EXHIBIT 2.6
AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 8, 2002
BY AND AMONG
RADIANCE MEDICAL SYSTEMS, INC.,
RMS ACQUISITION CORP.
AND
ENDOLOGIX, INC.
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of February 8, 2002 (this
"Agreement") is made and entered into by and among Radiance Medical Systems,
Inc., a Delaware corporation ("Radiance"), RMS Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of Radiance ("Sub"), and Endologix,
Inc., a Delaware corporation ("Endologix")
WHEREAS, the Board of Directors of each of Radiance, Sub and Endologix
believes it to be desirable and in the best interests of Radiance, Sub and
Endologix and each of their respective stockholders to merge Endologix and Sub
(the "Merger"); and
WHEREAS, Radiance, Sub and Endologix desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section
1.2), upon the terms and subject to the conditions set forth in this Agreement,
Sub shall be merged with and into Endologix in accordance with the provisions of
the Delaware General Corporation Law (the "DGCL"). Endologix shall be the
surviving corporation in the Merger (the "Surviving Corporation"). Sub and
Endologix are sometimes referred to herein as the "Constituent Corporations". As
a result of the Merger, each outstanding share of capital stock of Endologix
shall be canceled and converted into the right to receive the Merger
Consideration, in the manner provided in Article 2 hereof.
1.2 Effective Time. At the Closing (as defined in Section 1.3), a
certificate of merger (the "Certificate of Merger") shall be executed by the
parties hereto and filed with the Secretary of State of the State of Delaware
(the "Secretary of State"). The Merger shall become effective at the time of
filing of the Certificate of Merger (the "Effective Time").
1.3 Closing. The closing of the Merger (the "Closing") shall take
place at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. on the date
all of the conditions set forth herein have been satisfied or waived in
accordance with this Agreement (the "Closing Date"). At the Closing, Radiance,
Sub and Endologix shall deliver the certificates and other documents and
instruments required to be delivered hereunder.
1.4 Certificate of Incorporation and Bylaws of the Surviving
Corporation. At the Effective Time: (i) the Certificate of Incorporation of Sub
as in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended; and (ii)
the Bylaws of Sub as in effect immediately prior to the Effective Time shall be
the Bylaws of the Surviving Corporation until thereafter amended.
1.5 Directors and Officers of the Surviving Corporation. The
directors and officers of Sub immediately prior to the Effective Time shall be
the directors and officers of the Surviving Corporation from and after the
Effective Time, until their successors shall have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and Bylaws.
1.6 Effects of the Merger. Subject to the foregoing, the effects
of the Merger shall be as provided in the applicable provisions of the DGCL.
1.7 Further Assurances. Each party hereto shall execute such
further documents and instruments and take such further actions as may
reasonably be requested by one or more of the others to consummate the Merger,
to vest the Surviving Corporation with full title to all assets, properties,
rights, approvals, immunities and franchises of either of the Constituent
Corporations or to effect the other purposes of this Agreement.
1.8 Tax Treatment. The parties intend that the Merger, together
with the sideways merger contemplated in Section 6.13, be treated as a
reorganization described in Section 368(a) of the Internal Revenue Code of 1986,
as amended (the "Code"). The parties shall not take a position on any tax
returns inconsistent with such treatment unless otherwise required by law.
Radiance shall treat the portion of the Milestone Payment paid in Radiance
Common Stock as property that is permitted to be received under Section 354 of
the Code without the recognition of gain unless otherwise required by law.
ARTICLE 2
EXCHANGE OF SHARES
2.1 Exchange of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of the holders of the capital stock of
Sub or Endologix:
(a) Cancellation of Treasury Stock and Stock Owned by
Radiance. All shares of capital stock owned by Endologix as treasury stock and
all shares of capital stock of Endologix owned by Radiance or Sub shall be
canceled and retired and shall cease to exist and no stock of Radiance or other
consideration shall be delivered in exchange therefor.
(b) Determination of Merger Consideration. Each issued and
outstanding share of Endologix common stock, $0.001 par value ("Endologix Common
Stock"), issued and outstanding immediately prior to the Effective Time, except
as otherwise provided in Section 2.1(a), shall be converted into the right to
receive the merger consideration (the "Merger Consideration") as follows:
(i) Cash Consideration. Subject to the allocation
and election request set forth in Section 2.1(c) and any allocation required
pursuant to Section 2.1(d), each share of Endologix Common Stock issued and
outstanding immediately prior to the Effective Time shall be entitled to receive
in cash an amount equal to seventy-five cents ($0.75) per share of Endologix
Common Stock issued and outstanding immediately prior to the Effective Time, not
to exceed Eight Million Three Hundred Sixty-Nine Thousand Two Hundred
Eighty-Nine Dollars ($8,369,289) in the aggregate.
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(ii) Radiance Common Stock Merger Consideration.
Subject to the allocation and election set forth in Section 2.1(c) and any
allocation required pursuant to Section 2.1(d), each share of Endologix Common
Stock issued and outstanding immediately prior to the Effective Time shall be
entitled to receive one share of Radiance common stock, par value $0.001 per
share ("Radiance Common Stock"), in exchange for each share of Endologix Common
Stock issued and outstanding as of the Effective Time, not to exceed Eleven
Million One Hundred Fifty-Nine Thousand and Fifty-Two (11,159,052) shares in the
aggregate.
(iii) Milestone Payment. Upon completion by
Radiance, Sub or their successors or assigns of the following milestone (the
"Milestone") related to the PowerLink System, Radiance shall pay within ten (10)
days of achieving such Milestone to each holder of Endologix Common Stock
immediately prior to the Effective Time, the following payment (the "Milestone
Payment"):
(A) Upon the approval of the Pre-Marketing
Approval Application ("PMA") in the United States on or before March 31, 2004,
an amount for each share of Endologix common stock equal to Five Million Five
Hundred Seventy-Nine Thousand Five Hundred Twenty-Six Dollars ($5,579,526)
divided by the number of shares of Endologix Common Stock outstanding as of the
Effective Time, or
(B) Upon the approval of the PMA in the
United States after March 31, 2004 and on or before June 30, 2004, an amount for
each share of Endologix common stock equal to Two Million Seven Hundred
Eighty-Nine Thousand Seven Hundred Sixty-Three Dollars ($2,789,763) divided by
the number of shares of Endologix Common Stock outstanding as of the Effective
Time.
(C) No Milestone Payment shall be made if
the PMA is not approved on or before June 30, 2004.
(iv) Form and Payment of Milestone Payment. The
Milestone Payment shall be payable at the sole discretion of Radiance in either
cash or Radiance Common Stock, valued at the average of the closing prices of
Radiance Common Stock as reported on Nasdaq for the ten (10) trading days ending
on the trading day preceding the day that the Milestone is achieved (the
"Average Milestone Price"); provided, however, in the event the limit on the
payment of cash consideration provided in Section 2.1(d) would limit the amount
of cash payable, then the amount of the Milestone Payment that would be limited
by the 50% limitation contained in Section 2.1(d) shall be paid in Radiance
Common Stock.
(v) Potential Escrow of Milestone Payment. In the
event Radiance has pending claims for Radiance Indemnifiable Damages (as that
term is defined in Section 9.2(a)) made during the Indemnification Period, then
all or a portion of the subsequent Milestone Payment shall be deposited in
escrow, pursuant to the terms of an Escrow Agreement to be reasonably agreed to
by the parties (the "Escrow Agreement"), by and among Radiance, ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, as representative of the Endologix Stockholders) (the "Holders'
Representative"), and Commonwealth Land Title Company, as escrow agent (the
"Escrow Agent"). The total amount of such Milestone Payment deposited shall not
exceed the amount of the then pending claims, with the Radiance Common Stock
valued at the applicable Average Milestone Price as specified in Section
2.1(b)(iv). Any excess of the Milestone Payment over the amount of the then
pending claims shall be paid to the persons entitled thereto pursuant to Section
2.1(b)(iii). Any shares of Radiance Common
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Stock included with the Milestone Payment that are deposited into escrow shall
be registered in the names of the holders, immediately prior to the Effective
Time, of Endologix Common Stock, but shall be held by the Escrow Agent, such
deposit to constitute an escrow fund to be governed by the terms set forth
herein and in the Escrow Agreement. The adoption and approval of the Merger by
the Endologix stockholders shall constitute approval of the Escrow Agreement and
of the appointment of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as the Holders' Representative.
(c) Optional Cash or Stock Election. Subject to the
allocation of cash pursuant to Section 2.1(d) and the election procedure set
forth in this Section 2.1(c), each record holder of shares of Endologix Common
Stock immediately prior to the Effective Time will be entitled to request to
receive all or a portion of the Merger Consideration to be paid at Closing, but
not the Milestone Payment, in either cash or stock (a "Payment Election"). All
such elections shall be received by Radiance prior to the Effective Time on a
form designed for that purpose and shall indicate the percentage of the Merger
Consideration such holder desires to receive in cash or stock. Holders who elect
to receive cash and stock in a percentage equal to the percentage of cash and
stock which Radiance has elected to pay pursuant to Section 2.1(b)(i) and (ii)
(the "Default Percentage") shall receive the first allocation of the Merger
Consideration. If the aggregate amount of cash or stock to be paid by Radiance
is insufficient to satisfy all remaining Payment Elections, such cash or stock,
as the case may be, shall be distributed first according to the Default
Percentage and thereafter, to the extent practicable, among such holders pro
rata in accordance with the relative amounts of cash or stock indicated by such
remaining Payment Elections. To the extent that the amount of cash or stock to
be paid by Radiance exceeds the aggregate amount indicated by such remaining
Payment Elections, all such Payment Elections shall be satisfied and the
remaining cash or stock shall be distributed to such holders pro rata, based on
the number of shares of Endologix Common Stock held by each such holder
immediately prior to the Effective Time. Any holder of Endologix Common Stock
who does not submit a Form of Election prior to the Effective Date shall be
deemed to have made an election to receive cash and stock in accordance with the
Default Percentage. The determination of the allocation in accordance with the
Payment Elections shall be made at the sole and reasonable determination of
Radiance.
(d) Limit on Payment of Cash Consideration.
Notwithstanding any other provision in this Agreement, in no event shall the
total amount of cash to be paid by Radiance as a component of the Merger
Consideration, including any cash paid pursuant to Sections 2.2 and 2.3, exceed
fifty percent (50%) of the total of all of the Merger Consideration, valuing
each share of Radiance Common Stock for this purpose at its fair market value on
the date each share is payable hereunder, which fair market value shall be the
closing price of Radiance Common Stock as reported on Nasdaq on the trading day
immediately preceding the payment date of such share. In the event of the
perfection of the rights set forth in Section 2.2, Radiance shall: (i) estimate
the fair value of all such Dissenting Shares (as that term is defined in Section
2.2) and withhold from the cash component of the Merger Consideration an amount
of cash equal to such estimate of fair value; and (ii) reallocate to the
Radiance Common Stock component of the Merger Consideration, the number of
shares of Radiance Common Stock that such Dissenting Shares would have had the
right to convert into pursuant to the payment of the Merger Consideration had
such dissenting rights not been perfected.
2.2 Dissenting Shares.
(a) Notwithstanding anything to the contrary in this
Agreement, each share of Endologix Common Stock issued and outstanding
immediately prior to the Effective Time
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that is held by any stockholder who has not voted in favor of the Merger, has
perfected such holder's right to an appraisal of such holder's shares in
accordance with the applicable provisions of the DGCL, as applicable, and has
not effectively withdrawn or lost such right to appraisal (a "Dissenting
Share"), shall not be converted into the right to receive the Merger
Consideration pursuant to Section 2.1(b), but shall be entitled only to such
rights as are granted by the applicable provisions of the DGCL; provided,
however, that any Dissenting Share held by a person at the Effective Time who
shall, after the Effective Time, withdraw the demand for appraisal or lose the
right of appraisal, in either case pursuant to the DGCL, shall be deemed to be
converted into, as of the Effective Time, the right to receive the Merger
Consideration pursuant to Section 2.1(b).
(b) Endologix shall give Radiance (i) prompt notice of any
written demands for appraisal, withdrawals of demands for appraisal and any
other instruments served pursuant to the applicable provision of the DGCL,
relating to the appraisal process received by Endologix and (ii) the opportunity
to direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL, with the participation of Endologix. Endologix will not
voluntarily make any payment with respect to any demands for appraisal and will
not, except with the prior written consent of Radiance, settle or offer to
settle any such demands.
2.3 Fractional Shares. No fractional shares of Radiance Common
Stock shall be issued, but in lieu thereof each holder of shares of Endologix
Common Stock, who otherwise would be entitled to receive a fraction of a share
of Radiance Common Stock (after aggregating all fractional shares of Radiance
Common Stock to be received by such holder), shall receive from Radiance an
amount of cash (rounded up to the nearest whole cent) equal to the product of
the fraction of a share of Radiance Common Stock to which such holder would
otherwise be entitled, times the closing price for Radiance Common Stock on the
trading day prior to the Closing.
2.4 Treatment of Endologix Preferred Stock and Options. Each
share of Endologix Series A, Series B and Series C Convertible Preferred Stock
shall be converted into Endologix Common Stock immediately prior to the closing.
Each Endologix Option shall accelerate and vest immediately prior to the Closing
and, to the extent not exercised at the Closing, shall terminate.
2.5 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Radiance
shall designate a bank or trust company reasonably acceptable to Endologix (the
"Exchange Agent"). On the Closing Date, Radiance shall deposit with the Exchange
Agent a combination of cash and certificates representing the number of duly
authorized whole shares of Radiance Common Stock issuable in connection with the
Merger as of the Closing Date, plus an amount of cash equal to (i) Eight Million
Three Hundred Sixty-Nine Thousand Two Hundred Eighty-Nine Dollars ($8,369,289)
plus (ii) the aggregate amount payable in lieu of fractional shares in
accordance with Section 2.3, to be held for the benefit of and distributed to
such holders in accordance with this Section 2.5. The Exchange Agent shall agree
to hold such shares of Radiance Common Stock and funds (such shares of Radiance
Common Stock and funds, together with earnings thereon, being referred to herein
as the "Exchange Fund") for delivery as contemplated by this Section 2.5 and
upon such additional terms as may be agreed upon by the Exchange Agent,
Endologix and Radiance before the Effective Time. If for any reason (including
losses) the amount of cash in the Exchange Fund is inadequate to pay the cash
amounts to which holders of shares of Endologix Common Stock shall be entitled
pursuant to
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Section 2.3, Radiance shall make available to the Surviving Corporation
additional funds for the payment thereof.
