Exhibit 10.1
[Pursuant to Rule 24b-2, certain information has been
deleted and filed separately with the Commission.]
ASSET PURCHASE AGREEMENT
AMONG
UROLOGIX, INC.,
EDAP TMS S.A.,
TECHNOMED MEDICAL SYSTEMS S.A.
AND
EDAP TECHNOMED INC.
dated as of
October 1, 2000
TABLE OF CONTENTS
ARTICLE 1, TRANSFER OF ASSETS
1.1 Assets to Be Sold
1.2 Assumption and Exclusion of Liabilities
1.3 Transfer Documentation and Possession
ARTICLE 2, CONSIDERATION
2.1 Consideration
2.2 Escrow
2.3 Receipt of Purchase Price
ARTICLE 3, CLOSING
3.1 The Closing
3.2 Deliveries of EDAP
3.3 Deliveries of Urologix
3.4 Further Documents
ARTICLE 4, REPRESENTATIONS AND WARRANTEES OF EDAP,
FRENCH SUBSIDIARY AND U.S. SUBSIDIARY
4.1 Authority; Organization, Capitalization and Qualification; Effect of
Agreement
4.2 Financial Statements
4.3 Absence of Certain Developments
4.4 Title to Personal Property and Assets
4.5 Patents, Trademarks and Copyrights
4.6 Commitments
4.7 Litigation
4.8 Compliance with Laws; Permits
4.9 Governmental Consents
4.10 Products; Regulation
4.11 Material Obligations
4.12 Brokerage
4.13 Affiliated Transactions
4.14 Insurance
4.15 Inventory
4.16 Accounts and Notes Receivable
4.17 Suppliers and Customers
4.18 Policies, Procedures and Specifications
4.19 Investment Representations
4.20 Full Disclosure
4.21 No Trading
4.22 August 2000 PMA Report
4.23 Labor
ARTICLE 5, REPRESENTATIONS AND WARRANTIES OF UROLOGIX
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5.1 Corporate Power and Authority; Effect of Agreement
5.2 Consents
5.3 Financial Statements and SEC Filings
5.4 Material Events
5.5 Litigation
5.6 Brokerage
5.7 Issuance of Shares
5.8 Absence of Certain Developments
5.9 Patents, Trademarks and Copyrights
5.10 Compliance with Laws
5.11 HSR Act
5.12 Products, Regulation
5.13 Insurance
5.14 Full Disclosure
ARTICLE 6, COVENANTS
6.1 Cooperation
6.2 Post-Closing Warranty Work
6.3 Access
6.4 Other Financial Statements
6.5 Maintenance and Service Agreements
6.6 Distribution Agreements
6.7 Inventory
6.8 Term Debt
6.9 Corrective Actions
6.10 Marketing Support
6.11 Covenant Not to Sue
6.12 RF Testing
6.13 Collection of Receivables
ARTICLE 7, ADDITIONAL COVENANTS
7.1 Sales and Other Tax
7.2 Non-Competition
7.3 Non-Solicitation
7.4 EDAP TMS S.A. Name
7.5 Confidentiality
7.6 Bulk Sales Laws
7.7 Board Representation
7.8 Transferred Employees
7.9 Insurance
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ARTICLE 8, INDEMNIFICATION AND RELATED MATTERS
8.1 Survival
8.2 Indemnification by EDAP
8.3 Indemnification by Urologix
8.4 Limitations
8.5 Notice of Indemnification
8.6 Indemnification Procedure for Third-Party Claims
ARTICLE 9, MISCELLANEOUS
9.1 Entire Agreement
9.2 Amendment; Waiver
9.3 Assignment
9.4 Headings; Usage
9.5 Cooperation
9.6 Expenses
9.7 Governing Law
9.8 Disputes
9.9 Severability
9.10 Counterparts
9.11 Interpretation
9.12 Notices
9.13 Publicity
9.14 No Third Party Beneficiary
9.15 English Language
ARTICLE 10, DEFINITIONS
10.1 Definitions
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EXHIBITS
Exhibit 2.1.1 Form of Warrant
Exhibit 2.2 Escrow Agreement
Exhibit 3.2.1 Officers' Certificate
Exhibit 3.2.2 Opinion of Sellers' Counsel
Exhibit 3.2.4 Supply Agreement
Exhibit 3.2.5 General Bill of Sale and Instrument of Assignment
Exhibit 3.2.6-A General Assignment of Patents and Technology
Exhibit 3.2.6-B General Assignment of Trademarks and Non-Patent
Intellectual Property
Exhibit 3.2.7 Assumption Agreement
Exhibit 3.2.9 Transition and Technology Transfer Agreement
Exhibit 3.2.10 International Distribution Agreement
Exhibit 3.2.13 Registration Rights Agreement
Exhibit 3.3.3 Officers' Certificate
Exhibit 3.3.4 Opinion of Urologix's Counsel
Exhibit 3.3.11 Promissory Note
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of October 1, 2000 among
EDAP TMS S.A., a French corporation ("EDAP"), Technomed Medical Systems S.A., a
French corporation ("French Subsidiary"), EDAP Technomed Inc., a Delaware
corporation ("U.S. Subsidiary") and Urologix, Inc., a Minnesota corporation
("Urologix").
WHEREAS, EDAP, French Subsidiary and U.S. Subsidiary (each a "Seller" and
collectively the "Sellers") are engaged in the Business (as defined herein);
WHEREAS, French Subsidiary and U.S. Subsidiary are each a wholly-owned
subsidiary of EDAP; and
WHEREAS, the respective Boards of Directors of EDAP, French Subsidiary and
U.S. Subsidiary and Urologix have each determined that it is in their best
interests and the best interests of their respective shareholders that the
Sellers sell, assign, transfer, convey and deliver to Urologix or its Affiliates
all of the Assets, and that Urologix or its Affiliates purchase and acquire the
same, subject to the assumption by Urologix or its Affiliates of the Assumed
Liabilities (each such term being used as defined herein), all upon the terms
and subject to the conditions set forth in this Agreement;
The parties hereto agree as follows:
ARTICLE 1
TRANSFER OF ASSETS
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1.1 Assets to be Sold.
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(a) On the terms and subject to the conditions of this Agreement, Sellers
shall, on the Closing Date, sell, assign, transfer, convey and deliver to
Urologix, or to such Affiliate or Affiliates of Urologix, as Urologix may
designate in writing to EDAP (collectively, "Urologix Affiliates"), and Urologix
shall purchase or shall cause one of the Urologix Affiliates to purchase from
the Sellers on the Closing Date all of the right, title and interest of the
Sellers in the assets, properties, rights and goodwill of every kind and
description and wherever located, whether tangible or intangible, owned by the
Sellers which are used or held for use in the Business (as herein defined),
other than the Excluded Assets (the assets to be purchased by Urologix or the
Urologix Affiliates pursuant to this Section 1.1 being referred to as the
"Assets"), including, without limitation, the following:
(i) all equipment, machinery, molds, tools and dies and other
tangible personal property, including all CPP units and other units at
customer locations, whether on loan or consignment and wherever located,
used or held for use by a Seller (or such Seller's vendors or customers)
and used in the Business or otherwise owned or held by a
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Seller (or held by such Seller's vendors or customers) on the Closing Date
for use in the Business, including, but not limited to the items listed on
Schedule 1.1(a)(i), but excluding assets listed on Schedule 1.1(b)(xii);
(ii) all raw materials, work-in-process, spare parts and finished
goods inventories of the Business (the "Inventory") on the Closing Date
which are not located in France, and, as of the Closing Date, all parts of
all Products (including, without limitation, disposables) to be sold in the
ordinary course of the Business, merchandise, supplies or other personal
property used in the Business;
(iii) all U.S. third-party accounts and notes receivable, excluding
accounts and notes receivable from American MedTech Services, Inc.
("MedTech") and those listed on Schedule 1.1(b)(xiii), but including those
receivables listed on Schedule 1.1(a)(iii), and the US$370,000 intercompany
receivable (labeled as Other Current Assets on Sellers' March 31, 2000
balance sheet) (the "Intercompany Receivable") of the Sellers arising from
the conduct of the Business before the Closing Date;
(iv) all books of account, general and financial records, personnel
records related to any Transferred Employee, invoices, shipping records,
supplier lists, device history records, clinical study records, test data,
manufacturing records, traceability records, device master records for each
of the Products, regulatory documents, premarket approval ("PMA") files,
including all approved and pending amendments and supplements and product
materials prepared for, or submitted to, other governments and any files
related to approvals by such governments, records, reports and
correspondence, laboratory notes, research records, correspondence and
other documents, records, data files and service manuals and any rights
thereto used in, or relating to, the Business (with unrelated information
redacted) on the Closing Date; provided that, within EDAP's reasonable
discretion, EDAP may retain originals of any of the items listed in this
Section 1.1(a)(iv), other than such original items which Urologix shall be
required by law to retain, and provided further that any information
retained by EDAP shall be subject to the terms of Section 7.5;
(v) all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind (including rights to insurance
proceeds and rights under and pursuant to all warranties, representations
and guarantees made by suppliers of products, materials or equipment, or
components thereof), pertaining to, arising out of, and enuring to the
benefit, of any Seller and relating to the Assets and the Business and
relating to occurrences prior to the Closing Date, to the extent not
expended for the repair or restoration of such Assets prior to the Closing
Date;
(vi) all sales and promotional literature, customer lists artwork,
and other sales-related materials owned, used, associated with or employed
by and used in the Business on the Closing Date;
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(vii) all rights of each Seller under the contracts, licenses,
sublicenses, agreements, leases, commitments and sales orders for Products
not delivered prior to the Closing, in each case listed on Schedule
1.1(a)(vii), including all prepaid royalties related to the same, and any
sales order placed in the ordinary course of business after the date hereof
and prior to the Closing which is disclosed to Urologix at or prior to
Closing and accepted by Urologix (collectively, the "Assumed Contracts");
(viii) all U.S. and foreign patents, trademarks, service marks, trade
names, copyrights, registrations and applications for registration with
respect to any of the foregoing, including but not limited to those items
listed on Schedule 1.1(a)(viii), trade secrets, know-how, product designs
and design specifications, drawings, bills of material and engineering
documentation and other intellectual property owned by any Seller and used
in the Business on the Closing Date;
(ix) all product approvals, clearances, registrations, permits,
consents, waivers, certificates, listings and exemptions submitted to or
granted by a regulatory authority, foreign or domestic, for the purpose of
allowing the manufacture, sale or distribution of a product of the
Business, and all correspondence with and other permits, orders,
certificates, authorizations or approvals of any supranational, national,
federal, state, provincial or local, domestic or foreign, governmental
authority or regulatory agency held by a Seller in respect of the Business;
(x) computer software and firmware used in the Business; and
(xi) all goodwill of the Sellers with respect to the Business on the
Closing Date.
(b) Notwithstanding any provision of Section 1.1(a) to the contrary, the
Assets shall exclude the following assets owned by one or more of the Sellers
(the "Excluded Assets"):
(i) all cash, cash equivalents and bank accounts owned by each
Seller at the Closing Date;
(ii) all raw materials, work-in-process, finished goods and spare
parts inventories which are located in France used in the Business and all
purchase orders and other commitments for raw materials and contract work
with regard to the same;
(iii) the shares of capital stock of each Seller or any Subsidiary
thereof and the corporate books and records of each Seller;
(iv) all rights of each Seller under this Agreement;
(v) any and all interests in real property owned or leased by any
Seller;
(vi) any assets of any Employee Benefit Plan;
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(vii) any contract, license, lease or other agreement not set forth
on Schedule 1.1(a)(vii), including, without limitation, those contracts,
licenses, leases and other agreements set forth in Schedule 1.1(b)(vii) and
any Assumed Contract which is not assignable to Urologix;
(viii) all advances, deposits, loans, prepaid interest and other
prepaid expenses of all kinds of the Business;
(ix) all permits and licenses (including, without limitation, all
environmental permits and licenses) related to the ownership or use of real
property owned or leased by any Seller;
(x) all personnel records related to any employee or former
employee of any Seller who is not a Transferred Employee;
(xi) tax records;
(xii) production and accounting software and other assets listed on
Schedule 1.1(b)(xii); and
(xiii) the accounts and notes receivable listed on Schedule
1.1(b)(xiii).
(c) There shall be included in the Assets, for all purposes of this
Agreement, all assets of the type described in Section 1.1(a), other than
subsection (iii) thereof, which are owned by any EDAP Affiliates for use in the
Business. Except as provided herein or in any agreement referred herein,
physical possession of such Assets shall be transferred only as requested by
Urologix. Prior to Closing, EDAP agrees to cause such EDAP Affiliates to
transfer all right, title and interest in such assets to EDAP, free and clear of
all Liens. On the Closing, EDAP shall transfer all right, title and interest in
such assets to Urologix, free and clear of all Liens. After Closing, all tools
and dies shall stay in the possession of French Subsidiary to be utilized as
provided in the Supply and Transition and Technology Transfer Agreements. All
Kits, other than those held by EDAP's Japanese subsidiary, shall be shipped to
Urologix's facility in Minneapolis, Minnesota immediately after Closing. Kits
and spare parts held by EDAP's Japanese subsidiary shall be held by such
subsidiary and sold by Urologix to such subsidiary under the terms of the
International Distribution Agreement. Except as provided above, EDAP shall
cause all spare parts to be held by the EDAP Affiliates and to be first
utilized, without charge to Urologix, as applicable to meet the service or sales
needs of Urologix, and for no other purpose unless agreed to in writing by
Urologix.
(d) EDAP may retain copies of those categories of documents identified on
Schedule 1.1(d).
