EXHIBIT 10.1
PARTNERSHIP INTEREST PURCHASE AGREEMENT
THIS PARTNERSHIP INTEREST PURCHASE AGREEMENT (this "AGREEMENT") is made as
of the 30th day of December, 2004, by and between Endocare, Inc., a Delaware
corporation (the "SELLER") and Advanced Medical Partners, Inc., a Delaware
corporation (the "BUYER").
WITNESSETH
WHEREAS, the Seller owns, manages, and operates certain entities that own
medical devices and other equipment which provide cryosurgical therapy for
prostate cancer (the "BUSINESS"); and
WHEREAS, the Seller desires to sell, assign and transfer to the Buyer, and
the Buyer desires to purchase from the Seller, the Seller's general partnership
interests, limited partnership interests and other equity and ownership
interests of any kind or nature in the partnerships described herein; and
WHEREAS, the parties wish to set forth their agreement with respect to the
purchase and sale of the Interests (as defined in Section 1.1(B) below) and
other matters.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and promises herein contained, the parties agree as follows:
1. PURCHASE, SALE, AND ASSIGNMENT OF THE INTERESTS.
1.1 PURCHASE, SALE AND ASSIGNMENT.
(A) Subject to the terms and conditions hereof, at the Initial
Closing (as defined in Section 1.4 hereof) the Seller shall sell, assign, convey
and otherwise transfer to the Buyer, and the Buyer shall purchase from the
Seller, all right, title and interest of Seller in and to (i) each limited
partnership and other ownership or equity interest (including, without
limitation, each option or other right to purchase or acquire any such limited
partnership and other ownership or equity interest) as set forth and described
on Schedule 1.1 hereto (collectively, the "INITIAL INTERESTS"), in the
partnerships or that constitute a portion of the Business as listed on Schedule
1.1 hereto (collectively, the "PARTNERSHIPS"), (ii) a ninety-nine percent (99%)
interest in each general partnership interest and each option or other right to
purchase or acquire any such general partnership interest, as set forth and
described in Schedule 1.1, in the Partnerships ("FIRST TRANCHE GP INTERESTS,"
the Initial Interests and the First Tranche GP Interests are collectively
referred to herein as the "FIRST TRANCHE INTERESTS"), (iii) any management
agreements or other similar agreements between Seller and/or its affiliates, on
the one hand, and any of the Partnerships, on the other hand (the "MANAGEMENT
AGREEMENTS"); (iv) any rights of Seller and/or any of Seller's products in any
territory ("DISTRIBUTION RIGHTS"); and (v) 1,134,922 shares of Class A Common
Stock (the "U.S.M.D. INTEREST") of U.S. Medical Development, Inc., a Nevada
corporation ("U.S.M.D."), in each case, free and clear of any and all security
interests, liens, charges, claims, agreements (other than the obligations of
Buyer under the Partnership Agreements from and after the Initial Closing),
obligations and encumbrances of any nature whatsoever (as defined in Section
2.2) ("ENCUMBRANCES").
(B) Subject to the terms and conditions hereof, at the Second
Closing (as defined in Section 1.4 hereof) the Seller shall sell, assign, convey
and otherwise transfer to Buyer, and the Buyer shall purchase from the Seller,
all right, title and interest of Seller in and to the Seller's then remaining
one percent (1%) interests in each general partnership interest of the Seller,
as set forth and described in Schedule 1.1, in the Partnerships (the "SECOND
TRANCHE GP INTERESTS"; the First Tranche Interests and the
Second Tranche GP Interests are collectively referred to herein as the
"INTERESTS"), free and clear of any and all Encumbrances.
(C) The Seller and Buyer hereby expressly acknowledge and
agree that Buyer is purchasing and Seller is selling at and as of the Initial
Closing, with respect to the First Tranche Interests and at and as of the Second
Closing, with respect to the Second Tranche GP Interests, each and every
economic and financial interest of Seller in and to the Partnerships, including
without limitation, the right to receive distributions under the Partnership
Organizational Documents (as defined in Section 2.2 below). Without limiting the
generality of the foregoing, if and to the extent that the transfer of any of
the Interests hereunder or the consummation of any of the Transactions is deemed
to have been a transfer that is not a "Permitted Transfer" (as such term is
defined in the Partnership Agreements) under any of the Partnership Agreements,
the Seller, as general partner for each Partnership for which such Seller is a
general partner, in accordance with Section 10.03 of each of the Partnership
Agreements, hereby elects to recognize such transfer notwithstanding that such
transfer may be deemed to not be a "Permitted Transfer."
1.2 PURCHASE PRICE. In consideration of the sale, assignment and
transfer of the Interests pursuant to Section 1.1 hereof, the Buyer agrees to
pay to Seller, within twenty (20) days of the Second Closing Date (the
"CONSIDERATION DATE"), the sum of $850,000 (the "CONSIDERATION") by wire
transfer of immediately available funds to an account designated by the Seller.
1.3 NO ASSUMPTION OF LIABILITY. Except as expressly provided in this
Agreement, neither party shall assume or shall be deemed to have assumed any
liability or obligation of any other party of any kind, character, or
description, whether known or unknown, absolute or contingent, accrued or
unaccrued, disputed or undisputed, liquidated or unliquidated, secured or
unsecured, joint or several, due or to become due, vested or unvested,
executory, determined, determinable or otherwise (a "LIABILITY").
1.4 CLOSING.
(A) INITIAL CLOSING. The initial closing of the transactions
contemplated hereby, other than the transactions contemplated by Section 1.1(B)
hereof, (the "INITIAL CLOSING") shall be held on December 30, 2004 (the "INITIAL
CLOSING DATE"), at the offices of Xxxxxx and Xxxxx, LLP, 000 Xxxx Xxxxxx, Xxxxx
0000, Xxxx Xxxxx, Xxxxx 00000, or at such other location as the Buyer shall
designate.
(B) SECOND CLOSING. The closing of the transactions
contemplated by Section 1.1(B) hereof (the "SECOND CLOSING"; the Initial Closing
and the Second Closing are sometimes collectively referred to herein as the
"CLOSINGS") shall be held on December 31, 2004 (the "SECOND CLOSING DATE") at
the offices of Xxxxxx and Xxxxx, LLP, 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxxx,
Xxxxx 00000, or at such other location as the Buyer shall designate. The parties
agree that the effective date of the transactions contemplated by this
Agreement, for accounting and employment purposes, shall be the Second Closing
Date.
(C) TRANSACTIONS. For purposes of this Agreement,
"TRANSACTIONS" shall mean any and all of the transactions contemplated by this
Agreement.
2. REPRESENTATIONS AND WARRANTIES OF SELLER.
The Seller, on its own behalf and on behalf of the Partnerships, as
applicable, represents and warrants to the Buyer, as follows, as of the date
hereof, except as set forth on the disclosure schedule furnished to Buyer and
attached hereto which sets for the exceptions to the representations and
warranties
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contained in this Section 2 and certain other information called for by this
Section 2 (the "SELLER DISCLOSURE SCHEDULE") which Seller Disclosure Schedule
identifies any such exceptions with reasonable particularity and is arranged in
sections corresponding to the numbered and lettered sections contained in this
Agreement. The parties acknowledge and agree that disclosure of any fact or item
in any particular section of the Seller Disclosure Schedule shall be deemed to
be made in any other specific section or sections of the Seller Disclosure
Schedule to which such disclosure reasonably relates.
2.1 AUTHORITY. The Seller possesses full corporate power and
authority to execute and deliver this Agreement and to consummate the
Transactions. This Agreement has been duly and validly executed and delivered by
the Seller and constitutes the legal, valid and binding obligation of the
Seller, enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
from time to time in effect which affect the enforcement of creditors' rights
generally and by general principles of equity.