(b) Endologix Stock Exchange Procedures. As soon as
reasonably practicable after the Effective Time, Radiance shall cause the
Exchange Agent to mail to each holder of record of a certificate or certificates
which, immediately prior to the Effective Time, represented outstanding shares
of Endologix Common Stock (individually, a "Certificate" and collectively, the
"Certificates"), and whose shares are to be exchanged pursuant to Section 2.1
into the right to receive the Merger Consideration: (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Radiance may reasonably specify) and (ii) instructions for use in effecting the
surrender of Certificates in exchange for certificates representing shares of
Radiance Common Stock constituting the Merger Consideration and cash (both in
lieu of fractional shares and as a component of the Merger Consideration). Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal duly executed and completed in accordance with its
terms, the holder of such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of Radiance
Common Stock constituting the Merger Consideration, the cash component of the
Merger Consideration and the cash amount payable in lieu of fractional shares in
accordance with Section 2.3, and the Certificate so surrendered shall forthwith
be canceled. In no event shall the holder of any Certificate be entitled to
receive interest on any funds to be received in the Merger. In the event of a
transfer of ownership of Endologix Common Stock which is not registered in the
transfer records of Endologix, a certificate representing that number of whole
shares of Radiance Common Stock constituting the Merger Consideration, any cash
component of the Merger Consideration and the cash amount payable in lieu of
fractional shares in accordance with Section 2.3, may be paid and issued to a
transferee if the Certificate representing such Endologix Common Stock is
presented to the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.5(b), each Certificate shall be deemed at any time after the Effective Time
for all corporate purposes of Radiance, except as limited by paragraph (c)
below, to represent ownership of the number of shares of Radiance Common Stock
into which the number of shares of Endologix Common Stock shown thereon have
been converted as contemplated by this Article 2.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Radiance Common Stock with a record date on or after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Radiance Common Stock represented thereby and no cash payment
in lieu of fractional shares shall be paid to any such holder pursuant to
Section 2.3 until the holder of record of such Certificate shall surrender such
Certificate in accordance with this Section 2.5. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
Radiance Common Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions, if any,
with a record date on or after the Effective Time which theretofore became
payable, but which were not paid by reason of the immediately preceding
sentence, with respect to such whole shares of Radiance Common Stock, and (ii)
at the appropriate payment date, the amount of dividends or other distributions
with a record date on or after the Effective Time but prior to surrender and a
payment date subsequent to surrender payable with respect to such whole shares
of Radiance Common Stock.
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(d) No Further Ownership Rights in Endologix Stock. As of
the Effective Time the Endologix Common Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of Certificates previously representing any such Endologix Common Stock
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration upon surrender of the certificates representing such
Endologix Common Stock, as contemplated hereby, or pursuant to Section 2.2. From
and after the Effective Time, the stock transfer books of Endologix shall be
closed and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Endologix Common
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Section
2.5.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ENDOLOGIX
Endologix represents and warrants to Radiance and Sub that:
3.1 Organization and Qualification. Endologix is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to carry
on its business as now conducted and as proposed to be conducted. Endologix is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed or to be in
good standing (individually or in the aggregate) would not have a materially
adverse effect on the business, condition (financial or otherwise), properties,
assets (including intangible assets), liabilities (including contingent
liabilities), prospects, or results of operations of Endologix (a "Material
Adverse Effect"). Subject to obtaining Endologix Stockholder's Approval,
Endologix has all requisite corporate power and authority to execute and deliver
this Agreement.
3.2 Subsidiaries. Endologix does not own, directly or indirectly,
any capital stock or other ownership interest in any corporation, partnership,
joint venture, or other entity.
3.3 Authority Relative to this Agreement. Subject to obtaining
Endologix Stockholders' Approval (as defined below), Endologix has full
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by Endologix and the
consummation by Endologix of the transactions contemplated hereby have been duly
authorized and approved by the Board of Directors of Endologix, the Board of
Directors of Endologix has agreed to recommend adoption of this Agreement by the
stockholders of Endologix and directed that this Agreement be submitted to the
stockholders of Endologix for their consideration, and no other corporate
proceedings on the part of Endologix or its stockholders are necessary to
authorize the execution, delivery and performance of this Agreement by Endologix
and the consummation by Endologix of the transactions contemplated hereby, other
than obtaining Endologix Stockholders' Approval. "Endologix Stockholders'
Approval" means the requisite approvals of the shareholders of Endologix of this
Agreement and the Merger required by the DGCL, and the Certificate of
Incorporation and Bylaws of Endologix, including the conversion of all shares of
Endologix Preferred Stock into Endologix Common Stock immediately prior to the
Effective Time. Endologix
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has received and has provided to Radiance the voting agreements of the Endologix
stockholders listed on Schedule 3.3 to approve the Merger. Subject to obtaining
Endologix Stockholders' Approval, this Agreement has been duly authorized and
validly executed by Endologix and constitutes a valid and legally binding
obligation of Endologix, enforceable in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
3.4 Capital Stock of Endologix.
(a) The authorized capital stock of Endologix consists of
15,500,000 shares of Endologix Common Stock and 10,000,000 shares of Endologix
preferred stock, of which 1,300,000 shares are designated as Series A
Convertible Preferred Stock, 3,200,000 of which are designated as Series B
Convertible Preferred Stock, and 477,345 of which are designated Series C
Convertible Preferred Stock. As of the date hereof, 5,829,915 shares of Common
Stock, 1,300,000 shares of Series A Convertible Preferred Stock, 2,971,989
shares of Series B Convertible Preferred Stock and 428,571 shares of Series C
Convertible Preferred Stock, were issued and outstanding and 332,000 shares of
capital stock are held by Endologix in its treasury. As of the date hereof,
there are outstanding options to purchase 1,105,566 shares of Endologix Common
Stock. Except as disclosed in Section 3.4 of the Endologix Disclosure Schedule
attached hereto, all outstanding shares of capital stock of Endologix are duly
authorized, validly issued, fully paid, and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes, or other indebtedness
of Endologix having the right to vote (or convertible into securities having the
right to vote) on any matters on which stockholders of Endologix may vote.
Except as set forth in Section 3.4 of the Endologix Disclosure Schedule, as of
the date hereof, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements, or undertakings of any kind to which
Endologix is a party or by which it is bound obligating Endologix to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of Endologix or obligating Endologix to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking (together, "Options").
Except as disclosed in Section 3.4 of the Endologix Disclosure Schedule, as of
the date hereof, there are no outstanding contractual obligations of Endologix
to repurchase, redeem, or otherwise acquire any shares of capital stock of
Endologix. Endologix has furnished to Radiance true and correct copies of
Endologix's Certificate of Incorporation and Bylaws as in effect as of the date
hereof. The offers and sales of all of the outstanding shares of capital stock
of Endologix were at all relevant times either registered under the Securities
Act of 1933, as amended (the "Securities Act"), and applicable state securities
laws or exempt from such requirements.
(b) Endologix acknowledges that the offering and sale of
the Radiance Common Stock to be issued in exchange for all the outstanding
shares of capital stock of Endologix have not been registered with the
Securities and Exchange Commission (the "SEC") or any state securities laws and
is intended to be exempt from registration under the Securities Act by virtue of
Section 4(2) of the Securities Act and the provisions of Regulation D
promulgated thereunder ("Regulation D"). Except as disclosed in Section
3.4(b)(i) of the Endologix Disclosure Schedule to the actual knowledge of
Endologix, without investigation, the holders of all the outstanding shares and
options to acquire shares of capital stock of Endologix fulfill, and will
fulfill as of the Effective Time, the investor suitability requirements under
Section 4(2) of the Securities Act and
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Regulation D. Set forth in Section 3.4(b)(ii) of the Endologix Disclosure
Schedule is a list of holders of Endologix capital stock and options to acquire
capital stock, together with the number of shares and/or options held by each
such holder, who shall receive an offer from Endologix prior to the Effective
Time for Endologix to purchase such shares and/or options. Endologix shall use
its best efforts to obtain from each Endologix shareholder and optionholder not
listed in Section 3.4(b)(i) of the Endologix Disclosure Schedule a confirmation
that such shareholder is an "accredited investor" as defined under Regulation D;
provided, that in no event shall the number of holders of Endologix Common Stock
that are not "accredited investors" as of the Effective Time exceed thirty-five.
Notwithstanding anything herein to the contrary, Endologix assumes no
responsibility for Radiance's compliance with the applicable federal and state
securities laws in connection with the Merger and issuance of Radiance Common
Stock and Radiance options. Endologix acknowledges that the shares of Radiance
Common Stock are restricted securities and must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
such registration is available.
(c) Except as disclosed in Section 3.4(c) of the Endologix
Disclosure Schedule, there are no (i) outstanding Options obligating Endologix
or (ii) voting trusts, proxies or other commitments, understandings,
restrictions or arrangements in favor of any person other than Endologix.
3.5 Non-Contravention; Approvals and Consents.
(a) Except as disclosed in Section 3.5 of Endologix
Disclosure Schedule, and except for the filing of the Agreement of Merger and
other appropriate merger documents required by the DGCL with the Secretary of
State and appropriate documents with the relevant authorities of other states in
which the Constituent Corporations are qualified to do business, the execution
and delivery of this Agreement by Endologix does not, and the performance by
Endologix of its obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under,
result in or give to any person any right of payment or reimbursement,
termination, cancellation, modification or acceleration of, or result in the
creation or imposition of any pledges, claims, liens, charges, encumbrances, and
security interests of any kind or nature whatsoever (collectively, "Liens") upon
any of the assets or properties of Endologix under, any of the terms, conditions
or provisions of (i) the Certificate of Incorporation or Bylaws of Endologix, or
(ii) (x) any statute, law, rule, regulation or ordinance (together, "Laws"), or
any judgment, decree, order, writ, permit or license (together, "Orders"), of
any court, tribunal, arbitrator, authority, agency, commission, official or
other instrumentality of the United States or any state, county, city or other
political subdivision (a "Governmental or Regulatory Authority"), applicable to
Endologix or any of its assets or properties, or (y) any note, bond, mortgage,
security agreement, indenture, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind (together,
"Contracts") to which Endologix is a party or by which Endologix or any of its
assets or properties is bound, excluding from the foregoing clauses (x) and (y)
conflicts, violations, breaches, defaults, payments, reimbursements,
terminations, cancellations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on Endologix or on the
ability of Endologix to consummate the transactions contemplated by this
Agreement.
(b) Other than obtaining Endologix Stockholder's Approval
and except as disclosed in Section 3.5 of Endologix Disclosure Schedule, no
consent, approval or action of, filing
9
with or notice to any Governmental or Regulatory Authority or other public or
private third party is necessary or required under any of the terms, conditions
or provisions of any Law or Order of any Governmental or Regulatory Authority or
any contract to which Endologix is a party or by which Endologix or any of its
assets or properties is bound for the execution and delivery of this Agreement
by Endologix, the performance by Endologix of its obligations hereunder or the
consummation of the transactions contemplated hereby, other than such consents,
approvals, actions, filings and notices which the failure to make or obtain, as
the case may be, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on Endologix or on the ability of
Endologix to consummate the transactions contemplated by this Agreement.
3.6 Financial Statements. Endologix has delivered to Radiance a
true and complete copy of the following financial statements: (i) the audited
balance sheets of Endologix as of December 31, 1999 and December 31, 2000 and
the related audited statement of operations for the fiscal years then ended; and
(ii) the unaudited balance sheet of Endologix as of September 30, 2001 and the
unaudited statement of operations for such interim period (the "Endologix
Financial Statements'). As of their respective dates and for the respective
periods then ended, the audited financial statements and unaudited interim
financial statements (including, in each case, the notes, if any, thereto)
included in Endologix Financial Statements (A) were prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated therein or in the notes
thereto) and (B) fairly present (subject, in the case of the unaudited interim
financial statements, to normal, recurring year-end audit adjustments which are
not expected to be, individually or in the aggregate, materially adverse to
Endologix and to the absence of certain footnote disclosures) the financial
position of Endologix as at the respective dates thereof and the results of its
operations and cash flows for the respective periods then ended.
3.7 Absence of Changes. Except as disclosed in Section 3.7 of the
Endologix Disclosure Schedule and except for matters reflected or reserved
against in the balance sheet for the period ended September 30, 2001 included in
Endologix Financial Statements, since September 30, 2001 Endologix has conducted
its business only in the ordinary course, consistent with past practice and
there has been no change and no development in the business, properties,
operations, condition (financial or otherwise), or results of operations of
Endologix that had or could reasonably be expected to have a Material Adverse
Effect other than those occurring as a result of general economic or financial
conditions or other developments that are not unique to Endologix but also
affect other persons who participate or are engaged in the lines of business in
which Endologix participates or is engaged, or other than those occurring as a
result of this Agreement and the transactions contemplated hereby.
3.8 Absence of Undisclosed Liabilities. Except for liabilities
that are disclosed in this Section 3 and/or in the Endologix Disclosure Schedule
and except for matters reflected or reserved against in the balance sheet for
the period ended December 31, 2000 or in the September 30, 2001 Endologix
balance sheet for the period ended September 30, 2001 included in Endologix
Financial Statements, Endologix did not have at such date, nor has Endologix
incurred since that date, any liabilities or obligations (whether absolute,
accrued, contingent, fixed or otherwise, or whether due or to become due) of any
nature that would be required by generally accepted accounting principles to be
reflected on a balance sheet of Endologix (including the notes thereto), except
liabilities or obligations (i) which were incurred in the ordinary course of
business consistent with past practice or (ii) which have not been, and could
not be reasonably expected to have a Material Adverse Effect on Endologix.
10
3.9 Legal Proceedings. Except as disclosed in Section 3.9 of
Endologix Disclosure Schedule: (i) there are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of Endologix, threatened against,
relating to or affecting, nor to the knowledge of Endologix are there any
Governmental or Regulatory Authority investigations or audits pending or
threatened against, relating to or affecting, Endologix or any of its assets and
properties which could reasonably be expected to have a Material Adverse Effect
on Endologix or on the ability of Endologix to consummate the transactions
contemplated by this Agreement; (ii) Endologix is not subject to any Order of
any Governmental or Regulatory Authority which is having or could be reasonably
expected to have a Material Adverse Effect on Endologix, or on the ability of
Endologix to consummate the transactions contemplated by this Agreement; and
(iii) there are no material actions, suits, arbitrations or proceedings that
Endologix currently intends to initiate.