1.2 Assumption and Exclusion of Liabilities.
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(a) On the terms and subject to the conditions of this Agreement,
including, without limitation, the provisions of Section 6.2, on the Closing
Date, Urologix shall, or shall cause the appropriate Urologix Affiliate to,
assume and shall pay, perform and discharge when due the following Liabilities
(as defined in Section 10.1) of each Seller arising out of the conduct of the
Business or relating to the Assets: (i) the U.S. third-party accounts payable
identified on and not to exceed the amounts listed on Schedule 1.2(a)(i)
("Assumed Payables"); (ii) except as provided in Section 1.2(b)(ii), Liabilities
arising in connection with the Assumed Contracts, but not any Liability due
thereunder prior to Closing or arising out of a breach thereof on or prior to
the Closing, or related to any manufacturer's warranty related thereto or any
extension thereof (collectively, "Manufacturer's Warranty"), but including any
obligation thereunder, but not arising out of a breach thereto on or prior to
Closing, to maintain the equipment as provided therein ("Equipment Maintenance
Obligations"); and (iii) the performance of Seller's repair and service
obligations and other obligations identified on and not to exceed the amounts
listed on Schedule 1.2(a)(iii), but not any Liability for any Manufacturer's
Warranty related thereto (the Liabilities described in clauses (i), (ii) and
(iii) of this Section 1.2(a) and subject to the limitations described herein,
collectively, the "Assumed Liabilities").
(b) Except as expressly provided in Section 1.2(a), Urologix does not
assume any debt, liability, or obligation of Sellers and shall not become liable
for any obligations or liabilities of Seller of any nature whatsoever. Without
limiting the generality of the foregoing sentence, it is specifically agreed
that the Sellers shall retain, and shall be responsible for paying, performing
and discharging when due, and neither Urologix nor the Urologix Affiliates shall
assume or have any responsibility for, the following Liabilities (the "Excluded
Liabilities"):
(i) all Liabilities (as defined in Section 10.1) relating to or
arising out of the Excluded Assets, including, without limitation,
Liabilities related to or arising out of the contracts, licenses, leases
and other agreements set forth on Schedule 1.1(b)(vii);
(ii) Liabilities for Assumed Contracts or Permits included in the
Assets which are not assignable at Closing because a consent or approval
referred to in Section 6.1 is not obtained;
(iii) Liabilities for Taxes now or hereafter owed by any Seller or
any of their Affiliates, including Taxes imposed on any Seller or any of
their Affiliates for which Urologix or any of its Affiliates becomes
liable, under the laws of the relevant jurisdiction, by virtue of being a
successor to the Business;
(iv) Liabilities to third parties for borrowed monies, including
guarantees or indemnities of the same;
(v) any claims arising before or after the Closing Date which allege
or alleged damages as a result of products manufactured and/or sold by any
Seller prior to the Closing Date;
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(vi) "Environmental Liabilities" (meaning any claim, expense, loss,
damages, liabilities, expenses and costs associated with an actual or
alleged violation of an Environmental Law (as defined in Section 10.1)
arising from, related to or in connection with an act, omission, event or
Environmental Condition (as defined in Section 10.1) occurring or existing
on or before the Closing);
(vii) any Liabilities to employees or former employees of any Seller,
including but not limited to any liability for wages, salary, commissions,
vacation pay, vacation bonuses, sick leave pay or any other pay for leaves
of absence or time not worked, front pay, back pay, retention bonuses, any
denial of employment benefits, terms or conditions, damages (including
attorneys' fees, costs and penalties) payable under remedies pursuant to
statutes, regulations and common law governing employment practices,
express, implied or statutory indemnities and claims by former employees
continuing in Urologix's employ for retirement, severance or termination
pay or other payments due as a result of actual or constructive
termination, including any Liabilities imposed upon Urologix under French
law or otherwise with respect to any employees of Sellers, whether such
Liabilities arise before or after the Closing Date;
(viii) any Liability under any Employee Benefit Plan;
(ix) any Liability related to claims from employees of EDAP and/or
Employees of the French Subsidiary relating to the application of this
Agreement;
(x) any Liability with regard to any Transferred Employee for
claims based on conduct of such employee or a Seller occurring prior to the
Closing which continues or is alleged to have continued after the Closing;
(xi) claims for patent infringement arising from, related to or in
connection with Products manufactured, used or sold prior to the Closing
Date, including any claims referenced on Schedule 4.5(b);
(xii) any debt, obligation, liability or expense with respect to any
Litigation with respect to the Business or Assets relating to claims
arising before or after the Closing Date which relate to the operation of
the Business or Assets on or prior to the Closing Date, including any
Litigation referenced on Schedule 4.7;
(xiii) damages, losses, expenses related to, arising from, or in
connection with any investigation, proceeding, examination, action or
request initiated by a regulatory or other governmental authority with
respect to the conduct of the Business or use of the Assets prior to
Closing, whether such investigation, proceeds, examination, action or
request commences or was initiated before the Closing Date or after the
Closing Date;
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(xiv) Liabilities arising out of a breach, on or prior to the
Closing, of any Assumed Contract; or
(xv) except for the Assumed Liabilities described in and subject to
the limitations contained in Section 1.2(a)(ii) and (iii), including the
Equipment Maintenance Obligations thereunder, Liabilities with respect to
any warranty repairs and warranty service, including Manufacturer's
Warranty, with respect to products manufactured or sold by any Seller or
any Affiliate thereof on or prior to Closing;
(xvi) Liabilities incurred by either Seller in connection with this
Agreement or the consummation of the transactions provided herein or
contemplated hereby, including, without limitation, fees and expenses of
Sellers' counsel, accountants, investment bankers and other experts and all
other experts and all other expenses incurred by Sellers incident to the
negotiation, preparation and execution of this Agreement or any transaction
incident hereto or contemplated hereby, including expenses incurred in
proving or perfecting title to the Assets, taxes on transfer of Assets (as
provided in Section 7.1), taxes, commissions and all other expenses of
either Seller pertaining to the performance by it of its obligations under
this Agreement; or
(xvii) All Liabilities arising out of any FDA action related to
matters referred in the letter and memorandum listed on Schedule 4.3.10 or
the letter referenced in item (c) of Schedule 4.8, including all
Liabilities related to the failure of the locations identified on the
attachment thereof to be in compliance with FCC regulations.
1.3 Transfer Documentation and Possession. The parties hereto agree that,
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in order to effect the transfer of the Assets and the assumption of the Assumed
Liabilities, the parties shall deliver the documents described in Sections 3.2
and 3.3, and such other conveyance documents as are necessary to convey (and as
appropriate, record and perfect) title to the Assets to Urologix or a Urologix
Affiliate and for Urologix or a Urologix Affiliate to assume the Assumed
Liabilities, such other documents to be in form and substance mutually
satisfactory to the Sellers and Urologix and as may be necessary under the laws
of the jurisdiction where such Assets and Assumed Liabilities are located to
effect such transfer and assumption. Except as provided in the Supply Agreement
or Section 1.1(c), coincident with the Closing, the Sellers shall deliver
possession of the Assets to Urologix or the appropriate Urologix Affiliate.
ARTICLE 2
CONSIDERATION
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2.1 Consideration.
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2.1.1 The consideration paid for the Assets shall be (i) US$6,840,000
(the "Cash Consideration"); (ii) 1,365,000 unregistered shares of Urologix
Common Stock and (iii) Warrants to purchase 327,466 shares of Urologix Common
Stock at an exercise price per share equal to $7.725 (the "Average Price"). The
Warrants shall be in the form of Exhibit 2.1.1 hereto.
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2.1.2 As additional consideration, Urologix shall pay the amount(s)
contemplated in Section 6.8 and shall assume the Assumed Liabilities.
2.1.3 There shall be offset at the Closing from the Cash
Consideration the amount of US$370,000 representing payment by Sellers of the
Intercompany Receivable.
2.2 Escrow. On the Closing Date, Urologix shall deposit US$2,250,000 of
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the Cash Consideration and 97,087 shares of Urologix Common Stock (the "Escrow
Fund") into an account (the "Escrow Account") managed by U.S. Bank Trust, N.A.
(the "Escrow Agent") under the terms of an Escrow Agreement in the form of
Exhibit 2.2 hereto (the "Escrow Agreement"). The Escrow Fund shall be available
to indemnify Urologix as provided in Article 8 and to assure technology transfer
under the terms of the Transition and Technology Transfer Agreement and Section
8 of the Supply Agreement.
2.3 Receipt of Purchase Price. Sellers agree that the aggregate
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consideration shall be paid directly to EDAP but shall be beneficially owned by
EDAP, French Subsidiary and U.S. Subsidiary.
ARTICLE 3
CLOSING
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3.1 The Closing. The closing of the transactions contemplated hereby (the
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"Closing") are taking place simultaneously with the execution of this Agreement
and the related agreements at the offices of Lindquist & Vennum, P.L.L.P., 4200
IDS Center, Minneapolis, Minnesota 55402, at 10:00 a.m. (Central Standard Time)
on October 1, 2000 (the "Closing Date"). All matters at the Closing shall be
considered to take place simultaneously, and no delivery of any document shall
be deemed completed until all transactions and delivery of documents are
completed. The Closing shall be effective as of 12:01 a.m. (Central Standard
Time) on October 1, 2000.
3.2 Deliveries of EDAP. At the Closing, EDAP shall deliver or cause to be
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delivered to Urologix or the appropriate Urologix Affiliates the following:
3.2.1 the Officers' Certificates from an executive officer of each of
EDAP and French Subsidiary and U.S. Subsidiary, in substantially the form of
Exhibit 3.2.1 attached hereto;
3.2.2 the opinions of counsel for EDAP and French Subsidiary and U.S.
Subsidiary, in substantially the form of Exhibit 3.2.2 attached hereto;
3.2.3 copies of resolutions of EDAP's Board of Directors and of
French Subsidiary and U.S. Subsidiary's Board of Directors, each certified by
the respective Secretary (or other authorized officer) thereof as having been
duly and validly adopted and in full force and effect, authorizing execution and
delivery of this Agreement and performance respectively by EDAP and French
Subsidiary and U.S. Subsidiary of the transactions contemplated hereby;
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3.2.4 a Supply Agreement between Urologix and EDAP in the form of
Exhibit 3.2.4;
3.2.5 the General Bill of Sale and Instrument of Assignments in the
form of Exhibit 3.2.5;
3.2.6 a General Assignments of Patents and Technology in the form of
Exhibit 3.2.6-A and a General Assignments of Trademarks and Non-Patent
Intellectual Property in the form of Exhibit 3.2.6-B;
3.2.7 Assumption Agreements in the form of Exhibit 3.2.7;
3.2.8 an executed counterpart of the Escrow Agreement;
3.2.9 a Transition and Technology Transfer Agreement in the form of
Exhibit 3.2.9;
3.2.10 an International Distribution Agreement in the form of Exhibit
3.2.10;
3.2.11 complete copies of Seller's PMA's, including all amendments,
supplements and reports, related to the Products and a letter from Sellers
addressed to the FDA, and signed by appropriate company officials, indicating
that all rights in the PMA's have been transferred to Urologix as of the Closing
date;
3.2.12 such other documents as may be necessary to effect the
transfer of the right to use EDAP's CE mark in the EU and the right to market to
any country in which marketing authorization has been obtained by Sellers;
3.2.13 a Registration Rights Agreement in the form of Exhibit 3.2.13;
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3.2.14 an executed counterpart of the Escrow Agreement, together with
stock powers duly executed in blank for the shares of Urologix Common Stock to
be delivered to the Escrow Agent pursuant to Section 2.2.
3.2.15 Urologix shall receive a certificate of an officer of U. S.
Subsidiary listing all U. S. third party accounts and notes receivable and U. S.
accounts payable which are existing as of the Closing and included in the
Assets;
3.2.16 EDAP shall deliver the Certificate of Insurance as provided in
Section 7.9;
3.3 Deliveries of Urologix. At the Closing, Urologix shall deliver to
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EDAP, on behalf of the Sellers, the following:
3.3.1 the Cash Consideration, as adjusted in Sections 2.1.3 and 7.1,
(x) by check or wire transfer in immediately available funds to a bank account
designated by EDAP to Urologix in writing; and (y) to the Escrow Agent pursuant
to Section 2.2;
3.3.2 the amount of Urologix Common Stock and Warrants determined
under Section 2.1, less the number of shares of Urologix Common Stock to be
delivered to the Escrow Agent pursuant to Section 2.2;
3.3.3 the Officer's Certificate from an executive officer of
Urologix, in substantially the form of Exhibit 3.3.3 attached hereto;
3.3.4 the opinion of counsel for Urologix, in substantially the form
of Exhibit 3.3.4 attached hereto;
3.3.5 copies of resolutions of Urologix's Boards of Directors,
certified by the Secretary thereof as having been duly and validly adopted and
in full force and effect, authorizing execution and delivery of this Agreement
and performance of the transactions contemplated hereby;
3.3.6 an executed counterpart of the Assumption Agreement;
3.3.7 an executed counterpart of the Supply Agreement;
3.3.8 an executed counterpart of the Escrow Agreement;
3.3.9 an executed counterpart of the Registration Rights Agreement in
the form of Exhibit 3.3.8;
3.3.10 executed counterparts of the Transition and Technology
Transfer Agreement and International Distribution Agreement; and
3.3.11 an executed Promissory Note in the form of Exhibit 3.3.11.
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3.4 Further Documents. Urologix and the Sellers shall execute and
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deliver, or cause to be executed and delivered, such other powers of attorney,
instruments, documents or certificates as the other parties may reasonably
request to effect or evidence the consummation of the transactions contemplated
by this Agreement. Without limiting the foregoing, each of the Sellers and
Urologix shall cooperate with and shall cause its respective attorneys to
cooperate with each other and its counsel to prepare and file all necessary
documents in the relevant jurisdictions to cause the complete transfer to
Urologix of the Assets, including without limitation, the patents and trademarks
and applications therefor included in the Assets. Sellers shall cooperate with
Urologix to effect the return of Boxes under demonstration contracts terminated
on or prior to the date hereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
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EDAP, FRENCH SUBSIDIARY AND U.S. SUBSIDIARY
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EDAP and French Subsidiary and U.S. Subsidiary represent and warrant to
Urologix and agree with Urologix that:
4.1 Authority; Organization, Capitalization and Qualification, Effect of
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Agreement.