2.2 NO VIOLATION. The execution and delivery of this Agreement by
the Seller and the performance by it of the Transactions will not (A) violate
any provision of the Partnership Organizational Documents, (B) violate any law
or regulation of any United States federal, territorial, state or local
governmental or regulatory agency or authority (an "AUTHORITY"), (C) require any
consent or approval of, notice to or filing with any Authority which has not
been obtained or made, except where the failure to obtain such consent or
approval, or to provide such notice or filing, would not have a Material Adverse
Effect (as defined below) on the Partnerships, (D) result in a breach of any
provision of, or require the consent or approval of any third party which has
not been obtained under any material contract or agreement to which the Seller
or any of the Partnerships is a party, or (E) result in the creation or
imposition of any Encumbrance upon any portion of the assets of the Partnerships
pursuant to the terms of any contract or agreement to which the Seller or any of
the Partnerships is a party (the consents, approvals and notices, if any,
required to be obtained or made and referred to in clauses (C) and (D) above are
collectively referred to herein as "PARTNERSHIP CONSENTS"). Seller has
heretofore delivered to the Buyer true, correct and complete copies of (X) the
certificates of limited partnership of the Partnerships and all amendments
thereto (collectively, the "PARTNERSHIP CERTIFICATES"), (Y) the limited
partnership agreements of the Partnerships and all amendments thereto
(collectively, the "PARTNERSHIP AGREEMENTS"), and (Z) all other organizational
documents, if any, of the Partnerships governing the ownership, operation,
voting and control of any of the Partnerships (the documents described in
clauses (X), (Y) and (Z) above are, collectively referred to herein as the
"PARTNERSHIP ORGANIZATIONAL DOCUMENTS").
2.3 TITLE TO THE INTERESTS.
(A) The list of the Partnerships set forth in Schedule 1.1
hereto is a true, correct and complete list of each partnership through which
the Business (or any portion thereof) is conducted by the Seller.
(B) The list of the Interests set forth and described in
Schedule 1.1 hereto is a true, correct and complete list of each general
partnership, limited partnership and other ownership or equity interest
(including, without limitation each option or other right to purchase or acquire
any such general partnership, limited partnership and other ownership or equity
interest), of the Partnerships owned beneficially or of record by the Seller.
(C) The Seller is the record and beneficial owner of and has
good and valid title to the Interests in the percentages set forth in Schedule
1.1, free and clear of any and all Encumbrances.
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(D) The delivery by the Seller of the Interests to the Buyer
at the Initial Closing or the Second Closing, as provided herein, shall convey
to the Buyer good and valid title to the Interests, free and clear of all, and
shall not result in Buyer being subject to any, Encumbrances.
(E) During the Ownership Period (as defined in Section 9.10
below), each of the issued and outstanding general partnership, limited
partnership and other equity ownership interests (including, without limitation,
each option or other right to purchase or acquire any such general partnership,
limited partnership and other equity ownership interests), in the Partnerships,
including, without limitation, the Interests, has been issued in full compliance
with the Partnership Organizational Documents applicable thereto and in full
compliance with all applicable securities laws, rules, regulations and
requirements. Each subsequent transfer during the Ownership Period, if any, of
any such general partner interests (including the First Tranche GP Interests and
the Second Tranche GP Interests), was made in full compliance with the
Partnership Organizational Documents applicable thereto and, in full compliance
with all applicable securities laws, rules, regulations and requirements.
(F) The Seller has made any and all capital contributions
required to be made by it during the Ownership Period (including, without
limitation, any required initial capital contributions) to the Partnerships as
required by the Partnership Organizational Documents. The Seller has no
obligation to make any other capital contribution or any loan or other payment
or any other transfer of assets or services to the Partnerships.
2.4 OTHER OWNERSHIP INTERESTS. During the Ownership Period, no other
person has any right to obtain or acquire any general partnership, limited
partnership or other ownership or equity interest (including, without
limitation, any option or other right to purchase or acquire any such general
partnership, limited partnership or other ownership or equity interest), in or
to any of the Partnerships or its capital, profits or distributions.
2.5 CONTRACTS AND COMMITMENTS.
(A) CONTRACTS. Set forth in Section 2.5 of the Seller
Disclosure Schedule is a true, correct and complete list of each of the
following agreements, whether written or oral, to which the Partnerships (or any
of them) is a party:
(1) any lease of real property, or legally binding
commitment, contract, obligation or agreement for the purchase or sale of real
property (hereinafter, legally binding commitments, contracts, obligations and
agreements of any nature shall all be included in the term "AGREEMENT");
(2) any employment agreement with any officer, employee,
director or consultant which is not terminable without severance liability in
excess of $50,000.00 at the discretion of such Partnership on thirty (or fewer)
days' notice from such Partnership;
(3) any agreement to lend or borrow money in excess of
$50,000;
(4) any collective bargaining agreement with any labor
union or other representative of employees;
(5) any agreement guaranteeing the payment or
performance of the obligations of others, except in the ordinary course of
business;
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(6) any lease of any personal property under the express
terms of which such Partnership shall hereafter be obligated to make aggregate
annual payments exceeding one hundred thousand dollars ($100,000.00);
(7) any ongoing agreement for the sale or purchase of
products or services by such Partnership under the terms of which such
Partnership could hereafter be entitled to receive or obligated to make
aggregate annual payments exceeding one hundred thousand dollars ($100,000.00)
for any such agreement;
(8) any partnership or joint venture agreement the
existence of which the Seller has not informed the limited partners of the
Partnerships;
(9) any security or pledge agreement;
(10) any management or similar agreement, or
(11) any amendments Partnership Organizational Documents
made during the Ownership Period;
(12) any agreement (written or oral) pursuant to which
the Seller has granted to any person the exclusive right to conduct procedures
provided by the Partnerships; and
(13) any other agreement material to any of the
Partnerships.
(B) ENFORCEABILITY AND ASSIGNABILITY. Each of the agreements
set forth in Section 2.5 of the Seller Disclosure Schedule and the requirements
relating to the indebtedness referenced in Section 2.6 (the "CONTRACTS") is
enforceable and in full force and effect, except as such enforceability and
effectiveness may be limited by bankruptcy, insolvency or other similar laws
from time to time in effect which affect the enforcement of creditors rights
generally and by general principles of equity; and none of the Partnerships is
in breach or default, nor are there any facts that with notice or lapse of time
would cause a breach or default by the Partnerships under any of the Contracts,
nor is the Seller aware of any existing breach or default or of any facts that
with notice or lapse of time would constitute a breach or default of any such
Contract by any other party thereto. Each of the written Contracts incorporates
all of the material terms and conditions agreed to by the parties thereto. The
consummation of the Transactions will not be deemed to be an assignment of any
of the Contracts requiring the consent of any other person.
2.6 INDEBTEDNESS OF THE PARTNERSHIPS. None of the Partnerships has,
during the Ownership Period, nor shall the consummation of the Transactions
result in any of the Partnerships being subject to, any debt, guaranty,
liability or obligation of any nature, whether accrued, absolute, contingent or
otherwise, due or to become due, or known or unknown, other than such
liabilities incurred in the ordinary course of business consistent with past
practices or which have not had or could not reasonably be expected to result in
a Material Adverse Effect on the Partnerships.
2.7 LITIGATION. Except as disclosed in the Seller SEC Reports (as
defined in Section 9.10 below) filed prior to the date hereof, there is no suit,
action or other proceeding, or injunction or final judgment relating thereto,
pending, or to the knowledge of the Seller, threatened (i) against either the
Seller or the Partnerships, nor, to the knowledge of the Seller, any
investigation that might result in any such suit, action or proceeding, (ii)
that, to the knowledge of the Seller, otherwise relates to or may affect the
Business or (iii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the Transactions.
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2.8 ABSENCE OF CHANGES. During the Ownership Period, except for (i)
the execution and delivery of this Agreement and the Transactions and (ii) as
disclosed in the Seller SEC Reports filed prior to the date hereof, there has
not been any event or development which could reasonably be expected to result
in a Material Adverse Effect (as hereafter defined) on the Partnerships. For
purposes of this Agreement, "MATERIAL ADVERSE EFFECT" means, for any person, a
material adverse effect (a) on the business, operations, financial condition,
assets and properties, liabilities or prospects of such person, taken as a
whole, or (b) on the ability of such person to consummate the Transactions,
provided, however, that it shall not include any of the following, either alone
or in combination any effect or change occurring as a result of (i) general
economic or financial conditions, or (ii) other developments which are not
unique to the person but also uniformly affect each of the other persons who
participate or are engaged in the lines of business in which the person
participates or is engaged.