3.10 Contracts and Commitments. Section 3.10 of Endologix
Disclosure Schedule contains a true and complete list of each of the following
written, or to Endologix's knowledge, oral, contracts (the "Material Contracts')
to which Endologix is a party: (i) all Contracts (excluding Endologix Employee
Benefit Plans which can be terminated at will without subjecting Endologix to
cost or penalty) providing for a commitment for employment or consultation
services for a specified or unspecified term to, or otherwise relating to
employment or the termination of employment of, any employee; (ii) all Contracts
with any Person containing any provision or covenant prohibiting or limiting the
ability of Endologix to engage in any business activity or compete with any
Person in connection with its business or prohibiting or limiting the ability of
any Person to compete with Endologix in connection with its business; (iii) all
partnership, joint venture, stockholders' or other similar Contracts with any
Person in connection with Endologix's business; (iv) all Contracts relating to
the future disposition or acquisition of assets of Endologix, other than as
contemplated by this Agreement or dispositions or acquisitions in the ordinary
course of business; (v) all other Contracts with respect to Endologix that (A)
involve the payment or potential payment, pursuant to the terms of any such
Contract, by or to Endologix of more than $25,000 annually and (B) cannot be
terminated within sixty (60) days after giving notice of termination without
resulting in any material cost or penalty to Endologix. To the knowledge of
Endologix, there is no default or event that with notice or lapse of time, or
both, would constitute a material default by Endologix under any of the Material
Contracts to which it is a party. Endologix has not received notice of a default
under any Material Contract by any party thereto. Each of the Material Contracts
is enforceable against Endologix in accordance with its terms, except as such
enforceability may be limited by general principles of equity or by bankruptcy,
insolvency or other similar laws relating to rights of creditors. Endologix has
not received notice that any party to any of the Material Contracts intends to
cancel or terminate any of the Material Contracts or to exercise or not exercise
any options under any of the Material Contracts.
3.11 Taxes. Endologix has filed all tax returns that are required
to have been filed by it in any jurisdiction for all periods ending on or prior
to the date hereof and to the knowledge of Endologix such tax returns are true,
correct and complete in all material respects, and to its knowledge Endologix
has paid all taxes shown to be due and payable on such returns and all other
taxes and assessments payable by it to the extent the same have become due and
payable and before they have become delinquent, except for any taxes and
assessments the amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
Endologix has set aside on its books reserves (segregated to the extent required
by generally accepted accounting principles, consistently applied throughout the
specified period and in the immediately comparable period) deemed by it in its
reasonable discretion to be adequate. Endologix has no knowledge of any proposed
material tax assessment, obligation or other claim
11
against Endologix. There are no material liens for taxes upon any property or
assets of Endologix, except for liens for taxes not yet due. There are no
unresolved issues of law or fact arising out of a notice of deficiency, proposed
deficiency or assessment from the Internal Revenue Service ("IRS") or any other
governmental taxing authority with respect to taxes of Endologix which, if
decided adversely would have a Material Adverse Effect on Endologix. Endologix
is not a party to any agreement providing for the allocation or sharing of taxes
with any entity other than agreements the consequences of which are adequately
reserved for in Endologix Financial Statements. Endologix has not, with regard
to any assets or property held, acquired or to be acquired by it, filed a
consent to the application of Section 341(f) of the Code.
3.12 Employee Benefit Plans.
(a) Except as set forth in Section 3.12 of Endologix
Disclosure Schedule, Endologix has no Employee Benefit Plan or other Plan.
(b) As used herein:
(i) "Employee Benefit Plan" means any Plan entered
into, established, maintained, contributed to or required to be contributed to
by Endologix and existing on the date of this Agreement or at any time
subsequent thereto and on or prior to the Effective Time and, in the case of a
Plan which is subject to Part 3 of Title I of ERISA, Section 412 of the Code or
Title IV of ERISA, at any time during the five-year period preceding the date of
this Agreement; and
(ii) "Plan" means any employment, bonus, incentive
compensation, deferred compensation, pension, profit sharing, retirement, stock
purchase, stock option, stock ownership, stock appreciation rights, phantom
stock, leave of absence, layoff, vacation, day or dependent care, legal
services, cafeteria, life, health, medical, accident, disability, workers'
compensation or other insurance, severance, separation, termination, change of
control or other benefit plan, agreement, practice, policy or arrangement of any
kind, whether written or oral, including, but not limited to any "employee
benefit plan" within the meaning of Section 3(3) of ERISA.
3.13 Title to Assets. Endologix is in possession of and has good
title to, or has valid leasehold interests in or valid rights under contract to
use, all of its properties and assets primarily used in its business and
material to the condition (financial or other) of such business, free and clear
of all Liens, except (i) the lien for current taxes, payments of which are not
yet delinquent, (ii) such imperfections in title and easements and encumbrances,
if any, as are not substantial in character, amount or extent and do not
materially detract from the value of or interfere with the present use of the
property subject thereto or affected thereby, or otherwise materially impair
Endologix's business operations (in the manner presently carried on by
Endologix) or (iii) as disclosed in Endologix Financial Statements, and except
for such matters which, individually or in the aggregate, would not have a
Material Adverse Effect on Endologix. All leases under which Endologix leases
any substantial amount of real or personal property have been made available to
Radiance and are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default by Endologix or to the knowledge of Endologix any event which with
notice or lapse of time or both would become a default by Endologix other than
defaults under such leases which in the aggregate would not have a Material
Adverse Effect on Endologix.
12
3.14 Permits, Etc. Endologix owns or validly holds all material
licenses, permits, certificates of authority, registrations, franchises and
similar consents granted or issued by any applicable Governmental or Regulatory
Authority, used or held for use which are required to conduct and material to
the condition of its business.
3.15 Compliance with Laws. To the knowledge of Endologix,
Endologix is not in violation of, nor has it violated, any applicable provisions
of any Laws or any term of any Order binding against it, except for violations
which do not have and would not have, a Material Adverse Effect on Endologix.
Section 3.15 of Endologix Disclosure Schedule sets forth a complete list of
Endologix's licenses, permits and authorizations ("Permits") other than those
not material to the business or operations of Endologix. Since December 31,
1999, no state or federal governmental entity has revoked or materially limited
any license or certificate of authority of Endologix material to its business,
and no investigation or proceeding is pending or, to Endologix's knowledge,
threatened, which involves the revocation or material limitation of any of such
licenses or certificates. Endologix has no knowledge of any information which
would lead Endologix to believe that any licenses or permits necessary to the
conduct of the business of Endologix as presently conducted will not remain in
full force and effect for the complete duration of their terms. Endologix has
made available to Radiance all material filings made to, and all inspection or
compliance reports or correspondence received from, Governmental Entities for
the last three years and will make available to Radiance all other Permits as
requested by Radiance. To the knowledge of Endologix, each of such filings was
in material compliance with all applicable laws and regulations.
3.16 FDA Matters. Except as otherwise set forth in Section 3.16
of Endologix Disclosure Schedule:
(a) To the knowledge of Endologix, Endologix is in
compliance in all material respects with all current applicable laws, statutes,
rules, regulations, standards, guides or orders administered, issued or enforced
by the FDA or any other Governmental or Regulatory Authority having regulatory
authority or jurisdiction over the products and operations of Endologix.
(b) Endologix has not received from the FDA or any other
Governmental or Regulatory Authority, and Endologix has no knowledge of any
facts which would furnish any reasonable basis for, any notice of adverse
findings, FDA Form 483 inspectional observations, regulatory letters, notices of
violations, warning letters, Section 305 criminal proceeding notices under the
Federal Food, Drug and Cosmetic Act or other similar communication from the FDA
or other Governmental or Regulatory Authority, and to the knowledge of Endologix
there have been no seizures conducted or threatened by the FDA or other
Governmental or Regulatory Authority.
(c) To the knowledge of Endologix, there are no facts
which are reasonably likely to cause (i) the non-approval or non clearance,
denial, withdrawal, recall or require suspension or additional approvals or
clearances of any products intended to be sold by Endologix, or (ii) a change in
the manufacturing, marketing classification, labeling or intended use of any
such products.
3.17 Intellectual Property Rights
(a) Schedule 3.17 of the Endologix Disclosure Schedule
contains a true and correct list of all patents and patent applications,
including reissues, divisions, continuations,
13
continuations-in-part and extensions thereof and reexamination certificates
therefor and all trademarks, service marks and trade names owned or controlled
by Endologix.
(b) Except as described in Schedule 3.17 of the Endologix
Disclosure Schedule, to the knowledge of Endologix: (i) no third party is
infringing or misappropriating any of Endologix' intellectual property rights;
and (ii) Endologix' current PowerLink System does not infringe any valid claim
of a third party patent.
(c) Except as set forth on Schedule 3.17 of the Endologix
Disclosure Schedule, to the knowledge of Endologix, there are no outstanding
claims asserted or threatened against Endologix alleging that the development,
manufacture, marketing, distribution, sale or use of the PowerLink System
infringes or misappropriates any intellectual property or other proprietary
rights of any third party.
(d) To the knowledge of Endologix: (i) all of the patents
listed in Schedule 3.17 of the Endologix Disclosure Schedule are valid and in
full force and effect, and are not the current subject of any interference or
opposition proceeding; and (ii) it is unaware of any publications or activities
including, without limitation, patents, articles, and public uses or sales, by
it or others, which would or might invalidate any claim(s) of any such patent.
It has not conducted, nor has it commissioned the conducting of, any written
infringement or validity studies regarding any such patent or patent application
that it has not provided to Radiance for inspection prior to the date hereof.
3.18 Labor Controversies.
(a) There are no material controversies pending or, to the
knowledge of Endologix, threatened between Endologix and any representatives of
any of Endologix's employees.
(b) To the knowledge of Endologix, there are no material
organizational efforts presently being made involving any of the presently
unorganized employees of Endologix.
(c) To the knowledge of Endologix, Endologix has complied
in all material respects with all laws relating to the employment of labor,
including without limitation, any provisions thereof relating to wages, hours,
collective bargaining, and the payment of social security and similar taxes,
with respect to its employees on the Endologix payroll.
(d) To the knowledge of Endologix, no person has asserted
that Endologix is liable in any material amount for any arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing (subject to
the proviso set forth in subparagraph (a) above), except for such controversies,
organizational efforts, non-compliance and liabilities which, individually or in
the aggregate, could not be reasonably expected to have a Material Adverse
Effect on Endologix.
3.19 Insurance. Section 3.19 of Endologix Disclosure Schedule
lists all policies of fire, liability, life and employee health, environmental,
errors and omissions, workers' compensation and other forms of insurance
currently held and maintained by Endologix (the "Insurance Policies"). Endologix
believes that such Insurance Policies are commercially reasonable in amount and
coverage. To the knowledge of Endologix, all of the Insurance Policies are in
full force and effect, all billed premiums with respect thereto covering all
periods up to and including the Closing Date
14
have been paid or will have been paid on or prior to the Closing Date and no
written notice of cancellation or termination has been received with respect to
any such Policy, except for failures to pay or cancellations or terminations
which would not reasonably be expected to have a Material Adverse Effect on
Endologix.
3.20 Guaranties. Endologix has not executed any guaranty or
otherwise agreed to be a guarantor of any liability or obligation (including
indebtedness) of any other person.
3.21 Tax-Free Reorganization. Endologix has not taken and has not
agreed to take any action that would interfere with the ability of Radiance to
treat the Merger, together with the Sideways Merger contemplated in Section
6.13, as a tax-free reorganization within the meaning of Section 368(a) of the
Code.
3.22 Board of Directors and Stockholder Approval. The Board of
Directors has approved and adopted this Agreement and has authorized the
officers of Endologix to enter into this Agreement and to submit it to the
Endologix stockholders for their approval.
3.23 Brokers and Finders. Other than Gruntal & Co., L.L.C.,
Endologix has not employed any broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement who would be
entitled to a broker's, finder's or similar fee or commission in connection
therewith or upon the consummation thereof. Endologix is solely responsible for
the payment of any fee, commission or reimbursement that may be due to or become
payable to Gruntal & Co., L.L.C. in connection with the transactions
contemplated by this Agreement.
3.24 Full Disclosure. No information furnished by or on behalf of
Endologix to Radiance pursuant to this Agreement and any information contained
in Endologix Disclosure Schedule and other Schedules to this Agreement, at any
time prior to the Closing Date, contains nor will contain any untrue statement
of a material fact and does not and will not omit to state any material fact
necessary to make any statement, in light of the circumstances under which such
statement is made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF RADIANCE AND SUB
Radiance and Sub jointly and severally represent and warrant to
Endologix as follows:
4.1 Organization of Radiance and Sub. Each of Radiance and Sub is
an entity duly organized, validly existing and in good standing under the laws
of its respective jurisdiction. Radiance and Sub has full corporate power and
authority to own or lease and to operate and use its properties and assets and
to carry on its business as now conducted and as proposed to be conducted
pursuant to this Agreement. Radiance is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties make such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed or to be in good standing (individually or in the
aggregate) would not have a materially adverse effect on the business, condition
(financial or otherwise), properties, assets, including intangible assets,
liabilities (including contingent liabilities), prospects, or results of
operations of Radiance (a "Material Adverse Effect"). Except for Sub and as
disclosed
15
in Section 4.1 of the Radiance Disclosure Schedule or in the Radiance Reports
(as that term is defined in Section 4.6), Radiance does not own, directly or
indirectly, any capital stock or other ownership interest in any corporation,
partnership, joint venture or other entity.
4.2 Authorization. Each of Radiance and Sub has full corporate
power and authority to execute, deliver and perform this Agreement and the
Related Agreements and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and the
Related Agreements by Radiance have been duly authorized and approved by the
Board of Directors of Radiance and does not require any further authorization or
consent of Radiance other than approval by its stockholders. This Agreement has
been duly authorized, validly executed and delivered by Radiance and constitutes
the legal, valid and binding obligations of Radiance enforceable in accordance
with its terms, except as the enforceability thereof may be subject to or
limited by (i) bankruptcy, insolvency, reorganization, arrangement, moratorium
or other similar laws now or hereafter in effect relating to or affecting
creditors' rights, and (ii) general equitable principles, regardless of whether
the issue of enforceability is considered in a proceeding in equity or at law.