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4.1.1 Authority. Each of EDAP, French Subsidiary and U.S. Subsidiary
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has full corporate power and authority to execute and deliver this Agreement and
all agreements referenced herein to which either is a party ("Ancillary
Agreements"), perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Ancillary Agreements, the performance by EDAP, French
Subsidiary and U.S. Subsidiary of their obligations under this Agreement and the
Ancillary Agreements and the consummation by EDAP, French Subsidiary and U.S.
Subsidiary of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of EDAP, French
Subsidiary and U.S. Subsidiary, and no other corporate proceedings on the part
of EDAP, French Subsidiary or U.S. Subsidiary are necessary to authorize the
execution and delivery of this Agreement or the Ancillary Agreements and to
consummate the transactions so contemplated. This Agreement and the Ancillary
Agreements have been duly executed and delivered by EDAP, French Subsidiary and
U.S. Subsidiary and constitute the valid and binding obligations of EDAP, French
Subsidiary and U.S. Subsidiary and are enforceable against each of EDAP, French
Subsidiary and U.S. Subsidiary in accordance with their respective terms, except
to the extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally, and (ii) is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4.1.2 Organization and Qualification. Each of EDAP, French
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Subsidiary and U.S. Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of France, France and the State of Delaware,
respectively, and has full corporate power and
11
authority to carry on its business as it is now being conducted. Each of EDAP,
French Subsidiary and U.S. Subsidiary is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, have a Material
Adverse Effect (as defined in Section 10.1). EDAP has heretofore delivered, or
caused to be delivered, to Urologix true and complete copies of EDAP's, French
Subsidiary's and U.S. Subsidiary's governing documents.
4.1.3 Subsidiaries. Paragraph (a) of Schedule 4.1.3 lists all of the
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Subsidiaries of EDAP (except for French Subsidiary and U.S. Subsidiary), each of
which are wholly-owned by EDAP. Except as set forth on paragraph (b) of
Schedule 4.1.3, neither U.S. Subsidiary nor French Subsidiary has any equity
interest, partnership interest or joint venture interest in any Person where
such interest is related to the Business or includes assets used or held for use
in the Business.
4.1.4 Consents. Except as disclosed in Schedule 4.1.4, no material
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consent, approval, waiver or other action by any Person under any contract,
agreement, indenture, lease, license, instrument or other document to which
EDAP, French Subsidiary or U.S. Subsidiary is a party or by which any of them or
the Assets is bound is required or necessary for the execution, delivery and
performance of this Agreement or the other documents contemplated hereby by
EDAP, French Subsidiary or U.S. Subsidiary, as the case may be, or the
consummation of the transactions contemplated hereby or thereby.
4.1.5 No Default. The execution, delivery and performance by EDAP,
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French Subsidiary and U.S. Subsidiary of this Agreement or the other documents
contemplated hereby and the consummation by them of the transactions
contemplated hereby and thereby do not and will not (a) in any material respect,
contravene or constitute a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of EDAP, French
Subsidiary or U.S. Subsidiary or to a loss of any benefit to which EDAP, French
Subsidiary or U.S. Subsidiary is entitled under (i) any provision of applicable
law or regulation (assuming the governmental consents referred to in Section 4.9
have been obtained); (ii) the governing documents of EDAP, French Subsidiary or
U.S. Subsidiary; (iii) except as provided in Schedule 4.1.5, any Commitment (as
defined in Section 4.6); or (iv) any judgment, injunction, order, decree,
administrative interpretation, award or other instrument binding upon EDAP,
French Subsidiary or U.S. Subsidiary in respect of the Business; or (b) result
in the creation or imposition of any Lien on any Asset.
4.2 Financial Statements. Schedule 4.2 includes a copy of the unaudited
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balance sheet of the Business as of March 31, 2000 (the "Latest Balance Sheet").
The Latest Balance Sheet is accurate in all material respects.
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4.3 Absence of Certain Developments. Since December 31, 1999, the
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Business has been operated only in the ordinary course, and neither EDAP, French
Subsidiary and U.S. Subsidiary nor any EDAP Affiliate in respect of the
Business, alone or in the aggregate, has:
4.3.1 mortgaged, pledged or subjected to any Lien, any of the Assets,
tangible or intangible;
4.3.2 except as contemplated by this Agreement, (i) sold, leased,
assigned, transferred or otherwise disposed of any of its assets, except for
inventory sold in the ordinary course of business; or (ii) canceled or
compromised any debt or claim, or waived or released any right, in the case of
both (i) and (ii) above, having a value of more than $10,000 or an aggregate
value in excess of $50,000;
4.3.3 sold, assigned, transferred or licensed to any Person any
rights under any patents, trademarks, service marks, trade names, copyrights,
applications for registration with respect to any of the foregoing, trade
secrets or other intellectual property owned by, or licensed to, EDAP, French
Subsidiary, U.S. Subsidiary or any EDAP Affiliate in respect of the Business,
other than rights to use any Seller's tradenames or trademarks in the ordinary
course of business granted to third parties in connection with the sale of
products;
4.3.4 entered into any settlement agreement regarding the breach or
infringement (or alleged breach or infringement) of any United States or foreign
intellectual property license, patent, copyright or trademark;
4.3.5 made any capital expenditures in excess of an aggregate of
$50,000;
4.3.6 suffered any extraordinary losses or waived any rights of
material value, whether or not in the ordinary course of business or consistent
with past practice;
4.3.7 suffered any damage, destruction or loss of any Assets owned by
EDAP, French Subsidiary or U.S. Subsidiary or used in the operation of the
Business which in the aggregate have a replacement cost of more than $50,000
whether or not covered by insurance;
4.3.8 modified, amended or terminated any Commitment (as defined in
Section 4.6) in a manner materially adverse to the Business;
4.3.9 suffered any Material Adverse Effect;
4.3.10 except as set forth on Schedule 4.3.10, been the subject of
any inquiry or action taken or, to the knowledge of EDAP, French Subsidiary or
U.S. Subsidiary, threatened by the United States Food and Drug Administration
(the "FDA") or any foreign regulatory authority having jurisdiction over similar
matters, excluding observations of inspectors which have not resulted in any
action, claim or investigation by the FDA or other regulatory authority;
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4.3.11 made any change in any method of accounting or accounting
practice or guideline by EDAP, French Subsidiary or U.S. Subsidiary in respect
of the Business, except for any such change required by U.S. GAAP or similar
rules and except for changes to obtain uniformity of accounting policies and
classifications;
4.3.12 failed to maintain its inventory in a normal and customary
manner materially consistent with its prior practice, or made any material
change in its selling, pricing or advertising practices or credit terms, limits
or durations inconsistent with its prior practice;
4.3.13 discharged or satisfied accounts payable other than in the
ordinary course of business consistent with past practice; or
4.3.14 entered into any agreement or made any commitment to take any
of the types of action described in subparagraphs 4.3.1 through 4.3.13 above.
4.4 Title to Personal Property and Assets. EDAP, French Subsidiary and
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U.S. Subsidiary each owns or has a valid leasehold interest in all tangible
personal property necessary for the conduct of the Business, and owns or has a
valid license or sublicense to use all computer software used in the Business,
free and clear of all Liens. The equipment and fixed assets of the Business are
in good condition and repair and are usable in the ordinary course of business,
ordinary wear and tear excepted. EDAP shall cause the transfer of title to
Urologix to the assets as required in Section 1.1(c) and referred to therein to
occur at or prior to Closing. Except for the Excluded Assets, the Assets
constitute all of the assets and properties necessary for the conduct of the
Business as currently conducted. Schedule 1.1(a)(i) includes an accurate list
of all tools and dies necessary to conduct the Business, identifying the item
and the location thereof. Schedule 1.1(a)(ii) is an accurate list of all
equipment consigned to or on loan to customers, identifying the item and
location thereof. Schedule 1.1(c) also lists all items of inventory of Kits
owned by an EDAP Affiliate which are of the type identified in Section 1.1(c),
identifying the item and location thereof.
4.5 Patents, Trademarks and Copyrights. Schedule 1.1(a)(viii) lists all
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patents, trademarks, service marks, trade names, copyrights, registrations and
applications for registration with respect to any of the foregoing which are
owned by EDAP, French Subsidiary or U.S. Subsidiary or any EDAP Affiliate and
which are used in or necessary to the conduct the Business, and all of which are
in full force and all required updates to maintain the same have been made in
the jurisdictions listed on the Schedule. Schedule 4.5(a) lists all license
agreements under which third party owned patents, trademarks, service marks,
trade names, copyrights, registrations and applications for registration of any
of the foregoing know-how, technology or other intellectual property rights used
in or necessary to conducting the Business are licensed to EDAP, French
Subsidiary or U.S. Subsidiary. Except as set forth on Schedule 4.5(b), there
are no claims or disputes pending or, to the knowledge of EDAP, French
Subsidiary or U.S. Subsidiary, threatened with third parties alleging that EDAP,
French Subsidiary or U.S. Subsidiary, on the one hand, or such third party, on
the other hand, infringes on the other's patents, trademarks, service marks,
trade names, copyrights, trade secrets or other
14
intellectual property rights in connection with conducting the Business. EDAP
has provided to Urologix a copy of all pending patent applications filed by
EDAP, French Subsidiary, U.S. Subsidiary or any EDAP Affiliate (in respect of
the Business). There are no outstanding orders, judgments and decrees
restricting the use by EDAP, French Subsidiary, U.S. Subsidiary or any EDAP
Affiliate of the patents, trademarks, service marks, trade names, copyrights,
trade secrets or other intellectual property rights owned or licensed by any of
them. All of the license agreements listed on Schedule 4.5(a) will be in full
force and effect on the Closing Date, and neither EDAP, French Subsidiary or
U.S. Subsidiary, nor any EDAP Affiliate is in default under any of them nor, to
the knowledge of EDAP, (i) is any other party to any such license agreement in
default thereunder; nor (ii) does any condition exist that, with notice or lapse
of time or both, would constitute a default thereunder. The right, title and
interest of EDAP, French Subsidiary and U.S. Subsidiary in and to the
Proprietary Rights and Proprietary Information are duly recorded (as applicable)
and free and clear of all Liens and rights of third parties and all annuities
and registrations have been paid. Except as set forth on Schedule 4.5(b), none
of the features, components or configurations or methods of making or using the
same (whether developed or under development) of EDAP's, French Subsidiary's, or
U.S. Subsidiary's products or processes infringe the intellectual property
rights of any other party. EDAP, French Subsidiary and U.S. Subsidiary have
established safeguards to maintain the secrecy of its Proprietary Information
that it considers to be reasonable. To the knowledge of EDAP, the information
which EDAP believes is Proprietary Information has not been disclosed by EDAP,
French Subsidiary or U.S. Subsidiary nor any of their Affiliates to any other
person, entity or governmental agencies, except pursuant to confidentiality
agreements, protective orders or law. As used herein, "Proprietary Information"
means all know-how and technology owned by EDAP, French Subsidiary, U.S.
Subsidiary or any EDAP Affiliate and used in the Business; and "Proprietary
Rights" means all patents, trademarks, service marks, copyrights, registrations
and applications therefor arising out of, and owned by EDAP, French Subsidiary,
U.S. Subsidiary or any EDAP Affiliate as part of, the Business. No interference
actions are pending, and no notice has been received of an intention to provoke
an interference action or to otherwise challenge the validity or priority of
inventorship before the United States Patent and Trademark Office or other
similar U.S. or foreign authorities with respect to any patent or application
therefor included in the Assets, except as disclosed on Schedule 4.5(c).
4.6 Commitments. Paragraph (a) of Schedule 4.6 sets forth a list of all
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of the following written contracts and other agreements to which EDAP, French
Subsidiary or U.S. Subsidiary, or any EDAP Affiliate in respect of the Business,
is a party or by which EDAP, French Subsidiary or U.S. Subsidiary, or the EDAP
Affiliate in respect of the Business or any Assets, is bound or subject
(collectively, "Commitments"): (i) customer contracts and agreements for the
sale, service or maintenance of materials or products which by their terms
exceed one year or which are in dollar amounts which equal or exceed $50,000 per
annum; (ii) distributorship agreements and manufacturer's representative
agreements; (iii) supply and vendor contracts for sole source components; (iv)
material research and development agreements related to the Business; (v) joint
venture agreements or license agreements (where any Seller is the licensor)
related to the Business; (vi) contracts and other agreements relating to the
borrowing of money; (vii) any equipment leases requiring payment of at least
$10,000 within a given year
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which are not cancelable without penalty upon 90 days' notice; (viii) agreements
settling pending or threatened Litigation which require continuing obligations
of the Business after the date hereof; (ix) any agreements between EDAP, French
Subsidiary, U.S. Subsidiary or any EDAP Affiliate (in respect of the Business)
and any of their Affiliates; (x) agreements which limit the Business from
competing in any line of business or in any geographic area other than
distributorship or representation agreements which are exclusive as to
geographic area; or (xi) any other contract or other agreement (other than
contracts and agreements of the type specified in clauses (i) through (xi)
above) that is material to the Business, whether or not made in the ordinary
course of business. There have been delivered to Urologix true and complete
copies of all such contracts and other agreements set forth in paragraph (a) of
Schedule 4.6 and there are no oral modifications or amendments to any such
contracts or agreements. All of such Commitments are in full force and effect,
and none of EDAP, French Subsidiary or U.S. Subsidiary, nor any EDAP Affiliate
is in default under any of them, nor, to the knowledge of EDAP, French
Subsidiary or U.S. Subsidiary, (i) is any other party to any such contract or
other agreement in material default thereunder, nor (ii) does any condition
exist that, with notice or lapse of time or both, would constitute a default
thereunder. Paragraph (b) of Schedule 4.6 indicates which of the Commitments
included in the Assets requires the consent of a third party to be transferred
or to remain in full force and effect following the consummation of the
transactions contemplated by this Agreement. None of the Assumed Contracts will
require additional payments or increase any obligations of Urologix thereunder
as a result of the assignment by EDAP, French Subsidiary or U.S. Subsidiary of
such Assumed Contract to Urologix.
