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EXHIBIT 2.5.1
AMENDMENT AND SUPPLEMENT TO ASSETS
SALE AND PURCHASE AGREEMENT AND RELEASE
THIS AMENDMENT AND SUPPLEMENT AGREEMENT AND RELEASE (THE "AMENDMENT") is
entered into as of the 28th day of February 2001, by and between ESCALON MEDICAL
CORP., a Delaware corporation ("Escalon"), ESCALON VASCULAR ACCESS, INC.
("Buyer") and RADIANCE MEDICAL SYSTEMS, INC. (formerly CARDIOVASCULAR DYNAMICS,
INC.), a Delaware corporation ("Radiance").
BACKGROUND
WHEREAS, Escalon, Buyer and Radiance entered into an Assets Sale and
Purchase Agreement (the "Asset Agreement") dated January 21, 1999, and
WHEREAS, any capitalized term used herein and not defined shall have the
meaning ascribed to it in the Asset Agreement, and
WHEREAS, the parties wish to amend the Asset Agreement to provide an
adjustment in the terms of payment of the royalties pursuant to Section 2.3(c)
of the Asset Agreement,;
WITNESSETH
NOW, THEREFORE, in consideration of the respective covenants contained
herein and intending to be legally bound hereby, the parties hereto agree as
follows:
1. The last two sentences of Section 2.3(c) of the Asset Agreement shall
be amended to read as follows:
"With respect to Net Sales made during each 12-month period
during the Royalty Period commencing on January 21, 2001, (each such
period a "Royalty Year"), Buyer shall pay to Seller royalty payments
under this Section 2.3(c) only with respect to Net Sales in excess of
$3,000,000 in any Royalty Year."
2. Radiance, Escalon and Buyer agree that Buyer owes to Radiance an
additional $182,442 for royalties for the 12 months ended January 21, 2001, and
agree that as payment therefor, and as consideration for the amendment of
Section 2.3(c) of the Asset Agreement set forth above, Escalon and Buyer shall
make the issuances and payments and deliver promissory notes, and agrees to the
obligations, as set forth in Sections 3, 4, 5, 6 and 7 below.
3. Escalon shall within three (3) days of the date of this Amendment
issue to Radiance 50,000 shares of Escalon's common stock (to be valued at
$100,000). Radiance understands and acknowledges that (i) the shares of Escalon
Common Stock to be issued to the Radiance pursuant to this Amendment will be
issued under certain exemptions from the registration provisions of the
Securities Act of 1933 (the "Securities
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Act"), (ii) Radiance is acquiring the shares of Escalon Common Stock without
being furnished any offering literature or prospectus, (iii) the issuance of the
shares of Escalon Common Stock has not been examined by the Securities and
Exchange Commission (the "Commission") or by any agency charged with the
administration of the securities laws of any state or other jurisdiction and
(iv) it has had the opportunity to review certain materials, including financial
information, regarding Escalon and to ask questions of officers of Escalon
regarding Escalon. Radiance represents and warrants that it has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the shares of Escalon Common
Stock and of making an informed investment decision with respect thereto.
Radiance understand that Escalon is relying on the truth and accuracy of the
representations, declarations and warranties made in this Section 3 by Radiance
in issuing the shares of Escalon Common Stock without having first registered
the shares under the Securities Act or under the securities laws of any state or
other jurisdiction. Radiance also confirms that (i) it understands that there
are substantial restrictions on the transferability of the shares of Escalon
Common Stock it is to receive pursuant to this Amendment and, accordingly, it
may not be possible for it to liquidate its investment in the shares of Escalon
Common Stock in case of emergency and (ii) it is able to bear the economic risk
of its investment in the shares and to hold the shares for an indefinite period
of time. The shares of Escalon Common Stock are being acquired by the Radiance
in good faith solely for its own account, for investment purposes only, and are
not being acquired with a view to or for the resale, distribution, subdivision
or fractionalization thereof. Radiance does not have any contract, undertaking,
understanding, agreement or arrangement, formal or informal, with any person to
sell, transfer or pledge to any person the shares of Escalon Common Stock, or
any part thereof, and has no current plan to enter into any such contract,
undertaking, agreement or arrangement. Radiance understands that the legal
consequences of the foregoing representations and warranties are that it must
bear the economic risk of its investment in the shares of the Escalon Common
Stock for an indefinite period of time because the shares have not been
registered under the Securities Act.
4. Registration Rights.
(i) Registration Rights. Escalon shall use its best efforts to register
the shares of Escalon Common Stock issued to Radiance in this Amendment within
the seventy-five (75) days following the execution of this Amendment or as soon
as practicable thereafter on Form S-3 under the Securities Act, or any successor
to such form, (or if Escalon is not eligible to use Form S-3, then any other
appropriate form) in a manner that will, upon being declared effective,
constitute a "shelf" registration for purposes of Rule 415 under the Securities
Act, pursuant to which Radiance may sell the shares of Escalon Common Stock
received by it in this Amendment, from time to time and in such amounts as
Radiance may hereafter determine, all in a manner consistent with all applicable
provisions of the Securities Act and the Exchange Act.
(ii) Registration Procedure. With respect to registration under Section
4(i), Escalon shall prepare and file such amendments, post-effective amendments
and periodic reports under the Exchange Act as may be necessary to keep such
registration statement
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continuously effective until the second anniversary of this Amendment.
Notwithstanding the foregoing, Escalon shall not be required to update, pursuant
to this Section 4, any document during a period when Escalon shall, in good
faith and using reasonable business judgment, believe that the premature
disclosure of any event or information would have a material adverse effect on
Escalon or its prospects. Radiance hereby agrees, that upon receipt of notice
from Escalon of the happening of any occurrence described in the preceding
sentence, Radiance shall forthwith discontinue disposition of the shares of
Escalon Common Stock received by it in this Amendment pursuant to such
registration statement until Radiance receipt of the copies of the supplemented
or amended prospectus, and, if so directed by Escalon, Radiance shall deliver to
Escalon all copies in its possession, other than permanent file copies then in
Radiance's possession, of the prospectus covering such Escalon Common Stock
current at the time of receipt of such notice.