4.3 Capital Stock of Radiance and Sub.
(a) The authorized capital stock of Radiance consists of
30,000,000 shares of Radiance Common Stock and 5,000,000 shares of preferred
stock. As of February 7, 2002, 13,167,712 shares of Common Stock and no shares
of preferred stock, were issued and outstanding and no shares of Radiance Common
Stock are held by Radiance in its treasury. As of February 7, 2002, there are
outstanding options to purchase 2,002,853 shares of Radiance Common Stock (the
"Radiance Options"). All outstanding shares of capital stock of Radiance are
duly authorized, validly issued, fully paid, and nonassessable and not subject
to preemptive rights and such capital stock has been issued in full compliance
with all applicable federal and state securities laws. There are no bonds,
debentures, notes, or other indebtedness of Radiance having the right to vote
(or convertible into securities having the right to vote) on any matters on
which stockholders of Radiance may vote. Except as set forth above, as of the
date hereof, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements, or undertakings of any kind to which
Radiance is a party or by which it is bound obligating Radiance to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of Radiance or obligating Radiance to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking (together, "Options").
As of the date hereof, there are no outstanding contractual obligations of
Radiance to repurchase, redeem, or otherwise acquire any shares of capital stock
of Radiance. Radiance has furnished to Endologix true and correct copies of
Radiance's Certificate of Incorporation and Bylaws as in effect as of the date
hereof. The authorized capital stock of Sub consists of 100 shares of common
stock, $.001 par value, of which 100 shares are issued and outstanding and owned
of record by Radiance. Except as contemplated by this Agreement, there are no
outstanding options, warrants, or other rights to subscribe for or purchase from
Radiance any capital stock of Sub, or securities convertible into Sub, and there
are no commitments, agreements, arrangements or undertakings of any kind to
which Sub is a party or by which it is bound obligating Sub to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of Sub or obligating Sub to issue, grant,
extend or enter into any Options. As of the date hereof, there are no
outstanding contractual obligations of Sub to repurchase, redeem or otherwise
acquire any shares of capital stock of Sub.
16
(b) Except as disclosed in Section 4.3(b) of the schedule
attached hereto (the "Radiance Disclosure Schedule"), there are no (i)
outstanding Options obligating Radiance or (ii) voting trusts, proxies or other
commitments, understandings, restrictions or arrangements in favor of any person
other than Radiance.
4.4 Non-Contravention; Approvals and Consents.
(a) Except as disclosed in Section 4.4 of Radiance
Disclosure Schedule, and except for the filing of the Agreement of Merger and
other appropriate merger documents required by the DGCL with the Secretary of
State and appropriate documents with the relevant authorities of other states in
which the Constituent Corporations are qualified to do business, the execution
and delivery of this Agreement by Radiance does not, and the performance by
Radiance of its obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under,
result in or give to any person any right of payment or reimbursement,
termination, cancellation, modification or acceleration of, or result in the
creation or imposition of any pledges, claims, liens, charges, encumbrances, and
security interests of any kind or nature whatsoever (collectively, "Liens") upon
any of the assets or properties of Radiance under, any of the terms, conditions
or provisions of (i) the Certificate of Incorporation or Bylaws of Radiance, or
(ii) (x) any statute, law, rule, regulation or ordinance (together, "Laws"), or
any judgment, decree, order, writ, permit or license (together, "Orders"), of
any court, tribunal, arbitrator, authority, agency, commission, official or
other instrumentality of the United States or any state, county, city or other
political subdivision (a "Governmental or Regulatory Authority"), applicable to
Radiance or any of its assets or properties, or (y) any note, bond, mortgage,
security agreement, indenture, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind (together,
"Contracts") to which Radiance is a party or by which Radiance or any of its
assets or properties is bound, excluding from the foregoing clauses (x) and (y)
conflicts, violations, breaches, defaults, payments, reimbursements,
terminations, cancellations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on Radiance or on the
ability of Radiance to consummate the transactions contemplated by this
Agreement.
(b) Except as disclosed in Section 4.4 of Radiance
Disclosure Schedule, no consent, approval or action of, filing with or notice to
any Governmental or Regulatory Authority or other public or private third party
is necessary or required under any of the terms, conditions or provisions of any
Law or Order of any Governmental or Regulatory Authority or any contract to
which Radiance is a party or by which Radiance or any of its assets or
properties is bound for the execution and delivery of this Agreement by
Radiance, the performance by Radiance of its obligations hereunder or the
consummation of the transactions contemplated hereby, other than such consents,
approvals, actions, filings and notices which the failure to make or obtain, as
the case may be, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on Radiance or on the ability of
Radiance to consummate the transactions contemplated by this Agreement.
4.5 No Litigation or Regulatory Action. Except as disclosed in
the Radiance Reports or in Section 4.5 of Radiance Disclosure Schedule: (i)
there are no actions, suits, arbitrations or proceedings pending or, to the
knowledge of Radiance, threatened against, relating to or affecting, nor to the
knowledge of Radiance are there any Governmental or Regulatory Authority
investigations or audits pending or threatened against, relating to or
affecting, Radiance or any of its assets and
17
properties which could reasonably be expected to have a Material Adverse Effect
on Radiance or on the ability of Radiance to consummate the transactions
contemplated by this Agreement; (ii) Radiance is not subject to any Order of any
Governmental or Regulatory Authority which is having or could be reasonably
expected to have a Material Adverse Effect on Radiance, or on the ability of
Radiance or Sub to consummate the transactions contemplated by this Agreement;
and (iii) there are no material actions, suits, arbitrations or proceedings that
Radiance currently intends to initiate.
4.6 SEC Documents. Radiance has delivered or made available to
Endologix true and correct copies of each registration statement, report,
definitive proxy statement or definitive information statement and all exhibits
thereto filed (including exhibits and any amendments thereto) since January 1,
1999 with the SEC under or pursuant to the Securities Act of 1933, as amended
(the "Securities Act") or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (collectively, the "Radiance Reports"). As of their respective
dates, or as subsequently amended prior to the Closing Date, the Radiance
Reports complied in all material respects with the requirements of the Exchange
Act applicable to such Radiance Reports, and none of the Radiance Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Radiance included in the Radiance
Reports comply in all material respects with applicable accounting requirements
in the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with GAAP applied on a consistent basis (except as
may be indicated in the notes thereto) and fairly present the consolidated
financial position of Radiance and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments, the absence of notes and as permitted by Form 10-Q
of the Exchange Act). As of their respective dates, the Radiance Reports
complied as to form in all material respects with the applicable requirements of
the Securities Act and/or the Exchange Act.
4.7 Brokers and Finders. Other than ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.,
Radiance has not employed any broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement who would be
entitled to a broker's, finder's or similar fee or commission in connection
therewith or upon the consummation thereof. Radiance is solely responsible for
the payment of any fee, commission or reimbursement that may be due to or become
payable to ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. in connection with the transactions
contemplated by this Agreement.
4.8 Taxes.
(a) Prior to the Merger, Radiance will be in control of
Sub within the meaning of Section 368(c) of the Code. Radiance will not cause or
permit Sub to issue additional shares of its stock that would result in Radiance
losing control of Sub within the meaning of Section 368(c) of the Code. No stock
of Sub will be issued in the Merger.
(b) During its corporate existence, Sub has owned no
assets, and prior to the Merger shall not own any assets other than the shares
of Radiance to be distributed in the Merger.
(c) As of the date hereof and as of the Effective Time,
Radiance has no plan or intention to reacquire any of its stock to be
distributed in the Merger.
18
4.9 Absence of Changes. Except: (i) as disclosed in Section 4.19
of the Radiance Disclosure Schedule; (ii) for matters reflected or reserved
against in the balance sheet for the period September 30, 2001 included in the
Radiance Reports; and (iii) as disclosed in the Radiance Reports filed as of the
date of this Agreement, since September 30, 2001, Radiance has conducted its
business only in the ordinary course, consistent with past practice and there
has been no change and no development in the business, properties, operations,
condition (financial or otherwise), or results of operations of Radiance that
had or could reasonably be expected to have a Material Adverse Effect other than
those occurring as a result of general economic or financial conditions or other
developments that are not unique to Radiance but also affect other persons who
participate or are engaged in the lines of business in which Radiance
participates or is engaged, or other than those occurring as a result of this
Agreement and the transactions contemplated hereby.
4.10 Contracts and Commitments. To the knowledge of Radiance,
there is no default or event that with notice or lapse of time, or both, would
constitute a material default by Radiance under that certain license agreement
between Radiance and Guidant Corporation dated June 19, 1998, (the "Guidant
License"). Radiance has not received notice of a default under the Guidant
License. The Guidant License is enforceable against Radiance in accordance with
its terms, except as such enforceability may be limited by general principles of
equity or by bankruptcy, insolvency or other similar laws relating to rights of
creditors. Radiance has not received notice that Guidant intends to cancel or
terminate the Guidant License or to exercise or not exercise any options under
the Guidant License.
4.11 Title to Assets. Radiance is in possession of and has good
title to, or has valid leasehold interests in or valid rights under contract to
use, all of its properties and assets primarily used in its business and
material to the condition (financial or other) of such business, free and clear
of all Liens, except (i) the lien for current taxes, payments of which are not
yet delinquent, (ii) such imperfections in title and easements and encumbrances,
if any, as are not substantial in character, amount or extent and do not
materially detract from the value of or interfere with the present use of the
property subject thereto or affected thereby, or otherwise materially impair
Radiance's business operations (in the manner presently carried on by Radiance)
or (iii) as disclosed in the Radiance Reports, and except for such matters
which, individually or in the aggregate, would not have a Material Adverse
Effect on Radiance. All leases under which Radiance leases any substantial
amount of real or personal property have been made available to Endologix and
are in good standing, valid and effective in accordance with their respective
terms, and there is not, under any of such leases, any existing default by
Radiance or to the knowledge of Radiance any event which with notice or lapse of
time or both would become a default by Radiance other than defaults under such
leases which in the aggregate would not have a Material Adverse Effect on
Radiance.
4.12 Permits, Etc. Radiance owns or validly holds all material
licenses, permits, certificates of authority, registrations, franchises and
similar consents granted or issued by any applicable Governmental or Regulatory
Authority, used or held for use which are required to conduct and material to
the condition of its business.
4.13 Compliance with Laws. To the knowledge of Radiance, Radiance
is not in violation of, nor has it violated, any applicable provisions of any
Laws or any term of any Order binding against it except for violations which do
not have and would not have a Material Adverse Effect on Radiance.
19
4.14 Labor Controversies. Except as disclosed in Section 4.14 of
the Radiance Disclosure Schedule, there are no material controversies pending
or, to the knowledge of Radiance, threatened between Radiance and any of its
employees.
4.15 Radiance Stock Issued in Merger. The shares of Radiance
Common Stock to be issued in the Merger will, when issued and delivered to the
stockholders of Endologix as a result of the Merger and pursuant to the terms of
this Agreement, be duly and validly authorized and issued, fully paid,
non-assessable and free of preemptive rights of any securityholder of Radiance,
and issued in compliance with applicable federal and state securities laws.
4.16 Full Disclosure. No information furnished by or on behalf of
Radiance to Endologix pursuant to this Agreement and any information contained
in the Radiance Disclosure Schedule and other Schedules to this Agreement, at
any time prior to the Closing Date, contains nor will contain any untrue
statement of a material fact and does not and will not omit to state any
material fact necessary to make any statement, in light of the circumstances
under which such statement is made, not misleading.
ARTICLE 5
COVENANTS
5.1 Covenants of Endologix. At all times from and after the date
hereof until the Effective Time, Endologix covenants and agrees as to itself
that (except as expressly contemplated or permitted by this Agreement, or to the
extent that Radiance and Sub shall otherwise consent in writing):
(a) Endologix shall conduct its business only in, and
Endologix shall not take any action except in, the ordinary course consistent
with past practice.
(b) Without limiting the generality of paragraph (a) of
this Section, except as otherwise disclosed in Section 5.1 of Endologix
Disclosure Schedule, as applicable, and except as contemplated or permitted by
this Agreement, (i) Endologix shall use all commercially reasonable efforts to
preserve intact in all material respects its present business organization and
reputation, to keep available the services of its key officers and employees, to
maintain its respective assets and properties in good working order and
condition, ordinary wear and tear excepted, to maintain insurance on its
tangible assets and business in such amounts and against such risks and losses
as are currently in effect, to preserve its relationships with customers and
suppliers and others having significant business dealings with it and to comply
in all material respects with all Laws and Orders of all Governmental or
Regulatory Authorities applicable to them, and (ii) Endologix shall not:
(A) amend or propose to amend its
Certificate of Incorporation or Bylaws;
(B) (w) declare, set aside or pay any
dividends on or make other distributions in respect of any of its capital stock,
(x) split, combine, reclassify or take similar action with respect to any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (y) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such liquidation or
20
a dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization or (z) directly or indirectly purchase, redeem or otherwise
acquire any shares of its capital stock or any Option with respect thereto,
except for (i) the repurchase of capital stock from employees pursuant to
existing agreements providing for the repurchase of such shares of capital stock
upon termination of employment at the employee's cost therefor and (ii) the
repurchases from holders and not to exceed the number of shares and/or options
as are set forth in Section 3.4(b)(ii) of the Endologix Disclosure Schedule,
provided the price per share and/or option paid by Endologix shall be reasonably
approved by Radiance;
(C) except for the issuance of Endologix
capital stock upon exercise or conversion of presently outstanding warrants,
options, rights or convertible securities in accordance with their present
terms, issue, deliver or sell, or authorize or propose the issuance, delivery or
sale of, any shares of its capital stock or any Option with respect thereto, or
modify or amend any right of any holder of outstanding shares of capital stock
or Options with respect thereto;
(D) acquire (by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner) any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to Endologix;
(E) other than dispositions of assets which
are not individually or in the aggregate, material to Endologix, and except as
contemplated by this Agreement, sell, lease, grant any security interest in or
otherwise dispose of or encumber any of its assets or properties;
(F) except to the extent required by
applicable law, (x) permit any material change in (A) any investment,
accounting, financial reporting, inventory, credit, allowance or tax practice or
policy or (B) any method of calculating any bad debt, contingency or other
reserve for accounting, financial reporting or tax purposes or (y) make any
material tax election or settle or compromise any material income tax liability
with any Governmental or Regulatory Authority;
(G) except as contemplated by this
Agreement, (x) incur any indebtedness for borrowed money or guarantee any such
indebtedness other than in the ordinary course of its business consistent with
past practice in an aggregate principal amount exceeding $100,000 (net of any
amounts of any such indebtedness discharged during such period), or (y)
voluntarily purchase, cancel, prepay or otherwise provide for a complete or
partial discharge in advance of a scheduled repayment date with respect to, or
waive any right under, any indebtedness for borrowed money other than in the
ordinary course of its business consistent with past practice in an aggregate
principal amount exceeding $100,000;
(H) enter into, adopt, amend in any material
respect (except as may be required by applicable law) or terminate any Endologix
Employee Benefit Plan or any other agreement or arrangement, plan or policy
between Endologix and one or more of its directors, officers or employees, or,
except for normal increases in the ordinary course of business consistent with
past practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to Endologix, increase in any manner the
compensation or fringe benefits of
21
any director, officer or employee or pay any benefit not required by any plan or
arrangement in effect as of the date hereof;
(I) enter into any contract or amend or
modify any existing contract, or engage in any new transaction, outside the
ordinary course of business consistent with past practice or not on an arm's
length basis, with any affiliate of Endologix;
(J) make any capital expenditures or
commitments for additions to plant, property or equipment constituting capital
assets except in the ordinary course of business consistent with past practice
in an aggregate amount exceeding $100,000;
(K) make any change in the lines of business
in which it participates or is engaged;
(L) take any action to cause the Merger,
together with the Sideways Merger contemplated in Section 6.13, not to be
treated as a tax-free reorganization within the meaning of Section 368(a) of the
Code; or
(M) enter into any contract, agreement,
commitment or arrangement to do or engage in any of the foregoing.