2.9 TANGIBLE PERSONAL PROPERTY. All tangible personal property and
equipment used by the Partnerships in the conduct of the Business is listed in
Section 2.9 of the Seller Disclosure Schedule (the property and equipment listed
in such section is referred to herein as the "PARTNERSHIPS EQUIPMENT"). Each of
the Partnerships is in possession of and has good title to the Partnerships
Equipment, except where the failure to hold such title, interest or right would
not have a Material Adverse Effect either individually or in the aggregate on
the Partnerships (or any of them).
2.10 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS. Except as otherwise disclosed in the Seller SEC Reports filed
prior to the date hereof, during the Ownership Period:
(A) Both the Seller (with respect to the conduct and
operations of the Business) and the Partnerships are, and have been during the
Ownership Period, in compliance with each legal requirement that is or was
applicable to it or to the conduct or operation of the Business or the ownership
or use of any of its assets, except where failure to comply would not result in
a Material Adverse Effect.
(B) No event has occurred or circumstance exists during the
Ownership Period that (with or without notice or lapse of time) (i) may
constitute or result in a violation by the Seller and the Partnerships (or any
of them) of any legal requirement with respect to the conduct and operation of
the Business, except where such violation would not result in a Material Adverse
Effect on the Partnerships (or any of them) or (ii) may give rise to any
obligation on the part of the Seller and the Partnerships (or any of them) to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature with repect to the conduct or operations of Business, except where
the cost of such remedial action would not have a Material Adverse Effect.
(C) Neither the Seller nor the Partnerships has received any
written notice or other written communication from any Authority or any other
person during the Ownership Period regarding (i) any actual, alleged, possible,
or potential violation of, or failure to comply with, any legal requirement with
respect to the conduct and operation of the Business, or (ii) any actual,
alleged, possible, or potential obligation on the part of the Seller and the
Partnerships (or any of them) to undertake, or to bear all or any portion of the
cost of, any remedial action of any nature with respect to the conduct and
operation of the Business.
2.11 ENVIRONMENTAL MATTERS. Except as otherwise disclosed in the
Seller SEC Reports filed prior to the date hereof:
(A) Each of the Partnerships is in compliance with all
applicable Environmental Laws (as defined below) except where such failure could
not reasonably be expected to have a Material Adverse Effect, and there are no
circumstances which may materially prevent or interfere with such
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compliance in the future. Neither the Seller nor the Partnerships have received
during the Ownership Period any communication (whether written or oral), whether
from an Authority, citizen group, employee or otherwise, that alleges that the
Partnerships (or any of them) or any of their respective assets or properties
used in the Business is not in full compliance with Environmental Laws. All
permits, registrations and other governmental authorizations currently held by
the Seller and the Partnerships (or any of them) pursuant to Environmental Laws
(collectively, "ENVIRONMENTAL PERMITS") represent all permits necessary for the
conduct of the Business as currently conducted, except where the failure to hold
such Environmental Permits (or any of them) could reasonably be expected to have
a Material Adverse Effect. Neither the Seller nor the Partnerships has been
notified by any relevant Authority during the Ownership Period that any permit
will be modified, suspended or revoked or cannot be renewed in the ordinary
course of business.
(B) There is no Environmental Notice (as defined below) that
is (i) pending or, to the knowledge of the Seller, threatened against any of the
Partnerships or (ii) to the knowledge of the Seller, pending or threatened
against any person whose liability for such Environmental Notice may have been
retained or assumed by or could reasonably be imputed or attributed to the
Seller and the Partnerships (or any of them).
(C) To the knowledge of the Seller, there are no past or
present actions, activities, circumstances, conditions, events or incidents
arising from the operation, ownership or use of any property currently or
formerly owned, operated or used by the Partnerships during the Ownership
Period, including, without limitation, the release, emission, discharge or
disposal of any Material (as defined below) into the Environment (as defined
below), that (i) could reasonably be expected to result in the incurrence of
costs under Environmental Laws or (ii) could reasonably be expected to form the
basis of any Environmental Notice against or with respect to the Partnerships or
against any person whose liability for any Environmental Notice may have been
retained or assumed by or could be imputed or attributed to the Seller and the
Partnerships (or any of them).
(D) For purposes of this Section 2.11:
(1) "ENVIRONMENT" means any surface water, ground water,
drinking water supply, land surface or subsurface strata, ambient air and any
indoor workplace.
(2) "ENVIRONMENTAL NOTICE" means any written notice by
any person alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup costs, governmental costs,
harm or damages to person, property, natural resources or other fines or
penalties) arising out of, based on or resulting from (a) the emission,
discharge, disposal, release or threatened release in or into the Environment of
any Material or (b) circumstances forming the basis of any violation, or alleged
violation, of any applicable Environmental Law.
(3) "ENVIRONMENTAL LAWS" means all national, state,
local and foreign laws, codes, regulations, common law, requirements,
directives, orders, and administrative or judicial interpretations thereof, all
as in effect on the date hereof or on the Initial Closing Date, that may be
enforced by any Authority, relating to pollution, the protection of the
Environment.
(4) "MATERIAL" means pollutants, contaminants or
chemical, industrial, hazardous or toxic materials or wastes, including, without
limitation, petroleum and petroleum products.
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2.12 TAX MATTERS.
(A) Each of the Partnerships has filed on a timely basis during
the Ownership Period all Tax Returns (as defined below) that it was required to
file, and all such Tax Returns were complete and accurate in all material
respects. Each Partnership has paid on a timely basis all Taxes that were due
and payable during the Ownership Period, or if not yet due and payable, such
Taxes are accrued on the books and records of the Partnerships. None of the
Partnerships has any actual or potential liability for any Tax obligation of any
other taxpayer (including any affiliated group of entities that included the
Partnerships. All Taxes that the Partnerships are or were required by law to
withhold or collect during the Ownership Period have been duly withheld or
collected and, to the extent required, have been paid to the proper Authority.
(B) Seller has made available to Buyer complete and accurate
copies of all federal income Tax Returns with repect to the Ownership Period,
and has delivered to Buyer complete and accurate copies of all examination
reports and statements of deficiencies, if any, assessed against or agreed to by
the Partnerships during the Ownership Period. Seller has delivered to Buyer or
made available to Buyer complete and accurate copies of all other Tax Returns of
the Seller and the Partnerships, together with all related examination reports
and statements of deficiency during the Ownership Period. To the knowledge of
the Seller, no examination or audit of any Tax Return of the Partnerships by any
Authority is currently in progress or, threatened or contemplated. Neither the
Seller nor the Partnerships has been informed in writing by any jurisdiction
during the Ownership Period that the jurisdiction believes that the Partnerships
(or any of them) were required to file any Tax Return that was not filed. The
Partnerships have not, during the Ownership Period, waived any statute of
limitations with respect to Taxes or agreed to an extension of time with respect
to a Tax assessment or deficiency.
(C) For purposes of this Agreement:
(1) "TAX" (and, with correlative meaning, "TAXES,"
"TAXABLE" and "TAXING") means (i) any federal, state, local or foreign 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, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Authority responsible for the imposition of any such tax (domestic or foreign),
(ii) any liability for payment of any amounts of the type described in (i) as a
result of being a member of an affiliated, consolidated, combined, unitary or
other group for any Taxable period and (iii) any liability for the payment of
any amounts of the type described in (i) or (ii) as a result of any express
obligation to indemnify any other person.
(2) "TAX RETURN" means any return, report, information
return, schedule or other document (including any related or supporting
information) filed or required to be filed with respect to any taxing authority
with respect to Taxes.
2.13 PERMITS. All permits used in and material, individually, or in
the aggregate, to the Partnerships for the conduct of the Business during the
Ownership Period are currently effective and valid and have been validly issued.
Upon written request, the Seller shall provide the Buyer a list of such permits.
To the knowledge of Seller and the Partnerships, no additional permits are
necessary to enable the Partnerships (or any of them) to conduct the Business in
material compliance with all applicable federal, state and local laws. Neither
the execution, delivery or performance of this Agreement nor the mere passage of
time will have any effect on the continued validity or sufficiency of such
permits, nor will any additional permits be required by virtue of the execution,
delivery or performance of this Agreement to enable the conduct of the Business
as now conducted.