4.7 Litigation. There is no Litigation pending or, to EDAP's knowledge,
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threatened which seeks to enjoin or obtain damages in respect of the
consummation of the transactions contemplated hereby. Except as set forth in
Schedule 4.7, there is no material Litigation pending or, to EDAP's, French
Subsidiary's or U.S. Subsidiary's knowledge, threatened that (i) involves a
claim or potential claim of liability against or affecting French Subsidiary,
U.S. Subsidiary or EDAP or any EDAP Affiliate in respect of the Business; or
(ii) enjoins, or seeks to enjoin, the operation of a portion of the Business or
seeks declaratory judgment with respect to the Business.
4.8 Compliance with Law: Permits. Paragraph (a) of Schedule 4.8, lists
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all permits, licenses, clearances, PMA's, registrations, consents, waivers,
listings, exemptions, orders, certificates, authorizations or approvals of any
international, federal, provincial, state or local, domestic or foreign,
governmental authorities or regulatory agencies, including, without limitation,
those regulating safety, effectiveness and market clearance of medical devices
(the "Permits"), held by either Seller or used in the Business. There are no
other permits necessary to carry on the Business in the jurisdictions of the
United States, Europe or Japan or, to the knowledge of EDAP, French Subsidiary
or U.S. Subsidiary, in any other jurisdiction where the Business is currently
conducted. Except as set forth on paragraph (b) of Schedule 4.8, no approval or
consent of any Person is needed in order that any Permit shall continue in full
force and effect following the consummation of the transactions contemplated by
this Agreement and to assign such Permits to Urologix or one of its Affiliates
in the jurisdictions of the United States, Europe or Japan or, to the knowledge
of EDAP, French Subsidiary or U.S. Subsidiary, in any
16
other jurisdiction where the Business is currently conducted. Except as set
forth on paragraph (c) of Schedule 4.8, EDAP, French Subsidiary and U.S.
Subsidiary and each EDAP Affiliate in respect of the Business have complied, in
all material respects, with all applicable laws, including any Medicare or
Medicaid statutes, rules or regulations, Permits and orders of foreign, federal,
state and local governments and all agencies thereof (including, without
limitation, the FDA or any foreign regulatory authority having jurisdiction over
similar matters) that affect the Business and to which EDAP, Subsidiaries or any
EDAP Affiliate is subject, and no claims have been filed against EDAP, French
Subsidiary and U.S. Subsidiary or the EDAP Affiliates in respect of the Business
alleging a violation of any such laws, regulations or orders. No notice, warning
or other communication from any governmental authority in respect of any failure
or alleged failure by EDAP, French Subsidiary and U.S. Subsidiary or any EDAP
Affiliate in respect of the Business to comply with any law, regulation or order
has been received by EDAP, Subsidiaries or any EDAP Affiliate.
4.9 Governmental Consents. Except as set forth on Schedule 4.9, the
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execution, delivery and performance by EDAP or French Subsidiary and U.S.
Subsidiary of this Agreement and the other documents contemplated hereby and the
consummation by EDAP or Subsidiaries of the transactions contemplated by this
Agreement require no action by, or in respect of, or filing with, any
governmental body, agency, official or authority. The "Ultimate Parent Entity"
(under the HSR Act) of EDAP and French Subsidiary and U.S. Subsidiary does not
have assets or revenues in excess of $100 million as of EDAP's and the French
Subsidiary and U.S. Subsidiary's most recently completed fiscal year, in each
case as determined under the HSR Act.
4.10 Products; Regulation.
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4.10.1 Since January 1, 1997, there have been no written notices,
citations or decisions by any governmental or regulatory body that any product
produced, manufactured, marketed or distributed at any time by the Business (the
"Products") is defective or fails to meet any applicable standards or other
regulatory requirements promulgated by any such governmental or regulatory body.
The Business has complied in all material respects with its policies, procedures
and specifications with respect to design, manufacture, labeling, testing,
inspection and sale of Products. Since January 1, 1997, there have been no
recalls, field notifications or seizures ordered or, to the knowledge of EDAP,
French Subsidiary or U.S. Subsidiary, threatened by any such governmental or
regulatory body with respect to any of the Products. Except as has been
disclosed to Urologix, since January 1, 1997, EDAP, French Subsidiary and U.S.
Subsidiary have not received, and EDAP, French Subsidiary and U.S. Subsidiary do
not have knowledge of any reasonable basis for, any warning letter, or Section
305 notices from, or civil or criminal investigations by, the FDA.
4.10.2 The Products have been properly listed with the FDA and any
other governments, state, local or foreign, requiring a similar listing. The
Products have all necessary and current marketing approvals or clearances by all
governments, state, local or foreign, requiring such approvals or clearances in
the jurisdictions where the Business is currently conducted. All necessary
amendments, supplements and reports required to keep the approvals
17
and clearances current with the versions of the Products being marketed have
been filed in a timely manner and are complete and accurate. Without limiting
the foregoing, all required amendments or supplements related to the software
are complete and accurate. Any changes in product design and manufacturing and
quality assurance procedures have been filed in a timely manner.
4.10.3 All management, facilities, personnel, manufacturing, quality
and other systems of EDAP, French Subsidiary and U.S. Subsidiary regulated by
the FDA and other similar regulatory agencies, either state, local or foreign,
are in compliance with all regulatory requirements (e.g., the FDA's Quality
System Regulation, ISO 9001 and EN46001) related to the Products.
4.10.4 EDAP, French Subsidiary and U.S. Subsidiary have all necessary
reimbursement and pricing authorizations from all regulatory agencies of the
countries in which the Products are marketed and where such authorizations are
required.
4.10.5 EDAP, French Subsidiary and U.S. Subsidiary have complied with
all incident and adverse event (both injury and malfunction) reporting
requirements to the FDA and similar state, local and foreign governmental
agencies with respect to the Products. No events have occurred with respect to
Products sold by EDAP or French Subsidiary and U.S. Subsidiary which could, to
the knowledge of EDAP, result in claims against Urologix.
4.10.6 EDAP's, French Subsidiary's and U.S. Subsidiary's facilities
have all necessary Permits for operation as a medical device manufacturing
and/or distribution facility. EDAP, French Subsidiary and U.S. Subsidiary have
also obtained all necessary Permits from every country in which its Products are
currently marketed, if such a Permit is required.
4.10.7 EDAP, French Subsidiary and U.S. Subsidiary are in possession
of and will, upon Urologix's request, provide to Urologix all supportive
materials and data substantiating representations made to the FDA or other
domestic or foreign governmental regulatory authority in its filings therewith,
including any and all testing data in the possession, or under the control, of
EDAP, French Subsidiary or U.S. Subsidiary or any EDAP Affiliate (but only to
the extent used in the Business), whether or not submitted to the FDA or other
domestic or foreign governmental regulatory authority. The Products perform in
all material respects in compliance with the representations and performance
specifications as contained in said filings. EDAP, French Subsidiary or U.S.
Subsidiary or any EDAP Affiliate (but only to the extent used in the Business),
are in possession of and will, upon Urologix's request, provide to Urologix all
regulatory information and documents located at any international locations.
EDAP, French Subsidiary and U.S. Subsidiary have provided Urologix with copies
of all FDA Establishment Inspection Reports and Form FDA 483s in their
possession and related to inspections of the Products. In addition, EDAP,
French Subsidiary and U.S. Subsidiary have provided Urologix with copies of all
similar inspections and reviews by EDAP's EU conformity assessment body and any
other governmental authorities who have inspected the Products to the extent in
their possession or the possession of their Affiliates, agents or attorneys.
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4.10.8 All contractually required 30-minute protocol upgrades have
been completed.
4.11 Material Obligations. Neither EDAP, French Subsidiary or U.S.
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Subsidiary, nor any EDAP Affiliate, in respect of the Business, has any debts,
liabilities or obligations of any nature (whether accrued, absolute, contingent,
direct, indirect, perfected, inchoate, unliquidated or otherwise and whether due
or to become due) arising out of transactions entered into at or prior to the
Closing, or any transaction, series of transactions, action or inaction at or
prior to the Closing, or any state of facts or condition existing at or prior to
the Closing (regardless of when such liability or obligation is asserted),
except (a) to the extent specifically reflected and accrued for or reserved
against in the Financial Statements; (b) for Liabilities and obligations which
have arisen after the date of the Latest Balance Sheet in the ordinary course of
business consistent with past practice, none of which are material in nature; or
(c) other Liabilities specifically referenced in the Schedules hereto.
4.12 Brokerage. Other than the fee payable by EDAP to CIBC World Markets
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Corp., its investment banker, there are no claims for brokerage commissions,
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by
EDAP or French Subsidiary and U.S. Subsidiary.
4.13 Affiliated Transactions. Except as listed and described in paragraph
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(a) of Schedule 4.6 or in Schedule 4.13 hereto, neither EDAP, nor French
Subsidiary nor U.S. Subsidiary is a party to any transaction or Commitment with
any of their respective Affiliates, and has no obligation or liability owing
thereunder in respect of the Business in excess of $50,000 or which is not
cancelable by EDAP, French Subsidiary or U.S. Subsidiary on at least 60 days'
notice without penalty.
4.14 Insurance. Schedule 4.14 lists the coverages and limits presently
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applicable to or including the operations and property of the Business.
Schedule 4.14 shall identify those policies which are "claims made" and those
which are "occurrence" based policies. All such policies shall continue through
the Closing and thereafter as provided in Section 7.9. Schedule 4.14 identifies
all risks which EDAP, French Subsidiary or U.S. Subsidiary have designated as
being self-insured with respect to the Business. Schedule 4.14 also includes a
list of all claims made by EDAP, French Subsidiary or U.S. Subsidiary with
respect to the Business related to Products sold by EDAP, French Subsidiary or
U.S. Subsidiary. Neither EDAP, French Subsidiary or U.S. Subsidiary, nor any
EDAP Affiliate has received any notice of cancellation in respect of insurance
coverage for operations, assets and properties relating to the Business. All
premiums due and payable in respect of such insurance have been paid. There are
no pending or, to EDAP's, French Subsidiary's or U.S. Subsidiary's knowledge,
threatened terminations or premium increases with respect to any such policies
and EDAP, French Subsidiary and U.S. Subsidiary and the EDAP Affiliates are in
compliance with all material conditions contained therein. Complete copies of
policies listed on Schedule 4.14 which have been requested by Urologix have been
delivered to Urologix.
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4.15 Inventory. The finished goods Inventory (including that reflected on
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the Latest Balance Sheet and any finished goods Inventory subsequently
purchased, produced or otherwise returned) is or was, prior to the sale thereof,
in good and merchantable condition and with respect to all finished goods
Products is the latest version of such Product, and suitable and usable or
salable in the ordinary course of business for the purposes for which intended,
and has been reflected on the Latest Balance Sheet and carried on the books of
account of EDAP in accordance with generally accepted accounting principles
consistently applied. If any FDA action makes the finished goods Inventory of
Kits unsaleable, such Inventory of Kits shall be deemed not saleable as of the
time of Closing. The finished goods Inventory will not be obsolete or damaged,
will be merchantable and fit for its normal purpose and will not be defective.
The Inventory (including raw materials, work-in-process and finished goods) on
the date of this Agreement is the same as set forth in the Latest Balance Sheet,
except for additions and reductions made in the ordinary course of business
since March 31, 2000. There shall exist as of the Closing Date and be included
in the Assets acquired from U. S. Subsidiary, at least two Maxis, seven Classic
and five Praktis Boxes, 460 Kits and US$600,000 of book value of spare parts
inventory.
4.16 Accounts and Notes Receivable. All accounts and notes receivable
-----------------------------
reflected on the Latest Balance Sheet, and all accounts and notes receivable
arising subsequent to the Latest Balance Sheet Date, have arisen in the ordinary
course of business of EDAP, represent valid obligations due to EDAP and have
been collected or, except as provided in Schedule 4.16, are collectible in the
ordinary course of business within ninety (90) days of the Closing Date. All
items that are required by generally accepted account principles to be reflected
as accounts and notes receivable on the Latest Balance Sheet and on the books of
account of EDAP are so reflected.
4.17 Suppliers and Customers. EDAP has heretofore delivered to Urologix a
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complete list of its and French Subsidiary's and U.S. Subsidiary's suppliers and
top 20 customers (including without limitation its distributors) identifying
sales for calendar years 1997, 1998 and 1999 and year-to-date through June 30,
2000, for the products of each such vendor and customer. The relationships of
EDAP and French Subsidiary and U.S. Subsidiary with such customers and suppliers
are good commercial working relationships and no such customer or supplier has
canceled or otherwise terminated, or threatened, verbally or in writing, to
cancel or otherwise terminate, its relationship with EDAP or French Subsidiary
and U.S. Subsidiary during the last twelve (12) months or has during the last
twelve (12) months decreased materially, or threatened to decrease or limit
materially, its services, supplies or material to EDAP or French Subsidiary and
U.S. Subsidiary or its usage or purchase of the services or products from EDAP
or French Subsidiary and U.S. Subsidiary, as the case may be. Schedule 4.17
lists all commitments of EDAP or French Subsidiary and U.S. Subsidiary to
provide customers with product upgrades, warranty service, advertising
incentives or other special arrangements. Schedule 4.17 also sets forth
Sellers' standard warranty with respect to products sold by Sellers. Neither
EDAP nor French Subsidiary and U.S. Subsidiary has received any notification of
any change in its arrangements with customers or suppliers which would have an
adverse effect, nor is EDAP or
20
French Subsidiary and U.S. Subsidiary aware of any indication that any of its
customers, suppliers or vendors, nor any other material fact regarding or
pertaining to its customers, suppliers or vendors which would have an adverse
effect on Urologix after the consummation of the transactions contemplated
hereby. The transactions contemplated hereby will not, to the knowledge of EDAP
or French Subsidiary and U.S. Subsidiary, have an adverse effect on the
relationship of EDAP or French Subsidiary and U.S. Subsidiary with any such
customer, supplier or vendor, and none of EDAP, French Subsidiary or U.S.