5.2 Covenants of Radiance. At all times from and after the date
hereof until the Effective Time, Radiance covenants and agrees as to itself that
(except as expressly contemplated or permitted by this Agreement, or to the
extent that Endologix shall otherwise consent in writing):
(a) Radiance shall conduct its business only in, and
Radiance shall not take any action except in, the ordinary course consistent
with past practice.
(b) Without limiting the generality of paragraph (a) of
this Section 5.2, except as otherwise disclosed in Section 5.2 of the Radiance
Disclosure Schedule, as applicable, and except as contemplated or permitted by
this Agreement, (i) Radiance shall use all commercially reasonable efforts to
preserve intact in all material respects its present business organization and
reputation, to maintain its respective assets and properties in good working
order and condition, ordinary wear and tear excepted, to maintain insurance on
its tangible assets and business in such amounts and against such risks and
losses as are currently in effect, and to comply in all material respects with
all Laws and Orders of all Governmental or Regulatory Authorities applicable to
it, and (ii) Radiance shall not:
(A) amend or propose to amend its
Certificate of Incorporation or Bylaws;
(B) (w) declare, set aside or pay any
dividends on or make other distributions in respect of any of its capital stock,
(x) split, combine, reclassify or take similar action with respect to any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (y) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
or (z) directly or indirectly purchase, redeem or otherwise acquire any shares
of its capital stock or any Option with respect thereto, except for the
repurchase of capital stock from employees pursuant to
22
existing agreements providing for the repurchase of such shares of capital stock
upon termination of employment at the employee's cost therefor;
(C) except for the issuance of Radiance
capital stock upon exercise or conversion of presently outstanding warrants,
options, rights or convertible securities in accordance with their present
terms, issue, deliver or sell, or authorize or propose the issuance, delivery or
sale of, any shares of its capital stock or any Option with respect thereto, or
modify or amend any right of any holder of outstanding shares of capital stock
or Options with respect thereto;
(D) acquire (by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner) any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to Radiance;
(E) other than dispositions of assets which
are not individually or in the aggregate, material to Radiance, sell, lease,
grant any security interest in or otherwise dispose of or encumber any of its
assets or properties;
(F) except as contemplated by this
Agreement, (x) incur any indebtedness for borrowed money or guarantee any such
indebtedness other than in the ordinary course of its business consistent with
past practice in an aggregate principal amount exceeding $50,000 (net of any
amounts of any such indebtedness discharged during such period), or (y)
voluntarily purchase, cancel, prepay or otherwise provide for a complete or
partial discharge in advance of a scheduled repayment date with respect to, or
waive any right under, any indebtedness for borrowed money other than in the
ordinary course of its business consistent with past practice in an aggregate
principal amount exceeding $50,000;
(G) enter into, adopt, amend in any material
respect (except as may be required by applicable law) or terminate any employee
benefit plan or any other agreement or arrangement, plan or policy between
Radiance and one or more of its directors, officers or employees, or, except for
normal increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to Radiance, increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any plan or arrangement in effect as of the date hereof;
(H) enter into any contract or amend or
modify any existing contract, or engage in any new transaction, outside the
ordinary course of business consistent with past practice or not on an arm's
length basis, with any affiliate of Radiance;
(I) make any capital expenditures or
commitments for additions to plant, property or equipment constituting capital
assets except in the ordinary course of business consistent with past practice
in an aggregate amount exceeding $100,000;
(J) take any action to cause the Merger not
to be treated as a tax-free reorganization within the meaning of Section
368(a)(1)(A) and 368(a)(2)(D) of the Code; or
23
(K) enter into any contract, agreement,
commitment or arrangement to do or engage in any of the foregoing.
5.3 Advice of Changes. Each party shall confer on a regular and
frequent basis with the other with respect to its business and operations and
other matters relevant to the Merger, and shall promptly advise the other,
orally and in writing, of any change or event, including, without limitation,
any complaint, investigation or hearing by any Governmental or Regulatory
Authority (or communication indicating the same may be contemplated) or the
institution or threat of litigation, having, or which, insofar as can be
reasonably foreseen, could have, a Material Adverse Effect on Endologix, or
Radiance and its Subsidiaries taken as a whole, as the case may be, or on the
ability of Endologix or Radiance and Sub, as the case may be, to consummate the
transactions contemplated hereby.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Access to Information; Confidentiality.
(a) Each of Endologix and Radiance shall, and shall cause
each of its Subsidiaries, if any, to, throughout the period from the date hereof
to the Effective Time, (i) provide the other party and its directors, officers,
employees, legal, investment banking and financial advisors, accountants and any
other agents and representatives (collectively, "Representatives") with full
access, upon reasonable prior notice, and during normal business hours, to
Endologix or Radiance and its Subsidiaries, as the case may be, and their
respective assets, properties, books and records, but only to the extent that
such access does not unreasonably interfere with the business and operations of
Endologix or Radiance and its Subsidiaries, as the case may be, and (ii) furnish
promptly to such persons (x) a copy of each report, statement, schedule and
other document filed or received by Endologix and its Subsidiaries or Radiance
and its Subsidiaries, as the case may be, pursuant to the requirements of
federal or state securities laws or filed with any other Governmental or
Regulatory Authority, and (y) all other information and data (including, without
limitation, copies of Contracts, Endologix Employee Benefit Plans or Radiance
Employee Benefit Plans, as the case may be, and other books and records)
concerning the business and operations of Endologix or Radiance, as the case may
be, as the other party or any of such other persons reasonably may request. No
investigation pursuant to this paragraph or otherwise shall affect any
representation or warranty contained in this Agreement or any condition to the
obligations of the parties hereto.
(b) Each party will hold, and will use its best efforts to
cause its Representatives to hold, in strict confidence, unless (i) compelled to
disclose by judicial or administrative process or by-other requirements of
applicable Laws or Governmental or Regulatory Authorities (including, without
limitation, in connection with obtaining the necessary approvals of this
Agreement or the transactions contemplated hereby of Governmental or Regulatory
Authorities), or (ii) disclosed in an action or proceeding brought by a party
hereto in pursuit of its rights or in the exercise of its remedies hereunder,
all documents and information concerning the other party and its Subsidiaries
furnished to it by such other party or its Representatives in connection with
this Agreement or the transactions contemplated hereby, except to the extent
that such documents or information can be shown to have been (x) previously
known by Endologix or Radiance, as the case may be, or its Representatives, (y)
in the public domain (either prior to or after the furnishing of such documents
or information hereunder) through no fault of Endologix or Radiance, as the case
may be,
24
and its Representatives or (z) later acquired by Endologix or Radiance, as the
case may be, or its Representatives from another source if the recipient is not
aware that such source is under an obligation to Endologix or Radiance, as the
case may be, to keep such documents and information confidential. In the event
that this Agreement is terminated without the transactions contemplated hereby
having been consummated, upon the request of Endologix or Radiance, as the case
may be, the other party will, and will cause its Representatives to, promptly
(and in no event later than five (5) business days after such request) redeliver
or cause to be redelivered all copies-of documents and information furnished by
Endologix or Radiance, as the case may be, or its Representatives to such party
and its Representatives in connection with this Agreement or the transactions
contemplated hereby and destroy or cause to be destroyed all notes, memoranda,
summaries, analyses, compilations and other writings related thereto or based
thereon prepared by Endologix or Radiance, as the case may be, or its
Representatives.
6.2 Registration of Radiance Common Stock. Radiance shall
register for re-sale the shares of Radiance Common Stock issued pursuant to the
payment of the Merger Consideration and the Milestone Payment and shall file a
registration statement with respect to such registration with the SEC within ten
(10) business days after the Closing Date; provided, however, Endologix shall
use its best efforts to have the holders of shares of Endologix Common Stock
enter into a registration rights agreement with Radiance in the form of Exhibit
A hereto (the "Registration Rights Agreements").
6.3 Lock Up Agreement. Endologix shall cause each of its officers
and directors to enter lock-up agreements (the "Lock-Up Agreements") with
Radiance prior to the Effective Time which shall restrict the re-sale of
Radiance Common Stock issued pursuant to the payment of the Merger Consideration
for a period of 180 days after the SEC declares effective the registration
statement referred to in Section 6.2.
6.4 Nasdaq Listing. Radiance shall cause the shares of Radiance
Common Stock to be issued in the Merger in accordance with this Agreement to be
listed on the Nasdaq National Market prior to the effectiveness of the
registration of the Radiance Common Stock as provided in Section 6.2.
6.5 Approval of Stockholders. Subject to the exercise of
fiduciary obligations under applicable law as advised by independent counsel,
Radiance shall use its reasonable best efforts to obtain approval of this
Agreement by its stockholders (the "Radiance Stockholder Approval") as soon as
reasonably practicable after the date hereof and shall recommend to its
stockholders that it is in the best interest of the stockholders that the
stockholders of Radiance approve this Agreement and the transactions
contemplated hereby.
6.6 Regulatory and Other Approvals. Subject to the terms and
conditions of this Agreement and without limiting the provisions of Sections 6.3
and 6.4, each of Endologix and Radiance will proceed diligently and in good
faith and will use all commercially reasonable efforts to do, or cause to be
done, all things necessary, proper or advisable to, as promptly as practicable,
(i) obtain all consents, approvals or actions of, make all filings with and give
all notices to Governmental or Regulatory Authorities or any other public or
private third parties required of Radiance, Endologix or any of their
Subsidiaries to consummate the Merger and the other matters contemplated hereby,
and (ii) provide such other information and communications to such Governmental
or Regulatory Authorities or other public or private third parties as the other
party or
25
such Governmental or Regulatory Authorities or other public or private third
parties may reasonably request in connection therewith.
6.7 Board of Directors.
(a) Radiance shall take all necessary action so that
following the closing of the Merger, the directors of Radiance shall be:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Chairman of the Board
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, M.D. Director
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D. Director
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Director
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Director
▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇ Director
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Director
and the officers of Radiance shall be:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Chief Executive Officer
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ President and Chief Operating Officer
(b) Each of Endologix and Radiance agrees that Radiance
shall: (i) nominate ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, M.D. and ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇ for
election to the Board of Directors of Radiance at the next annual meeting of
stockholders of Radiance; and (ii) take all necessary action to cause such
election, including a recommendation for the election of such nominees.
6.8 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such cost or expense. If the Merger is not consummated due to
either party's failure to obtain Stockholder Approval, the party unable to
obtain such approval shall reimburse the expenses of the other party incurred in
connection with this Agreement and the Merger, up to a maximum of Two Hundred
Thousand Dollars ($200,000).
6.9 Indemnification of Officers and Directors.
(a) From and after the Effective Time, Radiance shall, to
the fullest extent authorized by the DGCL or any other applicable law as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits Radiance to provide broader
indemnification rights than such law permitted Radiance to provide prior to such
amendment), indemnify all directors and officers of Endologix as of the Closing
against any liability or losses (including reasonable attorney's fees and costs
for counsel who are reasonably acceptable to Radiance) any of them may incur
from any action, proceeding or investigation brought against such individuals by
existing stockholders and option holders of Endologix immediately prior to the
Merger as a result of the Merger, or any of the transactions contemplated by
this Agreement. The right to indemnification conferred in this Section shall be
a contract right and shall include the right to be paid by Radiance any expenses
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that, if so required by the DGCL, such advance shall be made
only upon delivery to Radiance of an undertaking, by or on behalf of such
director or officer, to
26
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section 6.9 or
otherwise. Radiance shall not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld). Radiance
shall not be obligated pursuant to this Section 6.9 to pay the fees and
disbursements of more than one counsel for all officers and directors in any
single action, except to the extent that, in the opinion of counsel for the
officers and directors, two or more of such officers and directors have
conflicting interests in the outcome of such action, or one or more of such
officers and directors and Radiance have conflicting interests in the outcome of
such action. Radiance may obtain directors' and officers' liability insurance
covering its obligations under this Section 6.9.
(b) The provisions of this Section 6.9 are intended to be
for the benefit of, and shall be enforceable by, each officer and director of
Endologix as of the Closing, and his or her heirs and legal representatives, and
shall be in addition to any other rights an officer and director of Endologix
may have under the Certificate of Incorporation or Bylaws of the Surviving
Corporation, under the DGCL or otherwise.