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2.14 REGULATORY COMPLIANCE. Except as disclosed in the Seller SEC
Reports filed prior to the date hereof:
(A) Each Partnership has timely filed or otherwise provided
all registrations, reports, data, and other information and applications with
respect to its medical device, pharmaceutical, consumer, health care, and other
governmentally regulated products (the "REGULATED PRODUCTS") required to be
filed with or otherwise provided during the Ownership Period to the United
States Food and Drug Administration (the "FDA") or any other Authority with
jurisdiction over the manufacture, use, or sale of the Regulated Products, has
complied in all material respects during the Ownership Period with all legal
requirements of the FDA or other Authority with respect to the Regulated
Products (including but not limited to the Federal Food, Drug, and Cosmetic Act,
the Medicare Anti-Kickback Statute, the Health Insurance Portability and
Accountability Act, the Federal False Claims Act, the Federal laws concerning
physician self-referral known as "Xxxxx Laws", and the rules and regulations of
the Joint Commission on Accreditation of Healthcare Organizations) in all
material respects, and all regulatory licenses or approvals in respect thereof
are in full force and effect. All documentation, correspondence, reports, data,
analyses and certifications relating to or regarding any medical devices of the
Partnerships filed with or delivered by or on behalf of the Partnerships during
the Ownership Period to any Authority was in all material respects true and
accurate when so filed or delivered and, to the knowledge of the Seller, remains
true and accurate in all material respects. Each Regulated Product is being
distributed and marketed in all material respects in compliance with all
applicable requirements under all applicable laws.
(B) No request has been made during the Ownership Period to
recall, withdraw, suspend or discontinue any Regulated Product distributed or
managed by the Partnerships (whether voluntarily or otherwise). To the knowledge
of the Seller, no proceedings (whether completed or pending) seeking the recall,
withdrawal, suspension or seizure of any Regulated Product managed or
distributed by the Partnerships during the Ownership Period are pending or, to
the knowledge of the Seller, threatened against the Partnerships, nor have any
such proceedings ever been instituted during the Ownership Period.
(C) Neither the Seller nor the Partnerships has received any
written notice from the FDA or any other Authority during the Ownership Period
of any action to withdraw its approval or request the recall of any Regulated
Product with repect to the conduct or operation of the Business, any action to
enjoin production of any such Regulated Product.
2.15 BROKERS. The Seller has not retained any broker in connection
with the Transactions. Buyer has, and will have, no obligation to pay any
broker's, finder's, investment banker's, financial advisor's or similar fee in
connection with this Agreement or the Transactions by reason of any action taken
by or on behalf of any of the Seller or the Partnerships.
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
Buyer represents and warrants to the Seller, as of the date hereof, as
follows:
3.1 AUTHORITY AND NO VIOLATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer possesses full corporate power and authority to execute and
deliver this Agreement and to consummate the Transactions. This Agreement has
been duly and validly executed and delivered by the Buyer and constitutes the
legal, valid and binding obligation of the Buyer, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency or other similar laws from time to time in effect which
affect the enforcement of creditors' rights generally and by general principles
of equity. The execution and delivery of this Agreement by the Buyer and the
performance by it of the Transactions do not violate the
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Certificate of Incorporation or Bylaws of the Buyer or, to the Buyer's
knowledge, (A) violate any law or regulation of any Authority, (B) require any
consent or approval of, notice to or filing with any Authority which has not
been obtained or made, except where the failure to obtain such consent or
approval, or to provide such notice or filing, would not have a Material Adverse
Effect on the Buyer or (C) result in a breach of any provision of, or require
the consent or approval of any third party which has not been obtained under,
the terms of any contract or agreement to which the Buyer is a party, which
violation, breach or consent or approval (if not obtained) would have a Material
Adverse Effect on the Buyer.
3.2 LITIGATION. There is no suit, action or other proceeding, or
injunction or final judgment relating thereto, pending, or to the knowledge of
Buyer, threatened against Buyer that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
Transactions.
3.3 BROKERS. Buyer has not retained any broker or investment banker
in connection with the Transactions. Seller and the Partnerships have, and will
have, no obligation to pay any broker's, finder's, investment banker's,
financial advisor's or similar fee, including without limitation, any fees of
Buyer's Financial Advisor, in connection with this Agreement or the Transactions
by reason of any action taken by or on behalf of the Buyer.
3.4 SELLER INFORMATION The Buyer acknowledges that it has access to,
and has reviewed, the Seller SEC Reports and has had an opportunity to discuss
the Seller's business, management, financial affairs, and other matters
disclosed in the Seller SEC Reports with directors, officers and management of
the Seller and has had the opportunity to review the Sellers operations and
facilities. The Buyer has also had an opportunity to ask questions of and
receive answers from the Seller and its management regarding the conduct and
operations of the Business.
3.5 U.S.M.D. INTEREST. The USMD Interest to be received by the Buyer
is being acquired for its own account, for investment purposes only, and not
with a view to the resale or distribution thereof, except pursuant to effective
registrations or qualifications related thereto under the Securities Act of
1933, as amended, and applicable state securities or blue sky laws or pursuant
to an exemption therefrom; provided, however, that in making this
representation, Buyer does not agree to hold the USMD Interest for any minimum
or specific term and reserves the right to sell, transfer or otherwise dispose
of the USMD Interest at any time in accordance with (i) federal and state
securities laws applicable to such sale, transfer or disposition, and (ii) the
provisions of this Agreement.
4. CERTAIN COVENANTS.
4.1 TRANSACTIONAL TAXES. The Seller and Buyer shall be equally
liable for, and shall indemnify and hold harmless the Partnerships against, all
Taxes with respect to the sale, transfer, or assignment of the Interests or the
consummation of the Transactions.
4.2 ACCESS. The Seller shall provide to Buyer, during the normal
business hours of Seller, reasonable access to the facilities, books, and
records of the Partnerships and any partnerships of which any of the
Partnerships is the general partner and shall cause their officers, employees,
accountants, and other agents and representatives ("collectively,
"REPRESENTATIVES") to reasonably cooperate with each Representative of Buyer in
connection with Buyer's due diligence investigation of the Partnerships and the
assets, contracts, liabilities, operations, records and other aspects of the
Business.
4.3 OPERATIONS. The Seller covenants and agrees on its own behalf
and on behalf of each of the Partnerships that the operations and financial
affairs of each of the Partnerships and the partnerships of which any of the
Partnerships is the general partner will be conducted in its ordinary
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course of business consistent with past practices during the period from the
effective date hereof until the Initial Closing.
4.4 INFORMATION ACCESS. Buyer agrees that, at the Seller's expense,
for a period of seven (7) years after the Initial Closing Date, it will assist
and cooperate with the Seller in collecting and assembling information relating
to the operation of the business of the Partnerships on or prior to the Initial
Closing Date that customarily has been provided or used in connection with the
preparation of any and all Tax Returns, information returns or other reports
required to be filed by the Seller with any Authority. During such period, Buyer
shall retain, and neither destroy nor dispose of, all Tax Returns, books and
records (including computer files) of, or with respect to the activities of, the
Business and the divisions for all taxable periods ending prior to the Initial
Closing Date.
4.5 FILINGS. Each of the Buyer and the Seller, on its own behalf and
on behalf of the Partnerships, shall promptly take all such action as may, under
applicable law, be necessary or appropriate for, and will promptly file and, if
appropriate, use its best efforts to have declared effective or approved all
documents and notifications with or to any Authority that are necessary or
appropriate for the consummation of the Transactions, and each of the Buyer and
the Seller shall promptly give the other party information requested by such
other party pertaining to it and its affiliates that is reasonably necessary to
enable such other party to take such actions and file in a timely manner all
documents and notifications required to be so filed by applicable law.
4.6 OTHER ACTIONS. Each of the Buyer and the Seller, on its own
behalf and on behalf of the Partnerships, shall use its reasonable best efforts
to consummate the Transactions and make them effective as promptly as
practicable, including, without limitation, (i) defending lawsuits or other
proceedings challenging this Agreement or the consummation of any of the
Transactions, (ii) using reasonable best efforts to lift any injunction or order
adversely affecting this Agreement or the consummation of the Transactions or
(iii) using reasonable best efforts to obtain any consents necessary for its
performance of the Transactions.