Subsidiary has any reason to believe such transactions will cause termination of
any supplier or vendor agreement or permit termination of any such agreement
without the consent of EDAP, which consent has not and shall not be given by
EDAP without prior written permission from Urologix .
4.18 Policies, Procedures and Specifications. Each of EDAP and French
---------------------------------------
Subsidiary and U.S. Subsidiary has complied with its policies, procedures and
specifications in the conduct of the Business, including, without limitation,
all such policies, procedures and specifications with respect to employment
matters, design, manufacture, testing and inspection of products, safety
matters, and the protection of trade secrets, know-how and confidential
information.
4.19 Investment Representations. Each of EDAP and French Subsidiary and
--------------------------
U.S. Subsidiary represents and warrants and acknowledges: (i) that it is
acquiring the common stock of Urologix hereunder for its own account for
investment and not with a view to, or for sale or other disposition in
connection with, any distribution thereof, nor with any present intention of
selling or otherwise disposing of the same; (ii) that it is an "accredited
investor" as that term is defined in Rule 501 promulgated by the SEC under the
Securities Act of 1933, as amended ("Securities Act"), or, in the case of French
Subsidiary, which is owned approximately 99% by EDAP (an accredited investor),
that it has the knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of the investment in Urologix
stock; and (iii) that it is fully informed that the shares of Urologix common
stock sold hereunder are being sold pursuant to a private offer exemption of the
Securities Act and are not being registered under the Securities Act or under
the Securities or Blue Sky Laws of any state or foreign jurisdiction, and that
such shares must be held indefinitely unless they are subsequently registered
under the Securities Act and any applicable State Securities or Blue Sky Laws,
or unless an exemption from registration is available thereunder, and that
Urologix has no obligation to register such shares other than pursuant to the
Registration Rights agreements referenced in Section 3.3.9). Sellers
acknowledge they have been provided copies of Urologix's Annual Report on Form
10-K for the year ended June 30, 2000 and such other information as they have
deemed necessary in connection with their investment in Urologix stock.
4.20 Full Disclosure. To the knowledge of EDAP, all documents, contracts,
---------------
instruments, certificates, notices, consents, affidavits, letters, telegrams,
telexes, statements, schedules (including Schedules to this Agreement), exhibits
(including Exhibits to this Agreement) and any other papers whatsoever
(collectively, "Documents") delivered by or on behalf of EDAP in connection with
this Agreement and the transactions contemplated thereby are true, complete and
authentic. No representation or warranty of EDAP contained in this Agreement
contains an untrue statement of material fact or, to the knowledge of any
Seller,
21
omits to state a material fact required to be stated therein or necessary to
make the statements made, in the context in which made, not false or misleading
in any material respect when made. There is no fact that EDAP has not disclosed
to Urologix in writing that has or could reasonably be expected to have a
material adverse effect upon the Assets or Business.
4.21 No Trading. No Seller and no EDAP Affiliate or any officers, director
----------
or other person associated with any such Seller or EDAP Affiliate has purchased
or sold Urologix common stock since January 1, 2000 and no Seller, or EDAP
Affiliate or any officers, director or other person associated with any such
Seller or EDAP Affiliate has taken any action to cause any other person to
effect any such purchases or sales.
4.22 August 2000 PMA Report. EDAP has provided Urologix with a complete
----------------------
copy of the PMA Report filed with the FDA in August 2000.
4.23 Labor. The Business and/or the Assets to be sold to Urologix do not
-----
constitute an autonomous economic unit under French and/or EU labor laws. The
transfer of the Business and/or Assets to Urologix do not create any rights or
entitlements whatsoever for the employees of EDAP and/or those of its French
Subsidiary towards Urologix.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF UROLOGIX
------------------------------------------
Urologix represents and warrants to EDAP and agrees with EDAP and French
Subsidiary and U.S. Subsidiary as follows:
5.1 Corporate Power and Authority; Effect of Agreement.
--------------------------------------------------
5.1.1 Urologix is a corporation duly organized, validly existing and
in good standing under the laws of Minnesota and has full corporate power and
authority to carry on its business as it is now being conducted.
5.1.2 Urologix has full corporate power and authority to execute and
deliver this Agreement, perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
the performance by Urologix of its obligations hereunder and the consummation by
Urologix of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of Urologix and no other corporate
proceedings on the part of Urologix are necessary to authorize the execution and
delivery of this Agreement, or to consummate the transactions so contemplated.
5.1.3 This Agreement has been duly executed and delivered by Urologix
and constitutes the legal, valid and binding obligation of Urologix, enforceable
against each such party in accordance with its terms, except to the extent that
such enforceability (a) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally, and (b) is subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
22
5.1.4 The execution, delivery and performance by Urologix of this
Agreement or the other documents contemplated hereby and the consummation by
them of the transactions contemplated hereby and thereby do not and will not
contravene or constitute a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of Urologix or to a loss
of any benefit to which Urologix is entitled under (i) except as would not be
materially adverse to the operations, results of operations, assets or financial
condition of Urologix, taken as a whole, or have a material adverse effect on
the ability of Urologix to consummate the transactions contemplated by this
Agreement and assuming the accuracy of the representations in Section 4.9, any
provision of applicable law or regulation (assuming the governmental consents
referred to in Section 5.2 have been obtained); (ii) the articles of
incorporation or bylaws of Urologix; (iii) any judgment, injunction, order,
decree, administrative interpretation, award or other instrument binding upon
Urologix; or (iv) result in the creation or imposition of any Lien on any asset
of Urologix which would have a material adverse effect on their ability to
consummate the transactions contemplated hereby.
5.2 Consents. Assuming the accuracy of the representations of EDAP and
--------
French Subsidiary and U.S. Subsidiary in Section 4.9, except as set forth in
Schedule 5.2, no consent, approval or authorization of, or exemption by, or
filing with, any governmental or regulatory authority or any other third party
is required in connection with the execution, delivery or performance by
Urologix of this Agreement, or the other documents contemplated hereby, or the
taking by Urologix of any other action contemplated hereby, excluding, however,
consents, approvals, authorizations, exemptions and filings, if any, which any
of the Sellers is required to obtain or make.
5.3 Financial Statements and SEC Filings. Urologix has delivered to
------------------------------------
Sellers true and complete copies of (i) its annual reports on Form 10-K for its
fiscal years ended June 30, 2000, 1999 and 1998; (ii) its quarterly reports on
Form 10-Q for its fiscal quarters ended September 30, 1999, December 31, 1999
and March 31, 2000; (iii) its proxy or information statements relating to all
meetings of, or actions taken without a meeting by, the shareholders of Company
held since June 30, 1998; and (iv) all of its other 8-K reported filed with the
SEC since June 30, 1998. The reports and statements so delivered are referred
to collectively in this Agreement as the "Urologix SEC Filings." As of their
respective dates, the Urologix SEC Filings (including all exhibits and schedules
thereto and documents incorporated by reference therein) did not contain any
untrue statement of a material fact or, to Urologix's knowledge, omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading. The audited financial
statements and unaudited interim financial statements of Urologix included or
incorporated by reference in the Urologix SEC Filings (i) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto); (ii) complied as of their respective dates in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto; and (iii) fairly present, in all material
respects, the financial position of Urologix as of the dates thereof
23
and the income and cash flows for the periods then ended (subject, in the case
of any unaudited interim financial statements, to normal year-end adjustments).
5.4 Material Events. Except as disclosed in the Urologix SEC Filings, and
---------------
except as expressly contemplated by this Agreement, since the date of the most
recent audited financial statements including in the Urologix SEC Filings there
has not been any event, occurrence or development of a state of circumstances or
facts which has had a material adverse effect on the operations, results of
operations, assets or financial condition of Urologix's business, taken as a
whole.
5.5 Litigation. There is no Litigation pending or, to Urologix's
----------
knowledge, threatened which seeks to enjoin or obtain damages in respect of the
consummation of the transactions contemplated hereby. Except as set forth on
Schedule 5.5, there is no Litigation pending or, to Urologix's knowledge, any
investigation by a governmental entity, in each case that (i) involves a claim
or potential claim of liability against or affecting Urologix which, if
adversely determined, would have a material adverse effect on the operations,
results of operations, assets or financial condition of Urologix's business,
taken as a whole; (ii) enjoins or seeks to enjoin the operation of a portion of
Urologix's business or seeks declaratory judgment if such injunction or judgment
would, or if entered would, constitute any change in, or effect on, the business
of Urologix as currently conducted that is, or is reasonably likely to be,
materially adverse to the operations, results of operations, assets or financial
condition of Urologix's business, taken as a whole.
5.6 Brokerage. Other than the fee payable by Urologix to Houlihan Lokey
---------
Howard & Zukin, its investment banker, there are no claims for brokerage
commissions, finder's fees or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by Urologix.
5.7 Issuance of Shares. The shares to be issued pursuant to this
------------------
Agreement are duly authorized and, when issued in accordance with the terms
hereof, shall be validly issued, fully paid and non-assessable. The shares of
Common Stock of Urologix issuable upon exercise of the Warrants, when issued in
accordance with the terms thereof, will be duly authorized, validly issued,
fully paid and non-assessable.
5.8 Absence of Certain Developments. Except as set forth in Schedule 5.8,
-------------------------------
since June 30, 2000, Urologix has not:
5.8.1 suffered any change in, or effect on, the business of Urologix
as currently conducted that is, or is reasonably likely to be, materially
adverse to the operations, results of operations, assets or financial condition
of Urologix's business, taken as a whole;
5.8.2 been the subject of any inquiry or action taken or, to
Urologix's knowledge, threatened by the FDA or any foreign regulatory authority
having jurisdiction over
24
similar matters, excluding observations of inspectors which have not resulted in
any action, claim or investigation by the FDA or other regulatory authority; or
5.8.3 made any change in any method of accounting or accounting
practice or guideline by Urologix, except for any such change required by U.S.
GAAP or similar rules and except for changes to obtain uniformity of accounting
policies and classifications.
5.9 Patents, Trademarks and Copyrights. No interference actions are
----------------------------------
pending, and no notice has been received of an intention to provoke an
interference action or to otherwise challenge the validity or priority of
inventorship before the United States Patent and Trademark Office or other
similar U.S. or foreign authorities with respect to any patent or application
therefor owned by Urologix.
5.10 Compliance with Law. Except as would not have a material adverse
-------------------
effect on the operations, results of operations, assets or financial condition
of Urologix's business, taken as a whole, (i) no notice, warning or other
communication from any governmental authority in respect of any failure or
alleged failure by Urologix in respect of its business to comply with any law,
regulation or order has been received by Urologix; and (ii) no claims have been
filed against Urologix in respect of its business alleging a violation of any
such law, regulation or order.
5.11 HSR Act. The "Ultimate Parent Entity" (under the HSR Act) of Urologix
-------
does not have assets or revenues in excess of $100 million as of Urologix's most
recently completed fiscal year, in each case as determined under the HSR Act.
5.12 Products, Regulation. Except as disclosed in the Schedules referenced
--------------------
below or where such items would not have a material adverse effect on the
operations, results of operations, assets or financial condition of Urologix's
business, taken as a whole:
5.12.1 Since January 1, 1997, there have been no written notices,
citations nor decisions by any governmental or regulatory body that any product
produced, manufactured, marketed or distributed at any time by Urologix's
business (the "Urologix Products") is defective or fails to meet any applicable
standards or other regulatory requirements promulgated by any such governmental
or regulatory body. Since January 1, 1997, there have been no recalls, field
notifications or seizures ordered or, to the knowledge of Urologix, threatened
by any such governmental or regulatory body with respect to any of the Urologix
Products. Except as has been disclosed to EDAP, since January 1, 1997, Urologix
has not received, and Urologix does not have knowledge or any reasonable basis
for, any warning letter, or Section 305 notices from, or civil or criminal
investigations by, the FDA.
5.12.2 The Urologix Products have been listed with FDA and any other
governments, state, local or foreign, requiring a similar listing. All
necessary amendments, supplements and reports required to keep the approvals and
clearances current with the versions of the Urologix Products being marketed
have been filed in a timely manner and are complete
25
and accurate. Any changes in product design and manufacturing and quality
assurance procedures have been filed in a timely manner.
5.12.3 Urologix has complied with all incident and adverse event
(both injury and malfunction) reporting requirements to the FDA and similar
state, local and foreign governmental agencies with respect to the Urologix
Products. No events have occurred with respect to Urologix Products sold by
Urologix which will, to the knowledge of Urologix, result in claims against
EDAP.
5.12.4 All management, facilities, personnel, manufacturing, quality
and other systems operated by or employed by Urologix at its facilities and
regulated by the FDA and other similar regulatory agencies, either state, local
or foreign, are in compliance with all regulatory requirements (e.g., the FDA's
Quality System Regulation, ISO 9001 and EN 46001) related to the Urologix
products produced at such facilities, except to the extent such non-compliance
would not have a material adverse effect on the operations, results of
operations, assets or financial condition of Urologix's business, taken as a
whole.
5.12.5 Urologix is in compliance, in accordance with general industry
practices, with its policies, procedures and specifications in the conduct of
its business, including, without limitation, all such policies, procedures and
specifications with respect to employment matters, design, manufacture, testing
and inspection of products, safety matters, and the protection of trade secrets,
know-how and confidential information, except to the extent such non-compliance
would not have a material adverse effect on the operations, results of
operations, assets or financial condition of Urologix's business, taken as a
whole.
5.13 Insurance. Urologix has not received any notice of cancellation in
---------
respect of insurance coverage for operations, assets and properties relating to
its business. All premiums due and payable in respect of such insurance have
been paid. There are no pending or, to Urologix's knowledge, threatened
terminations nor premium increases with respect to any such policies and
Urologix is in compliance with all material conditions contained therein.