(c) In the event Radiance or the Surviving Corporation, or
any of their respective successors or assigns, (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of Radiance or
the Surviving Corporation, as the case may be, or at Radiance's option,
Radiance, shall assume the obligations set forth in paragraph (a) of this
Section 6.9.
(d) In the event Radiance or the, Surviving Corporation,
or any of their respective successors or assigns, obtains directors' and
officers' liability insurance covering any of their directors or officers, such
insurance shall also cover the directors and officers of Endologix as of the
date hereof with respect to the obligations hereunder.
6.10 Name Change. Radiance agrees to include in its proxy
statement to be filed with the Securities and Exchange Commission in connection
with a special meeting of its stockholders soliciting approval of the
transactions contemplated by the Merger, a proposal amending its Certificate of
Incorporation to change the name of Radiance Medical Systems, Inc. to Endologix,
Inc.
6.11 Notice and Cure. Each of Radiance, Sub and Endologix will
notify the other in writing of, and contemporaneously will provide the other
with true and complete copies of any and all information or documents relating
to, and will use best efforts to cure before the Closing, any event, transaction
or circumstance, as soon as practical after it becomes known to such party,
occurring after the date of this Agreement that causes or will cause any
covenant or agreement of Radiance, Sub or Endologix, as the case may be, under
this Agreement to be breached or that renders or will render untrue any
representation or warranty of Radiance, Sub or Endologix, as the case may be,
contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. Each of Radiance, Sub and Endologix
also will notify the other in writing of, and will use best efforts to cure,
before the Closing, any violation or breach, as soon as practical after it
becomes known to such party, of any representation, warranty, covenant or
agreement made by Radiance, Sub or Endologix, as the case may be, in this
Agreement, whether occurring or arising prior to, on or after the date of this
Agreement. No notice given pursuant to this Section 6.11 shall have any effect
on the representations, warranties, covenants or agreements
27
contained in this Agreement for purposes of determining satisfaction of any
condition contained herein.
6.12 Fulfillment of Conditions. Subject to the terms and
conditions of this Agreement, each of Radiance, Sub and Endologix will take or
cause to be taken all steps necessary or desirable and proceed diligently and in
good faith to satisfy each condition to the other's obligations contained in
this Agreement and to consummate and make effective the transactions
contemplated by this Agreement, and neither Radiance nor Endologix will, nor
will it permit any subsidiary, if any, to, take or fail to take any action that
could be reasonably expected to result in the nonfulfillment of any such
condition.
6.13 No Solicitations. Endologix agrees that unless specifically
permitted in writing by Radiance until the earlier of (i) July 1, 2002 or such
later date as determined in accordance with Section 8.1(b)(i), or (ii) receipt
of written notice from Radiance of its intent not to proceed with the proposed
transaction, Endologix will not, directly or indirectly, through any officer,
director, affiliate or agent of Endologix, or otherwise, (i) solicit, initiate,
entertain, or encourage any proposals or offers from any third party relating to
(a) any possible acquisition of Endologix (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise), (b) any acquisition of its
assets, technology or securities, or (c) the grant of any license, distribution
or other commercial rights in Endologix's technology or its proposed products;
or (ii) enter into, or continue, any discussions or arrangements with, otherwise
cooperate with, facilitate or encourage any effort or attempt by, any third
party with respect to any of the foregoing, or furnish to any person any
information with respect to, or any person to do or seek any of the foregoing.
Endologix shall immediately cease and cause to be terminated any such contacts
or negotiations with third parties.
6.14 Completion of Sideways Merger. Within forty-five (45) days
following the Effective Time, Radiance agrees, as part of a single plan to which
the Merger is a part, to cause Endologix to be merged with and into a
newly-formed and wholly-owned subsidiary of Radiance ("Newsub") in accordance
with the provisions of the DGCL (the "Sideways Merger"). Newsub shall be the
surviving corporation in the Sideways Merger. Other than pursuant to the
Sideways Merger contemplated in this Section 6.13, Radiance has no present plan
or intention to (i) liquidate Newsub, (ii) merge Newsub with or into another
corporation including Radiance or any of its affiliates, or (iii) sell,
distribute or otherwise dispose of the stock of Endologix or Newsub, or cause
Endologix or Newsub to sell, distribute or otherwise dispose of any of Endologix
or Newsub's assets, except for transfers described in Section 368(a)(2)(C) of
the Code and Treasury Regulation Section 1.368-2(k).
ARTICLE 7
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:
(a) No Injunctions or Restraints. No court of competent
jurisdiction or other competent Governmental or Regulatory Authority shall have
enacted, issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) which is then in effect and has the effect
of making illegal or otherwise restricting, preventing or prohibiting
consummation of the Merger or the other transactions contemplated by this
Agreement.
28
(b) Governmental and Regulatory Consents and Approvals.
Other than the filing provided for by Section 1.2, all consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
or any other public or private third parties or Radiance or Endologix
stockholders required of Radiance, Endologix or any Subsidiary which are to be
taken prior to the Effective Time to consummate the Merger and the other matters
contemplated hereby, the failure of which to be obtained or taken could be
reasonably expected to have a Material Adverse Effect on Radiance and its
Subsidiary taken as a whole, or the Surviving Corporation, or on the ability of
Radiance and Endologix to consummate the transactions contemplated hereby shall
have been obtained.
7.2 Conditions to Obligation of Radiance and Sub to Effect the
Merger. The obligation of Radiance and Sub to effect the Merger is further
subject to the fulfillment, at or prior to the Closing, of each of the following
additional conditions (all or any of which may be waived in whole or in part by
Radiance and Sub in their sole discretion):
(a) Representations and Warranties. Each of the
representations and warranties made by Endologix in this Agreement shall be true
and correct in all material respects as of the Closing Date as though made on
and as of the Closing Date or, in the case of representations and warranties
made as of a specified date earlier than the Closing Date, on and as of such
earlier date, and Endologix shall have delivered to Radiance a certificate,
dated the Closing Date and executed on behalf of Endologix by its Chairman of
the Board, Chief Executive Officer, President or any Executive or Senior Vice
President, to such effect.
(b) Performance of Obligations. Endologix shall have
performed and complied with, in all material respects, each agreement, covenant
and obligation required by this Agreement to be so performed or complied with by
Endologix at or prior to the Closing, and Endologix shall have delivered to
Radiance a certificate, dated the Closing Date and executed on behalf of
Endologix by its Chairman of the Board, President or any Executive or Senior
Vice President, to such effect.
(c) Orders and Laws. There shall not have been issued,
enacted, promulgated or deemed applicable to Endologix, the Surviving
Corporation or the transactions contemplated by this Agreement any Order or Law
of any Governmental or Regulatory Authority which is then in effect and which
could be reasonably expected to result in a material diminution of the benefits
of the Merger to Radiance, and there shall not be pending or threatened on the
Closing Date any action, suit or proceeding in, before or by any Governmental or
Regulatory Authority which could be reasonably expected to result in any such
issuance, enactment, promulgation or deemed applicability of any such Order or
Law or of any Order or Law.
(d) Contractual Consents. Endologix shall have received
all consents (or in lieu thereof waivers) from parties to each Contract to the
extent required pursuant to the terms of each such contract disclosed pursuant
to Sections 3.5 and 3.10.
(e) No Material Adverse Change. Since the date of this
Agreement, there shall have been no changes in the business, condition
(financial or otherwise), properties, assets (including intangible assets),
liabilities (including contingent liabilities) or results of operations of
Endologix, which have had or may be reasonably expected to have, a Material
Adverse Effect on Endologix.
29
(f) Proceedings. All proceedings to be taken on the part
of Endologix in connection with the transactions contemplated by this Agreement
and all documents incident thereto shall be reasonably satisfactory in form and
substance to Radiance, and Radiance shall have received copies of all such
documents and other evidences as Radiance may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
(g) Opinion of Counsel. Radiance shall have received the
opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, counsel to Endologix, dated the Closing Date, in
form reasonably acceptable to Radiance.
(h) Conversion of Preferred Stock. All shares of Series A,
Series B and Series C Convertible Preferred Stock of Endologix shall have been
converted into Endologix Common Stock.
(i) Registration Rights Agreement. Radiance shall have
received signed Registration Rights Agreements in the form of Exhibit A from the
holders of shares of Endologix Common Stock.
(j) Lock-Up Agreements. Radiance shall have received
signed Lock-Up Agreements from each officer and director of Endologix.
(k) Escrow Agreement. Radiance shall have received a
signed Escrow Agreement from the Escrow Agent and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as Holders'
Representative.
7.3 Conditions to Obligation of Endologix to Effect the Merger.
The obligation of Endologix to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by Endologix
in its sole discretion):
(a) Representations and Warranties. Each of the
representations and warranties made by Radiance and Sub in this Agreement shall
be true and correct in all material respects as of the Closing Date as though
made on and as of the Closing Date or, in the case of representations and
warranties made as of a specified date earlier than the Closing Date, on and as
of such earlier date, and Radiance and Sub shall each have delivered to
Endologix a certificate, dated the Closing Date and executed on behalf of
Radiance by its Chairman of the Board, Chief Executive Officer, President or any
Executive or Senior Vice President and on behalf of Sub by its President or any
Vice President, to such effect.
(b) Performance of Obligations. Radiance and Sub shall
have performed and complied with, in all material respects, each agreement,
covenant and obligation required by this Agreement to be so performed or
complied with by Radiance, or Sub at or prior to the Closing, and Radiance and
Sub shall each have delivered to Endologix a certificate, dated the Closing Date
and executed on behalf of Radiance by its Chairman of the Board, President or
any Executive or Senior Vice President and on behalf of Sub by its Chairman of
the Board, President or any Vice President, to such effect.
(c) Orders and Laws. There shall not have been issued,
enacted, promulgated or deemed applicable to the Radiance, its Subsidiaries, the
Surviving Corporation or the
30
transactions contemplated by this Agreement any Order or Law of any Governmental
or Regulatory Authority which is then in effect and which could be reasonably
expected to result in a material diminution of the benefits of the Merger to
Endologix or its stockholders, and there shall not be pending or threatened on
the Closing Date any action, suit or proceeding in, before or by any
Governmental or Regulatory Authority which could be reasonably expected to
result in any such issuance, enactment, promulgation or deemed applicability of
any such Order or Law or of any Order or Law.
(d) Registration Rights Agreement. The Registration Rights
Agreements in the form of Exhibit A shall have been entered into by Radiance.
(e) No Material Adverse Change. Since the date of this
Agreement, there shall have been no changes in the business, condition
(financial or otherwise), properties, assets (including intangible assets),
liabilities (including contingent liabilities) or results of operations of
Radiance and its Subsidiaries taken as a whole, which have had or may be
reasonably expected to have, a Material Adverse Effect on Radiance and its
Subsidiaries taken as a whole.
(f) Proceedings. All proceedings to be taken on the part
of Radiance and Sub in connection with the transactions contemplated by this
Agreement and all documents incident thereto shall be reasonably satisfactory in
form and substance to Endologix, and Endologix shall have received copies of all
such documents and other evidences as Endologix may reasonably request in order
to establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
(g) Opinion of Counsel. Endologix shall have received the
opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to Radiance and Sub, dated
the Closing Date, in form reasonably acceptable to Endologix.
(h) Escrow Agreement. The Escrow Agreement shall have been
executed by Radiance are delivered to ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as Holders'
Representative.
(i) Lock-Up Agreements. Radiance shall have received
signed Lock-Up Agreements from each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
(j) Cash Balance. Radiance shall have an amount of cash or
cash equivalents of a least Eight Million Five Hundred Thousand ($8,500,000) in
its bank accounts as of the Closing, after payment of the cash portion of the
Merger Consideration.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time:
(a) by mutual written agreement of the parties hereto duly
authorized by action taken by or on behalf of their respective Boards of
Directors;
31
(b) by either Endologix or Radiance upon notification to
the non-terminating party by the terminating party:
(i) at any time after August 31, 2002, if the
Merger shall not have been consummated on or prior to such date and such failure
to consummate the Merger is not caused by a breach of this Agreement by the
terminating party;
(ii) if any Governmental or Regulatory Authority,
the taking of action by which is a condition to the obligations of either
Endologix or Radiance to consummate the transactions contemplated hereby, shall
have determined not to take such action and all appeals of such determination
shall have been taken and have been unsuccessful;
(iii) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of the
non-terminating party set forth in this Agreement which breach has not been
cured within ten (10) business days following receipt by the non-terminating
party of notice of such breach from the terminating party or assurance of such
cure reasonably satisfactory to the terminating party shall not have been given
by or on behalf of the non-terminating party within such ten (10) business day
period;
(iv) if any court of competent jurisdiction or
other competent Governmental or Regulatory Authority shall have issued an Order
making illegal or otherwise restricting, preventing or prohibiting the Merger
and such Order shall have become final and nonappealable;
(v) if the requisite shareholder vote of Endologix,
or Radiance approving the principal terms of this Agreement, the Agreement of
Merger and the Merger in accordance with applicable law and the Certificate of
Incorporation and Bylaws of Endologix or Radiance, as applicable, is not
obtained;
(vi) if the closing price of the Radiance Common
Stock as reported on Nasdaq on the trading day immediately preceding the
Effective Date shall be less than ninety cents ($0.90) per share; or
(vii) if the aggregate number of Dissenting Shares
(as defined in Section 2.2) exceeds five percent of the total number of shares
of Endologix Common Stock on an as-converted, fully diluted basis immediately
prior to the Effective Time.
8.2 Effect of Termination. If this Agreement is validly
terminated by either Endologix or Radiance pursuant to Section 8.1, this
Agreement will forthwith become null and void and there will be no liability or
obligation on the part of either Endologix or Radiance (or any of their
respective Representatives or affiliates), except that (i) the provisions of
Sections 6.1(b) and 6.8 will continue to apply following any such termination
and (ii) nothing contained herein shall relieve any party hereto from liability
for willful breach of its representations, warranties, covenants or agreements
contained in this Agreement, as further specified in Section 9.2(e).
8.3 Amendment. This Agreement may be amended, supplemented or
modified by action taken by or on behalf of the respective Boards of Directors
of the parties hereto at any time prior to the Effective Time. No such
amendment, supplement or modification shall be effective unless set forth in a
written instrument duly executed by or on behalf of each party hereto.