4.7 NO SOLICITATION OR NEGOTIATION. Between the date hereof and the
Initial Closing Date, the Seller will not (nor will the Seller permit any of the
Seller's officers, directors, general partners, limited partners, employees,
agents, Representatives or affiliates to) directly or indirectly, take any of
the following actions with any person other than Buyer: (i) solicit or initiate
any proposals or offers from any person relating to any possible acquisition of
any of the Partnerships or any of the Interests (whether by way of merger,
purchase of equity or ownership interests, purchase of assets or otherwise) or
any material portion of its or their assets; (ii) unless otherwise required by
any Authority, provide information with respect to it or any of the Partnerships
to any person, other than to Buyer, relating to, or otherwise cooperate with,
facilitate or encourage any effort or attempt by any such person to which the
Seller has knowledge, to acquire any of the Partnerships or any of the Interests
(whether by way of merger, purchase of equity or ownership interest, purchase of
assets or otherwise) or any portion of its or their assets; or (iii) enter into
any agreement with any person providing for the possible acquisition of any of
the Partnerships or any of the Interests (whether by way of merger, purchase of
equity or ownership interest, purchase of assets or otherwise), or any portion
of its or their assets.
4.8 RIGHT OF FIRST REFUSAL. The Seller hereby grants the Buyer a
right of first refusal to service cryotherapy cases where the applicable
hospital elects a "per procedure" case rate; provided, however, that (i) this
right shall only apply to the six (6) geographic markets serviced by the
Partnerships as of the Closing; and (ii) nothing herein shall obligate the
Seller to utilize the Buyer's mobile resources for those hospitals that elect to
provide technical service with their own staff or another service provider.
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4.9 TRI STATES CRYOTHERAPY, L.P.. Following the Closing, the Seller
shall promptly take the necessary actions in order to cause Tri States
Cryotherapy, L.P., a Texas limited partnership ("TRI STATES"), to be dissolved.
In addition, the Seller Agrees that it will not, for a period of one (1) year
following the Closing, enter into a limited partnership agreement with the
former limited partners of Tri States.
4.10 U.S.M.D. INTEREST. In the event that, at any time during the
one (1) year period following the Second Closing Date, (i) the Buyer sells the
U.S.M.D. Interest, (ii) all or substantially all of the assets of U.S.M.D. are
sold or transferred, (iii) the occurrence of a merger or consolidation of
U.S.M.D. by means of any transaction or series of related transactions, or (iv)
U.S.M.D. makes any liquidation distribution(s) (each of (i), (ii), (iii) and
(iv) a "Liquidation Event"), then the Buyer shall promptly (and in any event
within thirty (30) days of the Buyer's receipt thereof) pay the Seller fifty
percent (50%) of the proceeds above $200,000 received in connection with any
such Liquidation Event; provided, however, that the Buyer's obligations under
this section shall terminate upon its payment of $500,000, in the aggregate, to
the Seller pursuant to the terms of this Section 4.10.
4.11 FUNDING. In the event that the Consideration is not delivered
to Seller by Buyer on or before the Consideration Date, Buyer and Seller agree
to take all necessary actions in order to immediately cause the Interests, the
U.S.M.D. Interest, the Distribution Rights and all rights under the Management
Agreement to be transferred back to the Seller, including, without limitation,
executing one or more assignment agreements.
5. CONDITIONS TO OBLIGATIONS OF THE BUYER AND THE SELLER.
5.1 THE BUYER'S CONDITIONS. The Seller will deliver or cause to be
delivered to the Buyer:
(A) CERTIFICATE. At the Initial Closing, certificates of an
authorized officer of the Seller certifying (i) copies of resolutions duly
adopted by the Board of Directors of the Seller authorizing and approving the
execution, delivery and performance of this Agreement and the other agreements
and documents executed and delivered in connection herewith, (ii) that all
action by the Seller and the Partnerships necessary to approve the execution,
delivery and performance of this Agreement, and the other agreements and
documents executed and delivered by the Seller and the Partnerships (or any of
them) in connection herewith, shall have been duly and validly taken, (iii) that
the representations and warranties of the Seller contained in this Agreement
shall be true and correct in all material respects at and as of the Initial
Closing Date with the same effect as if made at and as of the Initial Closing
Date (except to the extent such representations specifically relate to an
earlier date, in which case such representations shall be true and correct in
all material respects as of such earlier date and in any event, subject to the
foregoing materiality qualification) and (iv) such other matters as the Buyer
may reasonably request.
(B) ASSIGNMENT AND ASSUMPTION AGREEMENTS AND AMENDMENTS TO
PARTNERSHIP AGREEMENTS.
(1) At the Initial Closing, (i) an Assignment Agreement,
providing for the sale, assignment and assumption of the First Tranche Interests
and the assignment of the Management Agreements and the Distribution Rights, all
as set forth in Section 1.1 above, substantially in the form satisfactory to the
Buyer, Seller and its legal counsel (the "INITIAL ASSIGNMENT AGREEMENT") and
(ii) if recommended by counsel to the Buyer, amendments to the Partnership
Agreements providing for the admission and substitution of the Buyer as the
general partner of the Partnerships, substantially in the form satisfactory to
the Buyer, Seller and its legal counsel (the "AMENDMENT AGREEMENTS"), in each
case,
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executed by the Buyer and the Seller (and any other parties required for the
effectuation thereof) and such other documentation as shall be reasonably
requested by the Buyer to evidence the valid assignment of the First Tranche
Interests and, if recommended by legal counsel to the Buyer, the admission and
substitution of the Buyer as the general partner of the Partnerships.
(2) At the Second Closing, an Assignment Agreement
providing for the sale, assignment and assumption of the Second Tranche GP
Interests as set forth in Section 1.1 above (the "SECOND ASSIGNMENT AGREEMENT"),
executed by the Buyer and the Seller and such other documentation as shall be
reasonably requested by the Buyer to evidence the valid assignment of the Second
Tranche GP Interests.
(C) AMENDMENTS TO PARTNERSHIP CERTIFICATES. At the Initial
Closing, if advised to do so by legal counsel to the Buyer, Certificates of
Amendment to the Partnership Certificates of the Partnerships, evidencing the
substitution and admission of the Buyer as the general partner of the
Partnerships, in a form satisfactory to the Buyer and its legal counsel,
executed by each of Buyer and the Seller (and any other parties required for the
effectuation thereof).
(D) TERMINATION OF ENCUMBRANCES. At the Initial Closing,
evidence satisfactory to Buyer and its counsel that all Encumbrances, if any, on
or with respect to (i) any of the Interests, and (ii) any Encumbrances on or
with respect to the Partnerships (or any of them) or any of the Partnerships'
respective assets and properties have, in each case, been fully released and
terminated (the "RELEASED ENCUMBRANCES"), including, without limitation, Uniform
Commercial Code ("UCC") termination statements terminating all UCC financing
statements which cover any of the Released Encumbrances; provided, however,
notwithstanding the closing of the Transactions, failure to secure the release
of any Encumbrances by Seller shall not constitute a waiver on the part of Buyer
of the obligations of Seller set forth in this subsection (D).
(E) LEGAL OPINIONS.
(1) At the Initial Closing, an opinion of Xxxxxxxx &
Xxxxxxxx LLP dated the Initial Closing Date, substantially in the form of
Exhibit 5.1(E), unless waived by the Buyer.
(2) At the Initial Closing, evidence that opinions of
Xxxxxxxx & Xxxxxxxx LLP dated the Initial Closing Date and substantially in the
form required by any of the Partnership Agreements have, where applicable, been
delivered to or waived by the Partnerships.
(F) GOOD STANDING CERTIFICATES. At the Initial Closing,
certificates dated as of a date not earlier than the tenth (10th) business day
prior to the Initial Closing as to the good standing of the Seller and each of
the Partnerships executed by the appropriate officials of the jurisdictions of
organization of each of the Seller and the Partnerships.
(G) CONSENTS. At the Initial Closing, the Partnership
Consents.
(H) OTHER CLOSING DOCUMENTS. At the Initial Closing,
such other deeds, bills of sale, assignments, certificates of title, documents
and other instruments of transfer and conveyance as may reasonably be requested
by Buyer, each in form and substance satisfactory to Buyer and its legal counsel
and executed by Seller.