5.14 Full Disclosure. No representation or warranty of Urologix contained
---------------
in this Agreement, contains an untrue statement of material fact or, to the
knowledge of Urologix, omits to state a material fact required to be stated
therein or necessary to make the statements made, in the context in which made,
not false or misleading in any material respect when made.
ARTICLE 6
COVENANTS
---------
6.1 Cooperation. Each of EDAP, French Subsidiary and U.S. Subsidiary and
-----------
Urologix shall use its reasonable best efforts to obtain the consent or approval
of third Persons to the transactions contemplated hereby with respect to the
Commitments identified on paragraph (b) of Schedule 4.6 and included in the
Assets, and the Permits, if any, identified on paragraph (b) of Schedule 4.8 as
requiring such consent or approval. In no event shall Urologix be
26
responsible for or pay any fees, expenses or other costs or payments required to
obtain such consents and all such amounts shall be paid by EDAP. EDAP and
Urologix agree that, in the event any consent or approval of any such third
Person necessary or desirable to preserve for the Business any right or benefit
under any such Commitment or Permit is not obtained prior to the Closing, EDAP
will, subsequent to the Closing, cooperate with Urologix in attempting to obtain
such consent or approval as promptly thereafter as practicable. If such consent
or approval cannot be obtained, EDAP shall use its reasonable best efforts, and
cause the other Sellers to use their reasonable best efforts, to provide
Urologix with the rights and benefits of the affected Commitment or Permit for
the term of such Commitment or Permit. After the Closing, EDAP shall cooperate
with Urologix in the preparation of any financial statements required to be
filed by Urologix with respect to the Business pursuant to U.S. federal
securities laws. After the Closing, Urologix will supply such information as may
reasonably be required for EDAP to meet its reporting obligations under that
certain agreement referenced as item 15 of Schedule 1.1(b)(vii). Any such
information provided shall be subject to the confidentiality provisions of
Section 7.5.
6.2 Post-Closing Warranty Work. Urologix agrees to perform on-site repairs
--------------------------
to the extent feasible with respect to contractually required warranty repair
and warranty service under Manufacturer Warranties given directly by EDAP to its
customers with respect to the products listed on Schedule 6.2 during the
warranty period provided on such Schedule with respect to such products. Such
service will be performed under substantially the same terms as provided under
the terms of the Supply Agreement. The applicable warranty related to such
products is also attached to Schedule 6.2. Sellers agree that the cost of such
warranty repair and service and Urologix's out-of-pocket expenses shall be
reimbursed by Sellers within thirty (30) days of presentment by Urologix of
evidence of performance of such warranty work and the cost incurred by Urologix.
This Section 6.2 and the exception set forth in Section 1.2(b)(xv) are not
intended for the benefit of any third party or otherwise to create any rights in
favor of a third party beneficiary. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, AND NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THIS SECTION 6.2
AND THE EXCEPTION SET FORTH IN SECTION 1.2(b)(xv) ARE NOT INTENDED TO BE AN
ASSUMPTION BY UROLOGIX OF ANY MANUFACTURER WARRANTY OBLIGATIONS OF SELLERS OR TO
SUBJECT UROLOGIX TO ANY DAMAGES INCLUDING DIRECT, SPECIAL, INDIRECT, INCIDENTAL
OR CONSEQUENTIAL DAMAGES RESULTING FROM PRODUCTS MANUFACTURED AND/OR SOLD BY ANY
SELLER PRIOR TO THE CLOSING DATE; PROVIDED THE COSTS REQUIRED IN THIS SECTION
6.2 TO BE REIMBURSED BY SELLERS SHALL NOT APPLY TO ANY OBLIGATIONS IDENTIFIED ON
AND NOT TO EXCEED THE AMOUNTS LISTED ON SCHEDULE 1.2(b)(iii) OR TO EQUIPMENT
MAINTENANCE OBLIGATIONS INCURRED UNDER ASSUMED CONTRACTS, SUBJECT TO THE
LIMITATIONS WITH RESPECT THERETO IN SECTION 1.2(a)(ii) or (iii).
6.3 Access. In order to facilitate the resolution of any claims made by or
------
against or incurred by Urologix with respect to third parties after the Closing,
upon reasonable notice, EDAP in respect of the Business shall, after the
Closing: (i) afford the officers, employees and
27
authorized agents and representatives of Urologix reasonable access, during
regular business hours, to the offices, properties, books and records of the
Sellers with respect to the Business, (ii) furnish to the officers, employees
and authorized agents and representatives of Urologix such additional financial
and other information regarding the Business for the period prior to the Closing
as Urologix may from time to time reasonably request and (iii) make available to
Urologix, the employees of the Sellers whose assistance, testimony or presence
is necessary to assist Urologix in evaluating any such claims and in defending
such claims, including the presence of such persons as witnesses in hearings or
trials for such purposes; provided, however, that such investigation shall not
-------- -------
unreasonably interfere with the business or operations of EDAP; provided
--------
further, however, that EDAP shall not be obligated to disclose any information
- ------- -------
which it holds under a legally binding obligation of confidentiality or which is
protected by any privilege; and provided further, however, that Urologix shall
-------- ------- -------
bear all costs related to those claims except to the extent such claims are
subject to indemnification by Sellers under Article 8. The parties agree to
enter into a reasonably acceptable confidentiality agreement at such time of
required disclosure.
6.4 Other Financial Statements. EDAP shall, within 10 days after the
--------------------------
Closing, deliver to Urologix complete audited statements of revenues and direct
expenses for the Business for the years ended December 31, 1998 and 1999 and
related notes, as well as audited statements of net assets of the Business as of
December 31, 1999 and related notes. EDAP shall, within 10 days after the
Closing, provide or will cause its independent auditors to provide all required
unqualified auditors opinions and consents for all SEC filings required to be
made by Urologix as a result of this transaction. EDAP shall, within 10 days
after the Closing, deliver to Urologix unaudited financial statements for the
Business, including statements of revenues and direct expenses and statements of
net assets and related notes to the financial statements for the twelve months
ended June 30, 2000. The audited financial statements for the years ended
December 31, 1998 and 1999, and the unaudited financial statements for the
twelve months ended June 30, 2000 are collectively referred to as the "Financial
Statements." The Financial Statements shall be prepared from the books and
records of EDAP in accordance with United States generally accepted accounting
principles ("U.S. GAAP") applied on a consistent basis, subject to normal year-
end adjustments, and fairly present, in all material respects, the financial
condition of the Business as at the date thereof and results of its operations
for the periods covered thereby.
6.5 Maintenance and Service Agreements. On or before the Closing Date,
----------------------------------
EDAP, French Subsidiary and U.S. Subsidiary shall have provided the required
notice to terminate all third party service and maintenance agreements,
including the Service Dealership Agreement dated August 12, 1999 between EDAP
and American MedTech Services, Inc.
6.6 Distribution Agreements. Within 70 days after the Closing Date, EDAP,
-----------------------
French Subsidiary and U.S. Subsidiary shall have terminated, without liability
to Urologix, all distributor agreements with respect to the Business except as
provided in Schedule 6.6. The agreements listed on Schedule 6.6 shall be
terminated as soon as allowed under such agreements, without liability to
Urologix.
28
6.7 Inventory. EDAP agrees to cause its Japanese or French Subsidiary to
---------
purchase [Confidential Treatment Requested] each FOB shipping point, but with
shipping charges to be split by EDAP and Urologix, within fifteen months of
Closing, [Confidential Treatment Requested], as provided in the International
Distribution Agreement. In the event such Japanese or French Subsidiary and U.S.
Subsidiary does not fulfill its obligations hereunder, EDAP shall purchase such
Boxes from Urologix on the same terms and at the times provided in the
International Distribution Agreement and EDAP or the EDAP Affiliates may sell
such Boxes in the countries of Latin America (other than Mexico), Africa (other
than Egypt), former USSR countries, Middle East (other than the United Arab
Emirates), and Asia, notwithstanding Section 7.2 hereof, provided EDAP has
attempted in good faith to sell such Boxes in Japan for a period of at least six
months after purchase and shall thereafter notify Urologix of the country in
which such sales efforts will be made prior to initiating such sales efforts in
such country.
6.8 Term Debt. EDAP and Urologix have agreed that EDAP will retain all
---------
term debt obligations. However, Urologix agrees to pay to EDAP US$575,000 on
December 30, 2003 pursuant to the terms of the Promissory Note.
6.9 Corrective Actions. EDAP shall at its sole cost and expense promptly
------------------
comply with all FDA directives arising out of the PMA Annual Report filed by
EDAP on August 8, 2000, or arising out of any action taken or omitted to be
taken by any Seller prior to Closing related to product modifications.
6.10 Marketing Support. Sellers have the marketing support commitments
-----------------
described on Schedule 6.10 in the amounts set forth on such Schedule. Urologix
agrees to perform such commitments for the account of Sellers. Sellers agree to
reimburse Urologix within thirty (30) days of presentment by Urologix of
evidence of satisfaction, in whole or in part, of a commitment set forth on
Schedule 6.10 provided Seller shall not be obligated to reimburse Urologix for
amounts in excess of those set forth on Schedule 6.10 unless a Seller is
contractually committed to expend more than the amounts referenced in the
Schedule.
6.11 Covenant Not to Sue. Sellers covenant not to bring any claim or
-------------------
action under any patent, trade secret or other intellectual property right of
Sellers, whether owned or licensed, against Urologix, any Urologix Affiliate or
any distributor, agent or customer of Urologix with respect to the development,
marketing, production, sale or distribution of the Products or any Competitive
Products.
6.12 RF Testing. Sellers and Urologix agree that various equipment used
----------
for the purpose of RF testing, including, without limitation, antennae, carrying
cases, cords, cables and other required sundry supplies, will be part of the
Assets which will be transferred to Urologix. Sellers, jointly and severally,
covenant and agree to perform all RF tests at each of the locations listed on
Schedule 4.8(b) within sixty (60) days of the Closing at Sellers' sole cost and
expense. Sellers shall be entitled to utilize the equipment solely for purposes
of fulfilling its obligations to complete the RF testing.
29
6.13 Collection of Receivables. For a period of three months following the
-------------------------
Closing Date, Urologix shall cooperate with Sellers in collecting the accounts
receivable listed on Schedule 1.1(b)(xiii), but Urologix shall have no
obligation to initiate legal proceedings for such purpose and shall have no
liability to Sellers by reason of Sellers' failure or inability to collect any
such accounts receivable. During such period, except as provided in Schedule
4.16, Urologix agrees not to provide such third party with Kits unless and until
such receivables have been paid in full.
ARTICLE 7
ADDITIONAL COVENANTS
--------------------
7.1 Sales and Other Tax. Sellers, jointly and severally, will pay, and
-------------------
shall indemnify and hold Urologix harmless against transfer, documentary,
recording, notarial, sales, use, registration, stamp and other similar taxes,
fees and expenses and including any penalties, interest and additions to such
tax ("Transfer Taxes") imposed by any jurisdiction other than the United States
or any state thereof with respect to the Assets. At the Closing, EDAP shall pay
Urologix US$40,000 as an estimate of such Transfer Taxes by reduction in the
Cash Consideration. Within ten days after the Closing, EDAP and Urologix shall
agree on French Contracts based on appraisals received by EDAP and its experts
and acceptable to Urologix and its experts. EDAP shall provide the French
Contracts and all required attachments translated into English and summary of
Asset Purchase Agreement to be provided to the tax authority translated into
English. In the event the amount to be paid pursuant to the French Contracts is
in excess of US$40,000, EDAP shall promptly pay such excess in time for the
filing of such French Contracts. In the event the amount to be paid is less than
US$40,00, Urologix shall promptly reimburse EDAP the amount by which the
required amount is less than US$40,000. In no event shall the execution by
Urologix of the French Contracts or any other agreement with respect to any
other allocation or the payment by EDAP of an estimate of such Transfer Taxes
constitute a waiver of any right to indemnification from Sellers for Transfer
Taxes or prohibit Urologix from making any allocations required under U.S. law
or SEC requirements. In the event the amounts paid with the French Contracts are
challenged, Sellers will indemnify Urologix from and against all costs,
expenses, penalties, interest and other fees incurred by Urologix in connection
therewith. Urologix shall pay, and shall indemnify and hold EDAP harmless
against, all Transfer Taxes imposed by United States or any state thereof with
respect to the Assets transferred by the U.S. Subsidiary.
30
7.2 Non-Competition.
---------------
7.2.1 During the period from the date of this Agreement to and
including the fifth anniversary of the date hereof (or, if not enforceable for
such period in any country or jurisdiction, for such shorter period as shall be
enforceable in such country or jurisdiction), neither EDAP, French Subsidiary
nor U.S. Subsidiary shall, nor shall any one of them permit any of its
Affiliates to, directly or indirectly, engage in the development, marketing,
production, sale or distribution anywhere in the world of Competitive Products
(as defined below), except as set forth in the Supply Agreement, the Transition
and Technology Transfer Agreement, the International Distribution Agreement and
any other agreement executed in connection with this Agreement and the overall
transaction.
7.2.2 During the period from the date of this Agreement to the later
of (i) the fifth anniversary of the date hereof; or (ii) the date of expiration
of the last patent included in the intellectual property identified below,
neither EDAP, French Subsidiary nor U.S. Subsidiary shall, nor shall any one of
them permit any of their Affiliates to, whether pursuant to an asset transfer,
stock transfer, merger, exchange, joint venture, by operation of law or
otherwise, assign or transfer, license, grant rights to, or otherwise allow any
Person to use, in any manner, other than for purposes of fulfilling the
obligations of Sellers under the Supply Agreement or Transition and Technology
Transfer Agreement, any intellectual property used or held for use in the
Business which is not included in the Assets, including any intellectual
property licensed to EDAP, French Subsidiary or U.S. Subsidiary or any Affiliate
of any one of them. EDAP, French Subsidiary and U.S. Subsidiary represent to
Urologix that no such assignment, transfer, license or right to use has been
granted to any Person on or prior to the date hereof. If requested in writing by
Urologix at any time after Sellers have fulfilled all of the obligations of
Sellers under the Supply Agreement and Transition and Technology Transfer
Agreement, Sellers will, without the payment of any further consideration by
Urologix, promptly assign and transfer in writing to Urologix all intellectual
property used or held for use in the Business which is not included in the
Assets, including any such intellectual property licensed to EDAP, French
Subsidiary, or U.S. Subsidiary, or any Affiliate of any one of them.