32
8.4 Waiver. At any time prior to the Effective Time any party
hereto, by action taken by or on behalf of its Board of Directors, may to the
extent permitted by applicable law (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties hereto
contained herein or in any document delivered pursuant hereto or (iii) waive
compliance with any of the covenants, agreements or conditions of the other
parties hereto contained herein. No such extension or waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the
party extending the time of performance or waiving any such inaccuracy or
non-compliance. No waiver by any party of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed as a
waiver of the same or any other term or condition of this Agreement on any
future occasion.
ARTICLE 9
GENERAL PROVISIONS
9.1 Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements contained
in Sections 3.6, 3.16, 3.17, 4.6, 4.9 and 4.10 of this Agreement shall survive
the Effective Time and shall continue in full force and effect for a period of
one year following the Effective Time (the "Indemnification Period"). All other
representations, warranties, covenants and agreements contained in this
Agreement shall terminate as of the Effective Time.
9.2 Indemnification.
(a) Indemnification of Radiance. Subject to the provisions
of this Article 9, Endologix shall indemnify Radiance from and against any and
all damage, loss, liability and expense (including without limitation reasonable
expenses of investigation and reasonable attorneys' fees and reasonable expenses
in connection with any action, suit or proceeding) incurred or suffered by
Radiance arising out of any breach of the representations, warranties, covenants
or agreements of Endologix set forth in Sections 3.6, 3.16 and 3.17 herein (the
"Radiance Indemnifiable Damages"). Notwithstanding the foregoing, Radiance shall
not be entitled to indemnification hereunder until the Radiance Indemnifiable
Damages exceed $100,000 and thereafter shall be entitled to indemnification for
all Radiance Indemnifiable Damages, up to the amount of the Milestone Payment
actually earned. Radiance may obtain indemnification for any Radiance
Indemnifiable Damages to which this Section 9.2(a) relates only if it makes a
claim for indemnification within the Indemnification Period defined in Section
9.1.
(b) Indemnification by Radiance of Endologix. Subject to
the provisions of this Article 9, Radiance agrees to indemnify the stockholders
of Endologix after the Effective Time from and against any and all damage, loss,
liability and expense (including without limitation reasonable expenses of
investigation and reasonable attorneys' fees and reasonable expenses in
connection with any action, suit or proceeding) incurred or suffered by the
stockholders of Endologix arising out of any breach of the representations,
warranties, covenants or agreements of Radiance and Sub set forth in Sections
4.6, 4.9 and 4.10 herein (the "Endologix Indemnifiable Damages").
Notwithstanding the foregoing, the stockholders of Endologix shall not be
entitled to indemnification hereunder until the Endologix Indemnifiable Damages
exceed $100,000 and thereafter shall be entitled to indemnification for all
Endologix Indemnifiable Damages, up to the amount of the Milestone Payment
actually earned. The stockholders of Endologix may obtain indemnification for
33
any Endologix Indemnifiable Damages to which this Section 9.2(b) relates only if
a stockholder or stockholders of Endologix makes a claim for indemnification
within the Indemnification Period defined in Section 9.1.
(c) Indemnification Procedures. A party seeking
indemnification (the "Indemnitee") shall use its best efforts to minimize any
liabilities, damages, deficiencies, claims, judgments, assessments, costs and
expenses in respect of which indemnity may be sought under this Agreement. The
Indemnitee shall give prompt written notice to the party from whom
indemnification is sought (the "Indemnitor") of the assertion of a claim for
indemnification, but in no event longer than twenty (20) days after service of
process in the event litigation is commenced against the Indemnitee by a third
party, or sixty (60) days after the assertion of such claim, whichever shall
first occur. No such notice of assertion of a claim shall satisfy the
requirements of this Section 9.2(c) unless it describes in reasonable detail and
in good faith the facts and circumstances upon which the asserted claim for
indemnification is based. If any action or proceeding shall be brought in
connection with any liability or claim to be indemnified hereunder, the
Indemnitee shall provide the Indemnitor twenty (20) calendar days to decide
whether to defend such liability or claim. During such period, the Indemnitee
shall take all necessary steps to protect the interests of itself and the
Indemnitor, including the filing of any necessary responsive pleadings, the
seeking of emergency relief or other action necessary to maintain the status
quo, subject to reimbursement from the Indemnitor of its expenses in doing so.
The Indemnitor shall (with, if necessary, reservation of rights) defend such
action or proceeding at its expense, using counsel selected by the insurance
company insuring against any such claim and undertaking to defend such claim, or
by other counsel selected by it and approved by the Indemnitee, which approval
shall not be unreasonably withheld or delayed. The Indemnitor shall keep the
Indemnitee fully apprised at all times of the status of the defense and shall
consult with the Indemnitee prior to the settlement of any indemnified matter.
The Indemnitee agrees to use reasonable efforts to cooperate with the Indemnitor
in connection with its defense of indemnifiable claims. In the event the
Indemnitee has a claim or claims against any third party arising out of or
connected with the indemnified matter, then upon receipt of indemnification, the
Indemnitee shall fully assign to the Indemnitor the entire claim or claims to
the extent of the indemnification actually paid by the Indemnitor and the
Indemnitor shall thereupon be subrogated with respect to such claim or claims of
the Indemnitee.
(d) No Liability of Endologix Stockholders. Radiance
agrees that the sole and exclusive remedy of Radiance after the Effective Time
for any damage, loss, liability or expense under this Agreement, including,
without limitation, for Radiance Indemnifiable Damages pursuant to Article 9 or
in connection with the transactions contemplated hereunder, shall be limited to
the stock and other property held in escrow, pursuant to the terms of the Escrow
Agreement, provided however, any such claims must be brought by Radiance within
the Indemnification Period. Subject to the provisions of this Section 9.2,
Radiance shall be entitled to offset any Radiance Indemnifiable Damages from the
amount payable by Radiance under the Milestone Payment in the event such claims
have been finally adjudicated in Radiance's favor prior to the time the
Milestone Payment is earned.
(e) Indemnification Prior to Effective Time.
Notwithstanding any other provision of this Article 9, in the event of a
termination by either Radiance or Endologix pursuant to Section 8.(1)(b)(iii)
prior to the Effective Time, such party shall be entitled to payment of all
Radiance Indemnifiable Damages or Endologix Indemnifiable Damages, as the case
may be, provided that such terminating party gives written notice of any claim
on or before thirty days from the date of termination. If written notice of a
claim is not made within thirty days, then all
34
representations, warranties, covenants and agreements contained in this
Agreement shall terminate, except that the provisions of Sections 6.1(b) and 6.8
will continue to apply following any termination.
9.3 Knowledge. With respect to any representations or warranties
contained herein which are made to the knowledge of Endologix or Radiance or any
Subsidiary, as the case may be, the actual knowledge of the officers and
directors of Endologix or Radiance, as the case may be, shall be imputed to
Endologix or Radiance, as the case may be.
9.4 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or nationally recognized
overnight courier service (such as Federal Express) or mailed (first class
postage prepaid) to the parties at the following addresses or facsimile numbers:
If to Radiance, Sub or the Surviving Corporation, to:
Radiance Medical Systems, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Endologix, to:
Endologix, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ Dallas
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by nationally recognized overnight courier or by mail in the manner described
above to the address
35
as provided in this Section 9.4, be deemed given upon receipt (in each case
regardless of whether such notice, request or other communication is received by
any other person to whom a copy of such notice, request or other communication
is to be delivered pursuant to this Section 9.4). Any party from time to time
may change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other
parties hereto.
9.5 Entire Agreement. This Agreement, together with the exhibits
hereto, supersedes all prior discussions and agreements among the parties hereto
with respect to the subject matter hereof and contains the sole and entire
agreement among the parties hereto with respect to the subject matter hereof.
9.6 Public Announcements. Except as otherwise required by law or
the rules of The Nasdaq National Market, so long as this Agreement is in effect,
Radiance and Endologix will not, and will not permit any of their respective
Representatives to, issue or cause the publication of any press release or make
any other public announcement or otherwise cause or permit the release in any
manner which could reasonably be expected to cause such information to be known
to the public with respect to the transactions contemplated by this Agreement
without the written consent of the other party, which consent shall not be
unreasonably withheld, provided however, that the parties may make such
announcements and releases to the extent the content of such announcements or
releases was contained in a prior approved announcement or release. Radiance and
Endologix will cooperate with each other in the development and distribution of
all press releases and other public announcements with respect to this Agreement
and the transactions contemplated hereby, and will furnish the other with drafts
of any such releases and announcements as far in advance as practicable.
9.7 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and except as provided in Sections
2.1 to 2.5, 6.2, 6.3, 6.9, 9.2, 9.7 and 9.8 (which are intended to be for the
benefit of the persons entitled to therein, and may be enforced by any of such
persons), it is not the intention of the parties to confer third-party
beneficiary rights upon any other person.
9.8 No Assignment; Binding Effect. Prior to Closing, neither this
Agreement nor any right, interest or obligation hereunder may be assigned by any
party hereto without the prior written consent of the other parties hereto and
any attempt to do so will be void, except that Sub may assign any or all of its
rights, interests and obligations hereunder to another direct or indirect
wholly-owned Subsidiary of Radiance. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
parties hereto and the third party beneficiaries to the extent set forth in
Section 9.7 and their respective successors and assigns, provided however, that
Radiance shall cause any such successor or assign to either (i) pay the
Milestone Payment (if still remaining to be earned) if not assumed within 10
days of such assignment, or (ii) expressly assume in writing all Radiance's
obligations hereunder, including the obligation to pay the Milestone Payment
when due.
9.9 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof
9.10 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (i) such provision
36
will be fully severable, (ii) this Agreement will be construed and enforced as
if such illegal, invalid or unenforceable provision had never comprised a part
hereof, (iii) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (iv) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible.
9.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to a
contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
9.12 Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
9.13 Arbitration. All claims, controversies, differences or
disputes between or among any of the parties hereto arising from or relating to
this Agreement shall be determined solely and exclusively by arbitration in
accordance with the rules of commercial arbitration then in effect of the
American Arbitration Association, or any successors hereto ("AAA"), in Orange
County, California, unless the parties otherwise agree in writing. Each of the
parties consents to venue for such arbitrations in Orange County, California and
to service of process by certified or registered mail. Upon commencement of any
arbitration pursuant hereto, the parties shall jointly select an arbitrator. In
the event the parties fail to agree upon an arbitrator within twenty (20) days,
then each party shall select an arbitrator and such arbitrators shall then
select a third arbitrator to serve as the sole arbitrator; provided that if
either party, in such event, fails to select an arbitrator within seven (7)
days, such arbitrator shall be selected by the AAA upon application of either
party. Judgment upon the award of the agreed upon arbitrator or the so chosen
third arbitrator, as the case may be, shall be binding and shall be entered into
by a court of competent jurisdiction. The parties agree to abide by any decision
rendered in any such arbitration as final and binding and waive the right to
submit the dispute to a public tribunal for a jury or nonjury trial. The Civil
Discovery Act of 1986 contained in Article 3 (commencing with Section 2016) of
Chapter 3 of Title III of Part IV of the California Code of Civil Procedure
shall be applicable to such arbitration proceedings, and all rights, remedies,
obligations, liabilities and procedures set forth in said Article 3 shall be
available to the parties. Each party shall be entitled to discovery which shall
be conducted in accordance with the provisions of Section 2020 and 2025 of the
California Code of Civil Procedures. The prevailing party shall be entitled to
reasonable attorney fees in connection with such arbitration.
37
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
signed by its officer thereunto duly authorized as of the date first above
written.
RADIANCE MEDICAL SYSTEMS, INC.
By:
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
RMS ACQUISITION CORP.
By:
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
ENDOLOGIX, INC.
By:
---------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
38
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made and
entered into as of _________________, 2002 by and among Radiance Medical
Systems, Inc., a Delaware corporation (the "Company"), and the former
Stockholders of Endologix, Inc., a Delaware corporation, listed on Exhibit A
hereto (the "Former Endologix Holders").
R E C I T A L S:
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of
February __, 2002, (the "Merger Agreement"), by and among the Company, RMS
Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of the
Company (the "Sub"), and Endologix, Inc., a Delaware corporation ("Endologix"),
the Company has agreed to issue and the Former Endologix Holders have agreed to
accept shares of Common Stock of the Company, par value $0.001 per share (the
"Radiance Common Stock"), in consideration for their shares and/or options of
Endologix.
WHEREAS, pursuant to the terms of, and in partial consideration for
Endologix's agreement to enter into the Merger Agreement, the Company has agreed
to provide the Former Endologix Holders with certain registration rights with
respect to the Radiance Common Stock;
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties and covenants of the parties hereto and
subject to the terms and conditions set forth herein, the Company and the Former
Endologix Holders agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings. Other capitalized terms used but
not defined herein shall have the meanings ascribed to such terms in the Merger
Agreement.
"Commission" or "SEC" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
"Holder" shall include the Former Endologix Holders and any
transferee of Registrable Securities which have not been sold to the public to
whom the registration rights conferred by this Agreement have been transferred
in compliance with Section 8 of this Agreement.
"Holders' Representative" shall have the meaning set forth in
Section 2.1(b)(v) of the Merger Agreement.
The terms "register," "registered" and "registration" shall refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" shall mean: (i) all shares of Radiance
Common Stock which may be issued to the Former Endologix Holders pursuant to the
Merger Agreement, including,
without limitation, shares of Radiance Common Stock which may be issued as a
Milestone Payment pursuant to Section 2.1(b)(iii) of the Merger Agreement; (ii)
any securities into which or for which any such shares referenced in (i) above
shall have been converted or exchanged pursuant to any recapitalization,
reorganization or merger; and (iii) any securities issued with respect to any of
the foregoing pursuant to a stock split or stock dividend.
"Registration Expenses" shall mean all expenses to be incurred by
the Company in connection with the Holders' exercise of their registration
rights under this Agreement, including, without limitation, all registration and
filing fees, printing expenses, Nasdaq listing fees, fees and disbursements of
counsel for the Company, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company, which shall be paid in any
event by the Company).
"Registration Statement" shall have the meaning set forth in
Section 2(a) herein.
"Regulation D" shall mean Regulation D promulgated under the
Securities Act, as amended from time to time.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"Selling Expenses" shall mean all underwriting discounts and
selling commissions and transfer taxes, if any, applicable to the sale of
Registrable Securities and all fees and disbursements of counsel for Holder not
described within "Registration Expenses."