5.2 SELLER' CONDITIONS. The Buyer will deliver or cause to be
delivered to the Seller:
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(A) CERTIFICATE. At the Initial Closing, a Certificate
of the Secretary of the Buyer certifying (i) copies of resolutions duly adopted
by the Board of Directors of the Buyer authorizing and approving the execution,
delivery and performance of this Agreement and the other agreements and
documents executed and delivered in connection herewith, (ii) that all action by
Buyer necessary to approve the execution, delivery and performance of this
Agreement, and the other agreements and documents executed and delivered by
Buyer in connection herewith, shall have been duly and validly taken, (iii) that
the representations and warranties of the Buyer contained in this Agreement
shall be true and correct in all material respects at and as of the Initial
Closing Date with the same effect as if made at and as of the Initial Closing
Date (except to the extent such representations specifically relate to an
earlier date, in which case such representations shall be true and correct in
all material respects as of such earlier date and in any event, subject to the
foregoing materiality qualification) and (iv) such other matters as the Seller
may reasonably request.
(B) ASSIGNMENT AGREEMENTS. At the Initial Closing, the
Initial Assignment Agreement, executed by the Buyer and, at the Second Closing,
the Second Assignment Agreement, executed by the Buyer.
(C) AMENDMENT AGREEMENTS. At the Initial Closing, the
Amendment Agreements, executed by the Buyer.
(D) GOOD STANDING CERTIFICATE. At the Initial Closing, a
Certificate dated as of a date not earlier than the tenth (10th) business day
prior to the Initial Closing as to the good standing of Buyer executed by the
Secretary of State of the State of Delaware.
6. SURVIVAL OF REPRESENTATIONS; INDEMNITIES; EQUIPMENT WARRANTY.
6.1 SURVIVAL; LIABILITY.
(A) SURVIVAL. The representations and warranties contained in
this Agreement shall survive the sale, assignment and transfer to the Buyer of
the Interests and shall continue in full force and effect for twelve (12) months
following the Initial Closing, except that (i) the representations and
warranties contained in Sections 2.1, 2.3 and 2.4 shall survive forever and (ii)
the representations and warranties contained in Sections 2.10, 2.11 and 2.12
shall survive through the applicable statute of limitations (the "EXPIRATION
DATE"). The agreements and covenants contained in this Agreement shall survive
in accordance with their terms.
(B) NO EFFECT ON LIABILITY. None of (i) the consummation of
the Transactions, (ii) the delay or omission of any party to exercise any of its
rights under this Agreement or (iii) any investigation or disclosure that any
party makes, any notice that any party gives, or any knowledge that any party
obtains as a result thereof, or otherwise, shall (x) affect the liability of the
parties to one another for breaches of their covenants contained in this
Agreement, (y) affect the liability of the parties to one another for
misrepresentation under this Agreement, or (z) prevent any party from relying on
the representations contained in this Agreement.
6.2 INDEMNITIES.
(A) SELLER' INDEMNITY. The Seller shall indemnify, defend and
hold harmless the Buyer and its officers, directors, employees, partners,
affiliates, agents, successors, subsidiaries and permitted assigns
(collectively, the "BUYER INDEMNIFIED GROUP") from and against any and all
liabilities, damages, obligations, claims and expenses (including, without
limitation, costs of investigation and defense and reasonable attorney's fees)
(collectively "LOSSES") that any member of the Buyer Indemnified
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Group sustains or becomes subject to as a result of, arising out of or relating
to (i) the breach of any of the warranties or representations of the Seller made
herein, (ii) the breach of any covenants or agreements of the Seller made
herein, and (iii) any Third Party Claims (as defined in Section 6.2(C) below)
arising out of or relating to the ownership of the Interests, the operation of
the Partnerships and the conduct of the Business during the applicable ownership
period.
(B) THE BUYER'S INDEMNITY. The Buyer shall indemnify, defend
and hold harmless the Seller and its officers, directors, employees, partners,
affiliates, agents, successors, subsidiaries and permitted assigns
(collectively, the "SELLER INDEMNIFIED GROUP") from and against all Losses that
any member of the Seller Indemnified Group sustains or becomes subject to as a
result of (i) the breach of any of the warranties or representations of the
Buyer made herein, (ii) the breach of any of the covenants or agreements of the
Buyer made herein, and (iii) the ownership of the Interests, the operation of
the Partnerships and the conduct of the Business in any period subsequent to the
termination of the applicable ownership period.
(C) THIRD PARTY CLAIM. If any claim, action, suit or
proceeding is filed or initiated by a third party against any party entitled to
the benefit of indemnity hereunder (each, a "THIRD PARTY CLAIM"), written notice
thereof shall be given to the indemnifying party as promptly as practicable (and
in any event within three (3) business days after the service of the citation or
summons); provided, however, that the failure of any indemnified party to give
timely notice shall not affect rights to indemnification hereunder except to the
extent that the indemnifying party demonstrates actual damage caused by such
failure. After such notice, if the indemnifying party shall acknowledge in
writing to the indemnified party that the indemnifying party shall be obligated
under the terms of its indemnity hereunder in connection with such Third Party
Claim, then the indemnifying party shall be entitled, if it so elects, to take
control of the defense and investigation of such Third Party Claim and to employ
and engage attorneys of its own choice to handle and defend the same, such
attorneys to be reasonably satisfactory to the indemnified party, at the
indemnifying party's cost, risk and expense (unless (i) the indemnifying party
has failed to assume the defense of such Third Party Claim or (ii) the named
parties to such Third Party Claim include both of the indemnifying party and the
indemnified party, and the indemnified party and its counsel determine in good
faith that there may be one or more legal defenses available to such indemnified
party that are different from or additional to those available to the
indemnifying party and that joint representation would be inappropriate), and to
compromise or settle such Third Party Claim, which compromise or settlement
shall be made only with the written consent of the indemnified party, such
consent not to be unreasonably withheld. The indemnified party may withhold such
consent if such compromise or settlement would adversely affect the conduct of
business or requires less than an unconditional release to be obtained. If (i)
the indemnifying party fails to assume the defense of such Third Party Claim
within 15 days after receipt of notice thereof pursuant to this Section 6.2, or
(ii) the named parties to such Third Party Claim include both the indemnifying
party and the indemnified party and the indemnified party and its counsel
determine in good faith that there may be one or more legal defenses available
to such indemnified party that are different from or additional to those
available to the indemnifying party and that joint representation would be
inappropriate, the indemnified party against which such Third Party Claim has
been filed or initiated will (upon delivering notice to such effect to the
indemnifying party) have the right to participate, at the indemnifying party's
cost and expense, in the defense, compromise or settlement of such Third Party
Claim; provided, however, that such Third Party Claim shall not be compromised
or settled without the written consent of both the indemnified and the
indemnifying party, which consent shall not be unreasonably withheld. The
indemnifying party shall be liable for any settlement of any Third Party Claim
effected pursuant to and in accordance with this Section 6.2 and for any final
judgment (subject to any right of appeal), and the indemnifying party agrees to
indemnify and hold harmless the indemnified party from and against any Losses by
reason of such settlement or judgment.
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Regardless of whether the indemnified party participates in the defense,
the indemnifying party will pay reasonable costs and expenses in connection with
the defense, compromise or settlement for any Third Party Claim under this
Section 6.2.
(D) COOPERATION. The indemnified party shall cooperate in all
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such Third Party Claim and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
cost, participate in the investigation, trial and defense of such Third Party
Claim and any appeal arising therefrom. The indemnifying party shall pay all
reasonable expenses due under this Section 6.2 as such expenses become due. In
the event such expenses are not so paid, the indemnified party shall be entitled
to settle any Third Party Claim under this Section 6.2 without the consent of
the indemnifying party and without waiving any rights the indemnified party may
have against the indemnifying party.
(E) LIMITATIONS ON INDEMNIFICATION OF BUYER INDEMNIFIED GROUP.
Claims for indemnification by the Buyer Indemnified Group under Section 6.2(A)
hereof shall be limited as follows:
(1) Any claim for indemnification by the Buyer
Indemnified Group under Section 6.2(A)(i) hereof shall be made on or before the
applicable Expiration Date (if any); and
(2) Except for any claim for indemnification by the
Buyer Indemnified Group relating to a breach of the representations or
warranties contained in Sections 2.1, 2.3 or 2.4, as to which this Section
6.2(E)(2) shall not apply, Seller shall not be liable to the Buyer Indemnified
Group for any claims for indemnification made by the Buyer Indemnified Group
under Section 6.2(A)(i) hereof until the aggregate amount of Losses with respect
to such claims exceeds $50,000, and then only to the extent such indemnification
claims exceed such amount; and
(3) Except for any claim for indemnification by the
Buyer Indemnified Group relating to a breach of the representations or
warranties contained in Sections 2.1, 2.3 or 2.4, as to which this Section
6.2(E)(3) shall not apply, the aggregate liability of Seller for Losses under
Section 6.2(A) shall be limited to $50,000.