7.2.3 As used in Section 7.2.1 hereof, the phrase "directly or
indirectly, engage in" includes any direct or indirect ownership, profit
participation or other interest by EDAP, French Subsidiary, U.S. Subsidiary or
any Affiliate of any one of them, whether as owner, stockholder, partner, joint
venturer, beneficiary or otherwise, in any Person; provided, however, that the
-------- -------
foregoing provisions shall not prevent EDAP, French Subsidiary, U.S. Subsidiary
or any Affiliate of any one of them from investing in businesses that compete
with the Competitive Products where such investments are incidental investments
in public companies and constitute, in the aggregate, less than 5% of the
outstanding securities or voting interest of each of such companies or where
such investments are in Urologix or its successors or assigns of its entire
business.
31
7.2.4 As used in this Section 7.2, "Competitive Products" means any
microwave products, including, without limitation, the EDAP Prostatron and any
other microwave devices performing the same purpose or function as, or that are
competitive with, the EDAP Prostatron, and shall include any microwave product
intended for use in minimally invasive treatments for BPH or any other disorders
(including, without limitation, parts, components, modules, subsystems or
subassemblies thereof, or parts, components, modules, subsystems or
subassemblies of and for such products).
7.3 Non-Solicitation. For thirty-six months from the Closing Date, neither
----------------
EDAP nor its Affiliates, on the one hand, nor Urologix nor any of its
Affiliates, on the other hand, shall specifically solicit to hire any current
employees of the other party without the prior written consent of such other
party, provided that nothing herein shall restrict or preclude the rights of
either party to make generalized searches for employees by use of advertisements
in the media (including without limitation, trade media) or by engaging search
firms to engage in searches which are not targeted or focused on the employees
of the other party.
7.4 EDAP Name. Except for use in the sale of any inventory included in
---------
the Assets, Urologix will take all action necessary to cease the use of the name
"EDAP" (or any variant thereof) and related trademarks, corporate names, and
trade names incorporating the name "EDAP", and any "EDAP" logos and trade dress,
in each case in connection with the conduct of the Business.
7.5 Confidentiality. Except as otherwise provided in this Agreement,
---------------
after the Closing, the Sellers and their Affiliates shall not use or disclose to
third Persons any information disclosed to and transferred and assigned,
licensed or otherwise made available to Urologix or its Affiliates in connection
with the Business and transfer of Assets hereunder. Without limitation, this
obligation of confidentiality shall apply to information related to the
Products, business plans, strategies, technologies, and future business
relationships of the Business. This obligation of confidentiality shall not
apply to the extent any such information (a) is or becomes part of the public
domain through no fault of the Sellers (but only after and only to the extent
that it is published or otherwise becomes part of the public domain); (b) after
the Closing, comes into the possession of the Sellers from a third Person, other
than Urologix or its Affiliates, who was not, to the Sellers' knowledge, under a
continuing obligation of confidence to the disclosing party; or (c) is disclosed
by the Sellers pursuant to any judicial compulsion, provided that Urologix is
notified at the time such judicial action is initiated. Disclosures relating to
the Products, business plans, strategies and future business relationships of
Urologix or EDAP shall not be deemed to be in the public domain or in the
possession of the receiving party merely because they are embraced (but not
disclosed) by general disclosures in the public domain or in the possession of
the receiving party.
7.6 Bulk Sales Laws. EDAP shall comply with the provisions of the "bulk
---------------
sales" type laws applicable in France, if any, and otherwise each of the parties
waives compliance by the other parties with the provisions of the "bulk sales"
laws of any jurisdiction which may be applicable to the transactions
contemplated by this Agreement.
32
7.7 Board Representation. This Section 7.7 shall only apply as of the date
--------------------
the Closing occurs. At least 15 days prior to the meeting of the Board of
Directors of Urologix establishing the slate of directors for the next scheduled
Annual Meeting of Shareholders of Urologix, Urologix shall provide EDAP with a
notice of such meeting. Prior to the date of such meeting of directors, EDAP
shall give the Urologix Board of Directors, in writing, the names of two
director candidates selected from EDAP's executive management team or directors.
Urologix will nominate and solicit proxies of the election of one such candidate
submitted by EDAP as a member of the Board of Directors of Urologix at that
Annual Meeting of Shareholders and at future Annual Meetings of Shareholders at
which successors to the directors in that same class of directors are elected;
provided, however, that at such time as the number of shares of Urologix Common
- -------- -------
Stock outstanding owned by EDAP is reduced to less than eight percent (8%) of
the total number of then outstanding shares of Urologix, Urologix shall no
longer be obligated to nominate and solicit proxies for election of such
designee of EDAP as a director of Urologix and such nominee shall, if requested
by the Board of Directors of Urologix, resign from the Urologix Board of
Directors.
7.8 Transferred Employees. Promptly after Closing, Urologix shall provide
---------------------
EDAP with a list of those employees of U.S. Subsidiary to which Urologix desires
to make offers of employment. To the extent any offer is made and accepted,
such individual shall be referred to herein as a "Transferred Employee." In no
event shall Urologix employ any Employee of EDAP or the French Subsidiary.
7.9 Insurance. Sellers shall deliver at Closing a Certificate of
---------
Insurance naming Urologix as an additional insured under U.S. Subsidiary's
products liability insurance policy. Sellers shall comply with the insurance
requirements of Section 10.4 of the Supply Agreement.
ARTICLE 8
INDEMNIFICATION AND RELATED MATTERS
-----------------------------------
8.1 Survival. Subject to the limitations and other provisions of this
--------
Agreement, the representations and warranties of EDAP, French Subsidiary and
U.S. Subsidiary and Urologix contained herein shall survive the Closing and
shall remain in full force and effect, regardless of any investigation made by
or on behalf of Urologix, EDAP or French Subsidiary and U.S. Subsidiary, as the
case may be, for a period of twenty-one (21) months after the Closing Date;
provided, however, that (A) the representations and warranties in Sections 4.1,
- -------- -------
4.4, 4.5, 4.10 and 4.23 shall survive indefinitely after the Closing Date and
(B) the agreements of indemnification in Sections 8.2 and 8.3 shall remain
effective in respect of claims made in writing as provided in Section 9.12 with
respect to such representations and warranties prior to the expiration of the
relevant survival period until such claims are finally determined and satisfied
in full. All other covenants, agreements and indemnification obligations shall
survive indefinitely unless a different period is specified herein.
33
8.2 Indemnification by Sellers. Subject to the terms and conditions of
--------------------------
this Article 8, Sellers, jointly and severally, agree to indemnify and hold
Urologix and its Affiliates, including, in each case, any of its or their
respective directors, officers, employees and representatives, harmless from and
against:
8.2.1 Any and all Losses resulting from any breach of any of the
representations and warranties, covenants or other agreements of EDAP or French
Subsidiary and U.S. Subsidiary contained in this Agreement; and
8.2.2 Losses arising out of, related to or resulting from Excluded
Liabilities.
8.3 Indemnification by Urologix. Subject to the terms and conditions of
---------------------------
this Article 8, Urologix agrees to indemnify and hold EDAP and its Affiliates,
including, in each case, any of its or their respective directors, officers,
employees and representatives, harmless from and against:
8.3.1 Any and all Losses resulting from any breach of any
representations and warranties, covenants or agreements of Urologix contained in
this Agreement; and
8.3.2 Losses arising out of, related to or resulting from Assumed
Liabilities.
8.4 Limitations. Notwithstanding the provisions of Section 8.2, Losses
-----------
for which Urologix or its Affiliates are entitled to indemnification as a result
of a breach by Sellers of any representation or warranty of Sellers in Article 4
of this Agreement shall not include the first US$50,000 of Losses (the
"Basket"); provided the Basket shall not apply to matters which may be covered
by the representations and warranties but which are also Excluded Liabilities.
8.5 Notice of Indemnification. In the event any legal proceeding shall be
-------------------------
threatened or instituted or any claim or demand shall be asserted by any person
in respect of which payment may be sought by one party hereto from the other
party under the provisions of this Agreement, the party seeking indemnification
(the "Indemnitee") shall promptly cause written notice of the assertion of any
such claim of which it has knowledge which is covered by this indemnity to be
forwarded to the other party (the "Indemnitor"). Any notice of a claim by reason
of any of the representations, warranties, covenants or agreements contained in
this Agreement shall state specifically the representation, warranty, covenant
or agreement with respect to which the claim is made, the facts giving rise to
an alleged basis for the claim, and the amount of the liability asserted against
the Indemnitor by reason of the claim.
8.6 Indemnification Procedure for Third-Party Claims. In the event that
------------------------------------------------
an Indemnitee receives written notice of the commencement of any action or
proceeding, the assertion of any claim by a third party or the imposition of any
penalty or assessment for which indemnity may be sought pursuant to this Article
8 (a "Third Party Claim"), and such Indemnitee intends to seek indemnity
pursuant to this Article 8, the Indemnitee shall promptly provide the Indemnitor
with notice of such action, proceeding, claim, penalty or assessment. The
Indemnitor
34
shall have the right, by giving notice to the Indemnitee within twenty (20) days
after receipt of notice from the Indemnitee of a Third Party Claim, stating that
the Indemnitor is responsible for such claim to the extent required under this
Article 8, at its expense, to defend against, negotiate, settle or otherwise
deal with any claim with respect to which it is the Indemnitor and to have the
Indemnitee represented by counsel reasonably satisfactory to the Indemnitee,
selected by the Indemnitor, provided that the Indemnitee may participate in any
--------
proceeding with counsel of its choice and at its expense; provided further that
----------------
the Indemnitee, at any time when it believes in good faith that (i) any third
party claim with respect to which Indemnitor is defending is having a Material
Adverse Effect; (ii) the Indemnitor does not have the financial resources to
defend against the claim and fulfill its indemnification obligations hereunder;
(iii) the settlement of, or adverse judgment with respect to, the third party
claim is likely to establish a precedential custom or practice materially
adverse to the business of the Indemnitee or, with respect to Urologix as
Indemnitee, will adversely affect the Indemnitee's relationship with its
customers; (iv) the Indemnitor is not conducting the defense of the third party
claim actively and diligently; or (v) the third party claim seeks an injunction
or other equitable relief, may assume the defense and settlement of such third
party claim in good faith, with counsel of its choice, and be fully indemnified
therefor; and provided further, that the Indemnitor may not enter into a
----------------
settlement of any third party claim without the consent of the Indemnitee unless
such settlement requires no more than a monetary payment for which the
Indemnitee has been fully paid. In the event the Indemnitee is controlling the
defense, the Indemnitor may participate in such defense and settlement through
counsel chosen by it or consent to any settlement of the third party claim,
which consent shall not be unreasonably withheld. The parties will cooperate
fully with each other in connection with the defense, negotiation or settlement
of any third party claim.
ARTICLE 9
MISCELLANEOUS
-------------
9.1 Entire Agreement. This Agreement (including the exhibits hereto, the
----------------
Schedules and the documents referred to herein and the other documents executed
by the parties on the date hereof) and the Letter Agreement dated July 21, 1999
contain the entire understanding of the parties hereto in respect of the subject
matter contained herein and supersede all prior agreements and understandings
between the parties with respect to such subject matter. There are no
restrictions, promises, representations, warranties, covenants, or undertakings,
other than those expressly set forth or referred to herein or therein.
9.2 Amendment; Waiver. No waiver and no modification or amendment of any
-----------------
provision of this Agreement shall be effective unless specifically made in
writing and duly signed by the parties to be bound thereby. Waiver by a party of
any breach of or failure to comply with any of the provisions of this Agreement
by any other party shall not be construed as, or constitute, a continuing waiver
of, or a waiver of any other breach of, or failure to comply with, any other
provision of this Agreement.
9.3 Assignment. This Agreement and all of the provisions hereof shall be
----------
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted
35
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties; provided, however, that Urologix may
--------
assign this Agreement and its rights, interests and obligations in whole or in
part hereunder to one or more directly or indirectly wholly owned subsidiaries
of Urologix without the consent of EDAP or French Subsidiary and U.S.
Subsidiary; provided, however, that such assignment shall not relieve Urologix
-------- -------
of any of its obligations hereunder.
9.4 Headings; Usage. The paragraph headings contained herein and the
---------------
headings and subheadings used herein or on any of the Schedules to this
Agreement are for the purposes of convenience only and are not intended to
define, limit or expand the contents of said paragraphs or said headings or
subheadings. The meanings of any terms defined herein are equally applicable to
both the singular and plural forms of the terms defined.
9.5 Cooperation. Each party hereto shall cooperate, shall take further
-----------
action and shall execute and deliver such further documents as may be reasonably
requested by the other party in order to carry out the provisions and purposes
of this Agreement.
9.6 Expenses. Except as provided in Section 7.1, Urologix shall bear its
--------
and EDAP shall bear its and French Subsidiary and U.S. Subsidiary's costs and
expenses in connection with the negotiation, preparation, performance and
consummation of the transactions contemplated by this Agreement, including all
taxes of any type, the fees and disbursements of all attorneys, accountants,
appraisers, investment bankers and advisors retained by or representing them in
connection with the preparation and performance of this Agreement.
9.7 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York applicable to contracts made
and to be performed therein without regard to the principles of any jurisdiction
with respect to conflicts of laws.