(iii) Expenses. The costs and expenses, other than selling discounts or
commissions, of registration pursuant to this Section 4 shall be paid by Escalon
(including, without limitation, all registration and filing fees, printing
expenses, and costs of special audits incident to or required by such
registration).
(iv) Indemnification. To the extent permitted by law, Escalon will
indemnify and hold harmless Radiance, any underwriter (as defined in the
Securities Act) for Radiance and each person, if any, who controls Radiance or
underwriter within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), against any losses, claims,
damages or liabilities (joint or several) to which they may become subject under
the Securities Act, the Exchange Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations: (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement on or after the effective date, or
final prospectus contained therein or any amendments or supplements thereto;
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading; or (iii) any violation or alleged violation by Escalon of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law; and the Company will pay to each the Holder, underwriter or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action.
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5. Upon execution of this Amendment Escalon or Buyer shall pay $17,558
to Radiance in immediately available funds.
6. Escalon and Buyer, jointly and severally, shall execute and deliver
to Radiance a term note, in the form attached hereto as Exhibit 1, (the "Short
Term Note") in the amount of $64,884, with interest at the Prime Rate as
published in the Wall Street Journal (New York edition) plus 1%, payable
interest only quarterly beginning on May 31, 2001 and the principal and interest
shall be due in full on January 15, 2002;
7. Escalon and Buyer, jointly and severally, shall execute and deliver
to Radiance an additional term note, in the form attached hereto as Exhibit 2,
(the "Long Term Note") in the amount of $717,558, with interest at the Prime
Rate as published in the Wall Street Journal (New York edition) plus 1%, payable
interest only quarterly beginning on May 31, 2001 through January 15, 2002 and
thereafter principal and interest payable in eleven (11) quarterly installments
beginning on April 15, 2002;
8. In the event of a Change of Control (as defined therein) of either
Escalon or Buyer then all obligations under the Short Term Note and the Long
Term Note (collectively, the "Notes") shall be immediately due and payable, with
a prepayment premium as set forth in the Notes.
9. Each of Buyer and Escalon, on behalf of itself and each of its
Affiliates, and the predecessors, successors and assigns of each acknowledges
full and complete satisfaction of, and hereby irrevocably, unconditionally,
forever and finally releases and fully discharges Radiance and its Affiliates,
and the shareholders, Affiliates, officers, directors, employees, agents,
attorneys, representatives, predecessors, successors and assigns of each (the
"Radiance Releasees") from, any and all claims, demands, actions, causes of
action, promises, covenants, contracts, agreements, bonds, obligations,
liabilities, losses, damages, costs, expenses and moneys otherwise accrued, due
or unpaid, of whatsoever character, nature or kind, whether in law or in equity,
in contract or in tort, under statute or at common law, whether now known or
unknown, suspected or unsuspected, fixed or contingent, against the Radiance
Releasees arising out of, in connection with, or in any way related to the Asset
Agreement.
10. Each of Buyer and Escalon, on behalf of itself and its Affiliates,
having been fully advised by its respective counsel, hereby expressly and
voluntarily waives all rights or benefits that it might otherwise have under the
provisions of Section 1542 of the Civil Code of the State of California, which
provides as follows, and under any and all federal, state, foreign and/or
common-law statutes or principles of similar effect:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY IT MUST HAVE MATERIALLY AFFECTED ITS
SETTLEMENT WITH DEBTOR.
11. Each of Buyer and Escalon, on behalf of itself and its Affiliates,
represents and acknowledges that (a) the terms of this Amendment have been
completely read and fully understood and accepted for the purpose of effecting a
full, complete and final compromise,
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adjustment, and settlement of the matters referred to herein; (b) it intends to
be fully bound hereby and may not hereafter raise any claim of mistake of fact,
misunderstanding, or inadequacy of consideration in connection herewith; and (c)
in executing this Agreement, it relies solely upon its own judgment, belief, and
knowledge, and the advice and recommendations of its own independently selected
counsel, concerning the nature, extent, and duration of its rights and claims,
and it has not been influenced to any extent whatsoever in executing the same by
any representation or statement made or omitted to be made by the other parties
hereto or by any person representing another party.
12. This Amendment shall be governed by the terms in the Asset
Agreement, provided however that in the event of any conflict or variance
between the terms of this Amendment and the Asset Agreement, this Amendment
shall control.
13. The parties acknowledge and agree that all of the terms, provisions,
covenants and conditions of the Asset Agreement shall hereafter continue in full
force and effect in accordance with the terms thereof, except to the extent
amended, modified, deleted or revised in this Amendment.
14. This Amendment may be executed in any number of counterparts by
facsimile or otherwise, each of which shall be deemed an original, but which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Amendment has been executed by the parties
hereto as of the day and year first written above.
RADIANCE MEDICAL SYSTEMS, INC.
By: /s/ STEPHEN R. KROLL
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Title: Vice President,
Finance/Administration
ESCALON MEDICAL CORP.
By: /s/ RICHARD J. DePIANO
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Richard J. DePiano, CEO
ESCALON VASCULAR ACCESS, INC.
By: /s/ RICHARD J. DePIANO
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Richard J. DePiano, CEO
[SIGNATURE PAGE TO THE AMENDMENT TO ASSETS SALE AND PURCHASE AGREEMENT
ESCALON MEDICAL CORP. AND RADIANCE MEDICAL SYSTEMS, INC.]