(F) REMEDIES. Except with respect to claims based on fraud or
willful misconduct, the parties hereto acknowledge and agree that the indemnity
obligations set forth above shall be the exclusive remedy of the indemnified
parties with respect to the Transactions.
6.3 EQUIPMENT WARRANTY.
(A) WARRANTY ITEMS. The Seller hereby warrants to the Buyer
that the Partnerships Equipment (the "WARRANTY ITEM(S)") are, and will be as of
the Closing and throughout the Warranty Period (as defined below), in good
operating condition and repair (subject to normal wear and tear). The Buyer's
exclusive remedy as to the Warranty Items shall be limited to repair of the
applicable Warranty Item by the Seller. The Buyer shall provide prompt notice to
the Seller of any Warranty Item which requires repair following the Buyer's
knowledge thereof, and in all events sufficiently promptly to minimize any
further damage to such Warranty Item.
(B) LIMITATION ON WARRANTY. Except as otherwise provided in
this Section 6.3, the Buyer acknowledges and agrees that the provisions of the
warranties given under this Section 6.3 constitute the sole and exclusive remedy
available to it with respect to defective Warranty Items. Except for the
warranties provided in this Section 6.3, all warranties, whether expressed,
implied or statutory, are hereby expressly excluded and disclaimed by the
Seller. The warranty as to the Warranty Items set forth in Section 6.3(A) above
shall only be valid with respect to warranty claims submitted by the Buyer
within
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the sixty (60) day period commencing as to each such Warranty Item as of the
Closing (the "WARRANTY PERIOD"). The warranty set forth in this Section 6.3
shall not apply to the extent any breach of warranty is directly attributable to
any damage or casualty occurring during the Buyer's ownership of the Warranty
Items, or due to the Buyer's failure to maintain any Warranty Item.
7. FURTHER ASSURANCES AND COOPERATION.
Following the Closings, the Seller and Buyer shall each promptly execute,
deliver and/or file such documents, and promptly take such other actions (at the
requesting party's expense, unless otherwise provided in this Agreement), as
shall be reasonably requested by the other party to effectuate the Transactions,
including, without limitation, if requested by Buyer, executing, delivering
and/or filing amendments to the Partnership Organizational Documents to reflect
the consummation of the Transactions and causing the execution, delivery and/or
filing of such documents and amendments by the holders (other than Buyer) of
equity or ownership interests in the Partnerships.
8. CONFIDENTIALITY; MARKET STANDSTILL.
8.1 CONFIDENTIALITY.
(A) From and after the date hereof and through the Initial
Closing Date, neither the Seller and the Partnerships, on the one hand, nor
Buyer, on the other hand (such party, as applicable, for the purpose of this
Section 8.1, the "DISCLOSING PARTY") shall, without the prior written consent of
the other party (for the purpose of this Section 8.1, the "NON-DISCLOSING
PARTY"), disclose to any person Confidential Information (as defined below) of
the Non-disclosing Party, except to a Disclosing Party's affiliates, employees,
financial advisers, lenders, or Representatives who need to know such
information for any reason contemplated by this Agreement (and then only to the
extent that such persons are under an obligation to maintain the confidentiality
of the Confidential Information), or use any Confidential Information of the
Non-disclosing Party for any reason other than contemplated by this Agreement
unless such Disclosing Party has (i) consulted with the Non-disclosing Party and
obtained the Non-disclosing Party's prior written consent, and (ii) been advised
by counsel that disclosure is required to be made under applicable legal
requirements or the requirements of a national securities exchange or another
similar regulatory body. In the event that the Disclosing Party is requested or
required by documents, subpoena, civil investigative demand, interrogatories,
requests for information, or other similar process to disclose any Confidential
Information, the Disclosing Party shall provide the Non-disclosing Party with
prompt written notice of such request or demands or other similar process so
that the Non-disclosing Party may seek an appropriate protective order or, if
such request, demand or other similar process is mandatory, waive the Disclosing
Party's compliance with the provisions of this Section 8.1(A) as appropriate.
(B) The term "CONFIDENTIAL INFORMATION" as used herein means
(i) as to Buyer, all confidential information relating to Buyer's business and
operations, and (ii) as to Seller, all confidential information relating to the
business and operations of the Seller and its affiliates in each of (i) and (ii)
whether disclosed prior to or after the date hereof. The term "Confidential
Information" does not include information which becomes generally available to
the public other than as a result of disclosure by the Disclosing Party, or
becomes available to the Disclosing Party on a non-confidential basis from a
source other than the Non-disclosing Party, provided that such source is not
bound by a confidentiality agreement with the Non-disclosing Party; provided,
however, the term "Confidential Information" does not include information which
becomes generally available to the public other than as a result of disclosure
by the Disclosing Party, or becomes available to the Disclosing Party on a
non-confidential basis from a source other than the Non-disclosing Party,
provided that such source is not bound by a confidentiality agreement with the
Non-disclosing Party.
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8.2 PUBLIC ANNOUNCEMENTS.
Neither the Buyer nor the Seller shall issue any press release or
otherwise make any public statements with respect to the Transactions without
the prior consent of Buyer (in the case of the Seller) or the Seller (in the
case of Buyer), except as may be required by applicable law, including any
determination by Seller that a press release or other public statement is
required under applicable securities or regulatory rules. If any party
determines, with the advice of counsel, that it is required by applicable law to
make this Agreement or any terms thereof public, it shall consult with the other
parties regarding such disclosure and seek confidential treatment for such terms
or portions of this Agreement as may be requested by the other parties.
9. GENERAL PROVISIONS.
9.1 TERMINATION.
This Agreement may be terminated and the Transactions may be abandoned at
any time prior to the Initial Closing whether before or after approval and
adoption of this Agreement:
(A) by written consent of Buyer and the Seller;
(B) by Buyer or the Seller if (i) any court of competent
jurisdiction in the United States or other United States federal or state
governmental entity shall have issued an order, decree, ruling or other action
restraining, enjoining or otherwise prohibiting the Transactions and such order,
decree, ruling or other action is or shall have become non-appealable, or (ii)
the Transactions have not been consummated by January 31, 2005 (the "FINAL
DATE"); provided that no party may terminate this Agreement pursuant to this
clause (ii) if such party's failure to fulfill any of its obligations under this
Agreement or the Transactions shall have been a principal reason that the
Initial Closing shall not have occurred on or before the Final Date.
(C) by the Seller if (i) there shall have been a breach in any
material respect of any representations or warranties on the part of Buyer set
forth in this Agreement or if any representations or warranties of Buyer shall
have become untrue in any material respect, provided that the Seller has not
breached any of its obligations hereunder in any material respect; or (ii) there
shall have been a breach by Buyer of any of its covenants or agreements
hereunder in any material respect or materially adversely affecting (or
materially delaying) the ability of Buyer or the Seller to consummate the
Transactions, and Buyer has not cured such breach within ten (10) business days
after written notice by the Seller thereof, provided that the Seller has not
breached any of its obligations hereunder in any material respect; or
(D) by the Buyer if (i) there shall have been a breach in any
material respect of any representations or warranties on the part of the Seller
set forth in this Agreement or if any representations or warranties of the
Seller shall have become untrue in any material respect, provided that Buyer has
not breached any of its obligations hereunder in any material respect; or (ii)
there shall have been a breach by the Seller of one or more of its covenants or
agreements hereunder in any material respect or materially adversely affecting
(or materially delaying) the ability of the Buyer or the Seller to consummate
the Transactions, and the Seller has not cured such breach within ten (10)
business days after notice by the Buyer thereof, provided that Buyer has not
breached any of its obligations hereunder in any material respect.
9.2 EFFECTS ON TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1 above, this Agreement
shall forthwith become void and have no effect
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without liability on the part of any party hereto or its affiliates other than
the provisions of this Section 9.2 and Sections 8, 9.3, 9.7, 9.8, 9.15 and 9.16.