9.8 Disputes.
--------
(a) Any dispute between Urologix and EDAP arising out of or in connection
with this Agreement (or any agreements or documents delivered by the parties
hereto pursuant to the terms of this Agreement) or any alleged breach hereof
may, at the option of either Urologix or EDAP, be submitted for discussion and
possible resolution by senior officers of Urologix and EDAP, as designated by
their respective chief executive officers.
(b) All disputes arising, relating to or arising in connection with this
Agreement, including those pertaining to the validity, interpretation,
construction or breach hereof or of any legal obligation owed or claimed to be
owed by any party hereto to any other party hereto or its Affiliates, that is
not otherwise amicably settled between the parties shall exclusively be resolved
by arbitration between EDAP and Urologix pursuant to the Commercial Arbitration
Rules of the
36
American Arbitration Association (the "Rules"), with the arbitration to be
conducted in the English language and taking place in New York, New York.
(c) The arbitral tribunal shall be composed of three arbitrators appointed
in accordance with the Rules. The Chairman of the arbitral tribunal shall be
nominated by the two arbitrators nominated respectively by EDAP and Urologix,
and if they fail to agree upon such Chairman within 30 days after the second
arbitrator has been appointed, such Chairman shall be appointed by the American
Arbitration Association. No arbitrator shall be or have been a present or past
employee, officer, director, legal counsel, consultant or agent of either party
or its Affiliates. All arbitrators shall be of legal education, unless the
parties agree otherwise at the time. Unless prohibited or restricted by
applicable law, each party agrees to provide to the arbitrators and the other
party, subject to a strict confidentiality agreement, such documents, other
evidence, witness testimony as may reasonably be requested by the other party
and as are relevant to the issues being arbitrated. The arbitrators may restrict
or terminate discovery requests which they conclude are unreasonable, unduly
burdensome or not relevant to the issues being arbitrated. Such discovery shall
occur during a reasonable time period. The arbitrators shall not have the power
to act as "amiable compositeurs" with respect to any dispute submitted to such
arbitration, but rather shall make their decision based on their understanding
and interpretation of the applicable law and facts. The fees and disbursements
of the arbitrators shall be allocated between the disputing party and the other
party to the dispute in the same proportion that the disputed items so submitted
to the arbitrators that are unsuccessfully disputed by each (as finally
determined by the arbitrators) bears to the total amount of all disputed items
so submitted. Notwithstanding any provision of this Agreement to the contrary,
(i) any party shall be entitled to seek a judicial order for interim relief to
the extent necessary to safeguard the property that is the subject matter of an
arbitration proceeding hereunder, and (ii) judgment upon the award rendered in
any arbitration proceeding hereunder may be entered in any court having
jurisdiction or application may be made to such court in a judicial acceptance
of the award and an order by enforcement, as the case may be. The parties hereto
agree that the arbitrators appointed pursuant to this Section 9.8 shall have the
power to grant equitable relief, including temporary and permanent injunctive
relief and specific performance.
(d) Notwithstanding any other provision in this Section 9.8 to the
contrary, either party may bring court proceedings or claims against the other
as part of separate litigation commenced by an unrelated third party.
(e) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdiction of any New
York State court or Federal court of the United States of America sitting in New
York City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby or for recognition or enforcement of any judgment relating thereto, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such New York State court or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may
37
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
9.9 Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under the
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
9.10 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which taken together will constitute one and the same
instrument.
9.11 Interpretation. This Agreement has been fully negotiated by the
--------------
parties through their legal counsel. Accordingly, in interpreting this
Agreement, the rule of the interpretation requiring that documents be construed
against the draftsman shall be inapplicable.
9.12 Notices. All notices, requests and other communications to any party
-------
hereunder shall be in writing, will be effective upon receipt, and shall be
given or made (and shall be deemed to have been duly given or made upon receipt)
by delivery in person, by courier service, by cable, by facsimile transmission,
by telegram or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 9.12):
if to EDAP or French Subsidiary and U.S. Subsidiary, to:
EDAP TMS S.A.
4-6 rue du Dauphine
69120 Vaulx-en-Velin
France
Attention: Chief Executive Officer
with a copy to: Cleary, Gottlieb, Steen & Hamilton
City Place House
55 Basinghall Street
London EC2V 5EH, England
Attention: Pierre-Marie Boury
if to Urologix to: Urologix, Inc.
14405 21/st/ Avenue North
Minneapolis, MN 55447
Attention: Chief Executive Officer
38
with a copy to: Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South 8TH Street
Minneapolis, MN 55402
Attention: Ronald G. Vantine
9.13 No Third Party Beneficiary. The provisions of this Agreement are for
--------------------------
the sole benefit of the parties to this Agreement and are not for the benefit of
any third party.
9.14 English Language. This Agreement shall be executed solely in English
----------------
language which shall be controlling in all respects whether or not translations
are made of this Agreement into any other language.
ARTICLE 10
DEFINITIONS
-----------
10.1 Definitions. For purposes of this Agreement, the following terms have
-----------
the meaning set forth below:
"Affiliate" means as to any Person controlling, controlled by, or under
common control with, such Person, any officer, director or executive employee of
such Person, and any Employee Benefit Plan maintained by such Person (including,
without limitation, related trusts and the fiduciaries thereof).
"Affiliated Group" means an affiliated group as defined in Section 1504 of
the Code (or any analogous combined, consolidated or unitary group defined under
state, local or foreign income tax law) of which EDAP is or has been a member.
"Assets" shall have the meaning given to it in Section 1.1(a).
"Assumption Agreement" means the Assumption Agreement to be executed by
Urologix and the Sellers on the Closing Date substantially in the form of
Exhibit 3.2.7.
"Assumed Liabilities" shall have the meaning given to it in Section 1.2(a).
"Bill of Sale" means the Bill of Sale and Assignment to be executed by the
Sellers on the Closing Date substantially in the form of Exhibit 3.2.5.
"Box" means all models of the Prostatron control module, which consists of
a microwave generator, a cooling system, a fiberoptic temperature measurement
system and a computer, including but not limited to the Prostatron Maxis and
Classics and the Prostatron Praktis, and including all current versions of
operating software and those under development.
39
"Business" means the research, development, manufacturing, marketing,
assembly, sales, maintenance and service of microwave products for the minimally
invasive treatment of benign prostatic hyperplasia (BPH) or other urological
disorders including, without limitation, microwave thermotherapy products.
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which banks are required or permitted to be closed in the State of Minnesota.
"Cash Consideration" shall have the meaning given to it in Section 2.1.
"Closing" shall have the meaning given to it in Section 3.1.
"Closing Date" shall have the meaning given to it in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitments" shall have the meaning given to it in Section 4.6.
"Competitive Products" shall have the meaning given to it in Section 7.2.3.
"Dollars" and the symbol "US$" means lawful currency of the United States
of America.
"EDAP Affiliate" means any Affiliate of EDAP, including any French
Subsidiary and U.S. Subsidiary.
"Employee" shall mean a current employee, including both active employees
(including light duty employees), inactive employees (including employees on a
leave of absence, sick leave, short term disability or worker's compensation
disability on the Closing Date), and former employees (including retirees and
employees on long term disability), of EDAP or French Subsidiary and U.S.
Subsidiary or any active employee of any EDAP Affiliate who is 100% engaged in
the Business.
"Employee Benefit Plan" shall mean any agreement, plan, program, fund,
policy, contract or arrangement (either written or unwritten) providing
compensation, benefits, pension, retirement, profit sharing, stock bonus, stock
option, stock purchase, phantom or stock equivalent, bonus, incentive, deferred
compensation, hospitalization, medical, dental, vision, vacation, insurance,
sick pay, disability, severance, or similar employee benefits covering any
Employee, and the beneficiaries and dependents of the Employee, including
without limitation, (i) any Employee Welfare Benefit Plan (the "Welfare Plan"),
whether or not terminated, including but not limited to any severance agreement
or plan, any material fringe benefit plan or program, any medical plan, life
insurance plan, short-term or long-term disability plan, dental plan, personnel
policy, vacation time, holiday pay, bonus program, service award, moving expense
reimbursement program or sick leave; (ii) any deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan,
whether or not terminated, including but not limited to any excess benefit plan,
top hat plan, or deferred compensation plan, any
40
Multiemployer Plan, defined contribution or defined benefit arrangements which
are Employee Pension Benefit Plans (the "Pension Plans"); (iii) any other plan,
program, policy, contract or arrangement, including but not limited to any bonus
or incentive plan, stock options, restricted stock, stock bonus, deferred bonus
plan, salary reduction agreement, change-of-control agreement, retention
agreement, employment agreement, or consulting agreement with former Employees.
"Environmental Condition" shall mean all environmental conditions existing
on or prior to the date hereof and arising or resulting from (i) the
noncompliance by EDAP or French Subsidiary and U.S. Subsidiary with any
applicable Environmental Law; or (ii) the release of a Regulated Substance into
the environment at or from the Property.
"Environmental Laws" shall mean any and all applicable national, federal,
state, foreign and local treaties, laws, regulations, ordinances, codes,
standards or criteria, orders or decrees of any court, agency, entity,
organization or authority, or of any jurisdiction where EDAP, French Subsidiary
and U.S. Subsidiary or any EDAP Affiliate conducting any part of the Business is
located or conducts business pertaining to the public health and safety,
workers, health and safety and the pollution of or protection of the
environment, including but not limited to those related to air, water, noise,
odor, land, soil, pesticide, hazardous or toxic substances and wastes, in effect
at the Closing Date.
"Environmental Liabilities" shall have the meaning given to it in Section
1.2(b).
"Escrow Agent" shall have the meaning given to it in Section 2.2.
"Escrow Agreement" shall have the meaning given to it in Section 2.2.
"EU" means the European Union.
"Excluded Assets" shall have the meaning given to it in Section 1.1(b).
"Excluded Liabilities" shall have the meaning given to it in Section
1.2(b).
"Financial Statements" shall have the meaning given to it in Section 4.2.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Kit" means all models of the Prostatron microwave delivery system, which
consists of a disposable urethral catheter and a rectal probe, including current
versions and those under development.
"Knowledge" means the knowledge, after due inquiry, of any officer,
director or division manager of such Person.
41
"Latest Balance Sheet" shall have the meaning given to it in Section 4.2.
"Liabilities" means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent or matured or unmatured.
"Lien" means any mortgage, claim, lien, pledge, charge, security interest,
option, preemptive right, assessment, security interest, restriction on transfer
or encumbrance of any kind.
"Litigation" means any claim, action, suit or proceeding in any court or
before any arbitrator or governmental body, agency or official.
"Losses" means any and all Liabilities, obligations, duties, demands,
claims, actions, causes of action, assessments, losses, costs, damages,
deficiencies, taxes, fines or expenses, including, without limitation, interest,
penalties, reasonable attorneys' fees and all amounts paid in investigation,
defense or settlement of any of the foregoing.
"Material Adverse Effect" means any change in, or effect on, the Business
as currently conducted that is, or is reasonably likely to be, materially
adverse to the operations, results of operations, assets or financial condition
of the Business, taken as a whole.
"Permits" shall have the meaning given to it in Section 4.8.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated association, corporation or other such entity or
government (whether domestic, foreign, federal, state, county, city or
otherwise, including, without limitation, any instrumentality, division, agency
or department thereof).
"Products" shall have the meaning given to it in Section 4.10.1.
"Property" shall mean all real estate and property now or formerly owned or
leased by EDAP, French Subsidiary and U.S. Subsidiary or any EDAP Affiliate
conducting any part of the Business. For purposes of this definition only,
"Property" includes groundwater underlying the surface.
"Regulated Substances" shall mean toxic, radioactive or hazardous
substances or wastes, pollutants or contaminants, including but not limited to:
asbestos; urea formaldehyde; the group of organic compounds known as
polychlorinated biphenyls; petroleum products including gasoline, fuel oil,
crude oil and the various constituents of such products; and any substance or
material the generation, storage, handling, release, disposal or cleanup of
which is regulated by any Environmental Law.
"Rules" shall have the meaning given to it in Section 9.8.
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"Sellers" has the meaning given to it in the first WHEREAS clause.
"Subsidiary" means any corporation of which the securities having a
majority of the ordinary voting power in electing the board of directors are, at
the time as of which any determination is being made, owned by EDAP either
directly or through one or more Subsidiaries.
"Tax" or "Taxes" means with respect to any person any federal, state,
county, local or foreign income, gross receipts, profits, capital, franchise,
estimated, alternative minimum, add-on minimum, estimated, sales, use,
occupancy, transfer, registration, value added, ad valorem, excise, natural
resources, severance, stamp, occupation, premium, windfall profit, environmental
(including taxes under Section 59A of the Code), customs, duties, levies, real
property, personal property, capital stock, mercantile, social security (or
similar), unemployment, disability, payroll, license, employment, employee or
other withholding, or other tax, governmental fee or like assessment or charge
of any kind whatsoever, including any interest, penalties or additions to tax or
additional amounts in respect of the foregoing, whether disputed or not and
whether computed on a separate, consolidated, unitary, combined or any other
basis; the foregoing shall include any transferee or secondary liability for a
Tax and any liability assumed by agreement or arising as a result of being (or
ceasing to be) a member of any Affiliated Group (or being included (or required
to be included) in any Tax Return relating thereto) or as a result of any spin-
off, distribution or other reorganization related to the disposition of any
assets or business of EDAP or any other member of the EDAP Consolidated Group.
"Tax Returns" means returns, amendments, statements, forms, information,
elections, declarations, reports, claims for refund, information returns or
other documents (including any related or supporting schedules, statements or
information) filed or required to be filed in connection with the determination,
assessment or collection of any Taxes of any party or the administration of any
laws, regulations or administrative requirements relating to any Taxes.
"Transferred Employee" has the meaning given to it in Section 7.8.
"U.S. GAAP" shall have the meaning given to it in Section 4.2.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
UROLOGIX, INC.
By:_________
Its:_____
EDAP TMS S.A.
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By:________
Its:____
TECHNOMED MEDICAL SYSTEMS S.A.
By:________
Its:____
EDAP TECHNOMED INC.
By:_______
Its:___
44