9.3 REIMBURSEMENT OF BUYER'S THIRD PARTY EXPENSES. In the event
Buyer terminates this Agreement pursuant to Section 9.1(D)(ii) as a result of
the Seller' breach of Section 4.7 hereof, the Seller shall promptly pay to Buyer
in cash, as liquidated damages and not as a penalty, the amount of Buyer's Third
Party Expenses (notwithstanding Section 9.15 hereof) related to this Agreement
and the Transactions, up to a maximum amount of $25,000.
9.4 NOTICES. All notices and other communications hereunder shall be
in writing and shall be delivered personally (including express courier) or sent
by telecopy (and promptly confirmed by mail) or sent by prepaid registered or
certified mail (return receipt requested) or by overnight delivery by a
nationally recognized overnight courier to the parties at the following
addresses:
(A) if to the Buyer, to:
Advanced Medical Partners, Inc.
000 Xxxxxxxxxx Xxxxxxxxx,Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxxx, President
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Telecopier: (000) 000-0000
(B) if to the Seller, to:
Endocare, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telecopier: (000) 000-0000
Notices sent as aforesaid shall be deemed given and effective upon receipt. Any
party (and any other person or entity designated to receive notice) may change
its address or telecopy number for notice by delivery to all other parties of
notice to such effect in the manner set forth herein.
9.5 ENTIRE AGREEMENT. This Agreement (including the exhibits,
schedules (including Seller Disclosure Schedule), documents and instruments
referred to or incorporated herein) constitutes the entire agreement, and
supersedes all other prior agreements and undertakings (including
representations
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and warranties), both written and oral, among the parties with
respect to the subject matter hereof and thereof.
9.6 THIRD PARTIES; ASSIGNMENT. This Agreement is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder. The Seller may not assign this Agreement or any interest therein
without the prior written consent of the Buyer. The Buyer may assign this
Agreement or any interest therein without the consent of the Seller.
9.7 GOVERNING LAW. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware (without regard to principles of conflicts of law).
9.8 CONSENT TO JURISDICTION AND FORUM SELECTION. The Buyer and the
Seller irrevocably agrees that any legal action or proceeding with respect to
this Agreement or for the recognition and enforcement of any judgment in respect
hereof brought by the other party hereto or its successors or assigns will be
brought and determined in the Chancery or other courts of the State of Delaware,
and the Buyer and the Seller hereby irrevocably submit with regard to any such
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts. The
Buyer and Seller hereby irrevocably waive and agree not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this Agreement, (a) any claim that it is not personally subject
to the jurisdiction of the above-named courts for any reason other than the
failure to lawfully serve process, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
(c) to the fullest extent permitted by applicable law, that (i) the suit, action
or proceeding in any such court is brought in an inconvenient forum, (ii) the
venue of such suit, action, or proceeding is improper and (iii) this Agreement,
or the subject matter hereof, may not be enforced in or by such courts and (d)
any right to trial by jury.
9.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts which together shall constitute a single agreement.
9.10 CERTAIN DEFINITIONS
(A) "AFFILIATE". For purposes of this Agreement an "AFFILIATE"
of the Seller or the Partnerships (or any of them) or the Buyer is a person that
directly, or through one or more intermediaries, controls, or is controlled by,
or is under common control with the Seller or the Partnerships (or any of them)
or Buyer, as the case may be. "CONTROL" (including 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 or policies of a
person, whether through the ownership of stock or other interests, by contract,
credit arrangement, or otherwise.
(B) "OWNERSHIP PERIOD". For purposes of the Agreement, the
"OWNERSHIP PERIOD" shall mean the period of time commencing on October 1, 2002,
and ending on the Closing Date.
(C) "PERSON". For purposes of this Agreement a "PERSON" means
any natural person, corporation, general partnership, limited partnership,
limited liability company, proprietorship, other business organization, trust,
union, association or Authority.
(D) "KNOWLEDGE". For purposes of this Agreement "KNOWLEDGE OF
THE SELLER" means the knowledge of each of the officers and directors of the
Seller. Each such individual will be
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deemed to have Knowledge of a particular fact or other matter if: (i) such
individual is actually aware of such fact or other matter; or (ii) a prudent
individual could be expected to discover or otherwise become aware of such fact
or other matter in the course of conducting a reasonable investigation
concerning the existence of such fact or other matter.
(E) "SELLER SEC REPORTS". For purposes of this Agreement, all
forms, reports and documents filed by the Seller with the Securities and
Exchange Commission are referred to collectively as the "SELLER SEC REPORTS."
9.11 AMENDMENT. This Agreement may only be amended by an instrument
in writing signed by the parties hereto.
9.12 WAIVER. Any term or provision of this Agreement may be waived
at any time by the party or parties entitled to the benefits thereof but (A) no
such waiver shall be effective unless in writing and signed by the party claimed
to have made such waiver, and (B) no waiver of any term, provision or breach of
this Agreement shall operate or be construed as a waiver of the same or any
other term or provision, or any other breach of this Agreement, on any other
occasion.
9.13 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible and mutually
acceptable to the parties herein.
9.14 CONSTRUCTION. No provision of this Agreement shall be construed
in favor of or against any party on the ground that such party or its counsel
drafted the provision. Except as otherwise provided herein, any remedies
provided for herein are not exclusive of any other lawful remedies which may be
available to either party. This Agreement shall at all times be construed so as
to carry out the purposes stated herein.
9.15 EXPENSES. Whether or not the Transactions are consummated, all
fees, costs and expenses incurred in connection with the Transactions, this
Agreement and the other agreements and transactions contemplated hereby and
thereby, including all legal, accounting, financial advisory, broker's
consulting and other fees and expenses of third parties incurred by a party in
connection with the negotiation, documentation and effectuation of the terms and
conditions of the Transactions, this Agreement and the other agreements and
transactions contemplated hereby and thereby ("THIRD PARTY EXPENSES"), shall be
the obligation of the respective party incurring such Third Party Expenses. For
further clarity, the parties hereto understand and agree that any Third Party
Expenses incurred by or on behalf of the Partnerships shall be the obligation of
the Seller.
9.16 ATTORNEYS FEES. In the event any action is brought for
enforcement or interpretation of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys fees and costs incurred in said action.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLER:
ENDOCARE, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------
Name: /s/ Xxxxx X. Xxxxxxxxx
----------------------
Title: /s/ CEO
---------------------
BUYER:
ADVANCED MEDICAL PARTNERS, INC., a Delaware corporation
By: /s/ Xxxxx Xxxxxx
-------------------
Name: /s/ Xxxxx Xxxxxx
-----------------
Title: /s/ President
----------------
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SCHEDULE 1.1
GENERAL PARTNERSHIP AND LIMITED PARTNERSHIP INTERESTS TO BE PURCHASED
TYPE OF PERCENTAGE
ENTITY NAME INTEREST OWNERSHIP
----------- -------- ---------
Atlantic Cryotherapy, LP................................ General Partner 20.0%
Atlantic Cryotherapy, LP................................ Limited Partner 14.36%
Central States Cryotherapy, LP.......................... General Partner 20.0%
Central States Cryotherapy, LP.......................... Limited Partner 35.0%
East Coast Cryotherapy, LP.............................. General Partner 20.0%
East Coast Cryotherapy, LP.............................. Limited Partner 60.0%
East Michigan Cryotherapy, LP........................... General Partner 20.0%
East Michigan Cryotherapy, LP........................... Limited Partner 80.0%
Georgia Cryotherapy, LP................................. General Partner 20.0%
Georgia Cryotherapy, LP................................. Limited Partner 45.0%
Mid-America Cryotherapy, LP............................. General Partner 20.0%
Mid-America Cryotherapy, LP............................. Limited Partner 0.0%
Rocky Mountain Cryotherapy, LP.......................... General Partner 20.0%
Rocky Mountain Cryotherapy, LP.......................... Limited Partner 59.0%
Sabine Cryotherapy, LP.................................. General Partner 20.0%
Sabine Cryotherapy, LP.................................. Limited Partner 80.0%
South Coast Cryotherapy, LP............................. General Partner 20.0%
South Coast Cryotherapy, LP............................. Limited Partner 80.0%
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