2. Registration Requirements. The Company shall file with the
Commission, not later than ten (10) business days after the Closing Date, a
registration statement covering the resale of the Registrable Securities, and
shall take all action necessary to qualify the Registrable Securities under
state "blue sky" laws as hereinafter provided. The Company shall use its
diligent best efforts to effect the foregoing registration (including, without
limitation, the execution of an undertaking to file amendments and
post-effective amendments, appropriate qualification under and compliance with
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act) all in accordance
with this Agreement. Such best efforts by the Company shall include, without
limitation, the following:
(a) The Company shall file (i) registration statements with the
Commission pursuant to Rule 415 under the Securities Act on Form S-3 under the
Securities Act and the Company shall use its best efforts to qualify for the use
of such Form (or in the event that the Company is ineligible to use such form,
such other form as the Company is eligible to use under the Securities Act)
covering all of the Registrable Securities to be so registered (each, a
"Registration Statement"); (ii) such blue sky filings as shall be reasonably
requested to permit such sales, provided, however, that the Company shall not be
required to register the Registrable Securities in any jurisdiction that would
subject it to general service of process in any such jurisdiction where it is
not then so subject or subject the Company to any tax in any such jurisdiction
where it is not then so subject or require the Company to qualify to do business
in any jurisdiction where it is not then so qualified; and (iii) required
filings with the National Association of Securities Dealers, Inc. ("NASD") and
any exchange where the Shares are traded. The Company shall use its diligent
best
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efforts to have the Registration Statement and other filings declared effective
as soon as practicable after the filing of such Registration Statement.
(b) The Company shall make available for inspection and review by
the Holders, the Holders' Representative, any underwriter participating in any
disposition pursuant to a Registration Statement, and any attorney or accountant
retained by any Holder, the Holders' Representative or underwriter, any such
registration statement or amendment or supplement or any blue sky, NASD or other
filing, all financial and other records, pertinent corporate documents and
properties of the Company as they may reasonably request for the purpose, and
cause the Company's officers, directors and employees to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with such Registration Statement; provided, however,
that the relevant Holder shall first agree in writing with the Company that any
information that is reasonably and in good faith designated by the Company in
writing as confidential at the time of delivery of such information shall be
kept confidential by the Holder and that the Holder will use his or her best
efforts to cause its representatives, the Holders' Representative, and such
other persons to keep such information confidential, unless (i) disclosure of
such information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements pursuant
to Federal securities laws in connection with the filing of any Registration
Statement or the use of any prospectus referred to in this Agreement), (iii)
such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by any such person, (iv) such
information becomes available to any such person from a source other than the
Company and such source, to the knowledge of such persons, is not bound by a
confidentiality agreement with the Company, or (v) such information was known to
or is developed by such persons without reference to such confidential
information of the Company.
(c) The Company will keep the Holders and the Holders'
Representative advised in writing as to initiation of each registration and as
to the completion thereof.
(d) The Company shall keep such registration effective for the
period ending on the earliest to occur of (i) on the third anniversary of the
Closing Date, (ii) when the Holders have completed the distribution of the
Registrable Securities described in the registration statement relating thereto,
or (iii) the date on which all the Registrable Securities are salable pursuant
to Rule 144 promulgated under the Securities Act, without regard to any
limitation on volume.
(e) The Company shall promptly notify the Holders' Representative
in writing by telecopier of any stop order, injunction or other order or
requirement of the SEC or any other governmental agency is issued which suspends
the effectiveness of any such registration.
(f) The Company shall promptly furnish such number of
prospectuses and other documents incident thereto as the Holders from time to
time may reasonably request.
(g) The Company shall promptly notify the Holders' Representative
in writing by telecopier if any registration statement with respect to any
Registrable Securities is no longer current or includes an untrue statement of
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, in which
case the Holders shall suspend use of such registration statement until notified
by the Company. In such
-3-
event, the Company shall use its best efforts to correct any such matter as soon
as practicable so that such registration statement may again be used.
(h) The Company shall furnish, at the request of any Holder, on
the date that the registration statement with respect to such securities becomes
effective, (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the Holders (provided however that no opinion shall be required with respect
to the accuracy of the factual disclosures in such registration statement), and
(ii) to the extent permitted by the rules of the AICPA, a letter dated such
date, from the independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
Holders.
3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Agreement shall be borne by the Company, and all Selling Expenses shall be borne
by the Holder.
4. Indemnification.
(a) Company Indemnity. The Company will indemnify the Holders,
any officers, directors and partners of any Holder, and each person controlling
any Holder within the meaning of Section 15 of the Securities Act and the rules
and regulations thereunder, and each underwriter, if any, and each person who
controls, within the meaning of Section 15 of the Securities Act and the rules
and regulations thereunder, any underwriter, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any registration
effected pursuant to this Agreement, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or any violation by the Company of
the Securities Act or any state securities law or in either case, any rule or
regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration, and
will reimburse the Holders, any officers, directors and partners of any Holder,
and each person controlling any Holder, each such underwriter and each person
who controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action; provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission (or alleged untrue statement or omission) based upon written
information furnished to the Company by the Holders' Representative or any
Holder and stated to be specifically for use therein. The indemnity agreement
contained in this Section 4(a) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent will not be withheld
unreasonably).
(b) Holder Indemnity. Each Holder severally but not jointly with
other Holders will, if Registrable Securities held by it are included in a
registration statement effected pursuant to this Agreement, indemnify the
Company, each of its directors, officers, partners, each person who controls the
Company within the meaning of Section 15 of the Securities Act and the rules and
-4-
regulations thereunder, each other Holder, and each of their officers, directors
and partners, and each person controlling such other Holder, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other document incident to any registration of Registrable Securities pursuant
to this Agreement, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and will reimburse the Company and such other Holders and their
directors, officers and partners or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by the Holder and
stated to be specifically for use therein; provided, however, that the
obligations of the Holder shall not apply to amounts paid in settlement of any
such claims, losses, damages or liabilities if such settlement is effected
without the consent of the Holder (which consent shall not be withheld
unreasonably). Notwithstanding anything to the contrary in this Section 4, any
Holder's liability under this Section 4(b) with respect to any particular
registration shall be limited to an amount equal to the proceeds received by
such Holder from the Registrable Securities sold in such registration.
(c) Procedure. Each party entitled to indemnification under this
Section 4 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at its own expense, and provided, further, that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section except to
the extent that the Indemnifying Party is actually prejudiced by such failure to
provide notice. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of the Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to all
Indemnified Parties of a release from all liability in respect of such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as any Indemnifying Party may reasonably request
in writing.
5. Contribution. If the indemnification provided for in Section 4 herein
is unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein, then each Indemnifying Party, in lieu
of indemnifying the Indemnified Parties, shall contribute to the amount paid or
payable by such Indemnified Parties as a result of such losses, claims, damages
or liabilities as between the Company on the one hand and the Indemnified
Parties on the other, in such proportion as is appropriate to reflect, the
relative fault of the Company on the one hand, and of the Indemnified Parties on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations.
-5-
The relative fault of the Company on the one hand, and of the
Holder on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the Company
or by the Holder or its representative, and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 4 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 4(a) or 4(b) hereof had been
available under the circumstances.
The Company and the Holder agree that it would not be just and
equitable if contribution pursuant to this Section 4 were determined by pro rata
allocation (even if the Indemnified Parties were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraphs.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraphs shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
6. Survival. The indemnity and contribution agreements contained in
Sections 4 and 5 shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of any Indemnified Party or by or
on behalf of the Company or (ii) the consummation of the sale or successive
resales of the Registrable Securities.
7. Information By Holder and Any Underwriters. The Holders'
Representative shall furnish to the Company, within five (5) business days of
the Company's request therefor, such information regarding the Holders or
underwriters, as the case may be, and the distribution proposed by such Holders
or underwriters as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement.
8. Transfer or Assignment of Registration Rights. The rights granted to
the Former Endologix Holders by the Company under this Agreement, to cause the
Company to register Registrable Securities, may be transferred or assigned, as
the case may be, to a transferee or assignee of any Registrable Securities;
provided that (i) the Company is given written notice by the assigning Former
Endologix Holder or the transferee or assignee of Holder at the time of or
within a reasonable time after such transfer or assignment, stating the name and
address and telecopier number of such transferee or assignee and identifying the
securities with respect to which such registration rights are being transferred
or assigned; (ii) the transferee or assignee of such rights is not deemed by the
Board of Directors of the Company in its reasonable judgment, to be a competitor
of the Company; and (iii) the transferee or assignee of such rights agrees to be
bound by this Agreement.
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9. Rule 144 Requirements. The Company shall make and keep publicly
available and available to the Holders, pursuant to Rule 144 of the Commission
under the Securities Act, such information as shall be necessary to enable the
Holders to make sales of restricted securities, as defined in such rule,
pursuant to that rule. So long as a Holder owns any Registrable Securities, the
Company will furnish to any Holder, upon request made by such Holder at any time
after the undertaking of the Company in the preceding sentence shall have first
become effective, a written statement signed by the Company, describing briefly
the action the Company has taken or proposes to take to comply with the current
public information requirements of Rule 144. The Company will, at the request of
any Holder of Registrable Securities, upon receipt from such Holder of a
certificate certifying (i) that such Holder has held such Registrable Securities
for a period of not less than two (2) consecutive years, (ii) that such Holder
has not been an affiliate (as defined in Rule 144) of the Company at any time
during the preceding ninety (90) days, and (iii) as to such other matters as may
be appropriate in accordance with Rule 144, remove from the stock certificates
representing such Registrable Securities that portion of any restrictive legend
which relates to the registration provisions of the Securities Act.
10. Miscellaneous.
(a) Entire Agreement; Counterparts. This Agreement contains the
entire understanding and agreement of the parties with respect to the subject
matter hereof, and may not be modified or terminated except by a written
agreement signed by the Company and the Holders of at least a majority of the
Registrable Securities. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.
(b) Notices. All notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed to have been
properly given or made on the date personally delivered or on the date mailed,
by first class registered or certified mail with postage prepaid, by private
nationally recognized courier service or by facsimile and confirmed, if
delivered, mailed, courier or facsimile to the Holders at the address or
telecopier number, if any, indicated on the records of the Company or to the
Company at the following addresses:
Radiance Medical Systems, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may designate a different address by providing written notice
of such new address to the other parties hereto.
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(c) Governing Law; Consent of Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of the State of
California, without giving effect to principles of conflicts of laws thereof.
Each of the Company and the Holders (i) hereby irrevocably submits to the
exclusive jurisdiction of State or federal courts of the Orange County,
California for the purposes of any suit, action or proceeding arising out of or
relating to this Agreement and (ii) hereby waives, and agrees not to assert in
any such suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper.
(d) Headings. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
(e) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(f) Remedies. In the event of a breach by the Company of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of any of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(g) Registrable Securities Held by the Company. Whenever the
consent or approval of Holders of Registrable Securities is required pursuant to
this Agreement, Registrable Securities held by the Company shall not be counted
in determining whether such consent or approval was duly and properly given by
such Holders.
(h) Term. The agreements of the Company contained in this
Agreement shall continue in full force and effect so long as any Holder holds
any Registrable Securities.
(i) No Inconsistent Agreements. The Company has not previously
entered into any agreement with respect to its Common Stock granting any
registration rights to any Person inconsistent with this Agreement, and will not
on or after the date of this Agreement enter into any agreement with respect to
its securities which grants demand registration rights inconsistent with this
Agreement to anyone or which is inconsistent with the rights granted to the
Holders of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
COMPANY:
RADIANCE MEDICAL SYSTEMS, INC.
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By:
---------------------------------
Its:
--------------------------------
FORMER ENDOLOGIX HOLDERS
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EXHIBIT B
Name Name
---- ----
EXHIBIT B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of February ___,
2002 by and among RADIANCE MEDICAL SYSTEMS, INC., a Delaware corporation
("Radiance"), the Holders' Representative (as defined in Section 7 below) on
behalf of the persons listed on Schedule A of Exhibit A hereto (collectively,
the "Holders") and Commonwealth Land Title Company (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Radiance, RMS Acquisition Corp., a Delaware corporation, and
ENDOLOGIX, Inc., a Delaware corporation ("Endologix"), have entered into an
Agreement and Plan of Merger dated as of February 8, 2002 (the "Merger
Agreement"), a copy of which has been delivered to the Escrow Agent and to the
Holders (all capitalized terms not otherwise defined in this Agreement having
the meanings set forth in the Merger Agreement); and
WHEREAS, Section 2.1(b)(v) of the Merger Agreement provides that
Radiance may issue the Milestone Payment in the names of the Holders and deliver
it to the Escrow Agent to be held in the escrow fund for the purpose of securing
Radiance's claims for indemnification pursuant to Section 9.2 of the Merger
Agreement; and
WHEREAS, the Escrow Agent is willing to act as escrow agent for Radiance
and the Holders on the terms and conditions set forth herein:
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
conditions set forth herein, the parties agree as follows:
1. Establishment of Escrow; Escrow Share Certificates. In the event of a
claim for Radiance Indemnifiable Damages and in accordance with the procedures
set forth in Sections 2.1(b)(v) and 9.2 of the Merger Agreement, Radiance will
deposit the Milestone Payment or a portion thereof (the "Escrow Fund"), which
may include shares of Radiance Common Stock (the "Escrow Shares") in the names
of the Holders, or in the name of the Holders' Representative (as defined in
Section 7 below) as agent for the Holders, with the Escrow Agent, and the
Holders (or the Holders' Representative, as applicable) shall execute
assignments in blank with respect to the Escrow Shares and cause them to be
delivered to the Escrow Agent. Such deposit shall equal an amount of Escrow
Shares and Cash equal to the amount of the then pending claim for Radiance
Indemnifiable Damages. For such purposes, Escrow Shares shall be valued in
accordance with the provisions of Section 2.1(b)(iv) of the Merger Agreement.
The Milestone Payment shall be held by the Escrow Agent in escrow subject to the
terms and conditions set forth herein. Radiance will cooperate with the Escrow
Agent, including making any written instructions required by its stock transfer
agent, to permit the Escrow Agent to make any necessary exchanges of Radiance
stock certificates so as to facilitate any distribution of Escrow Shares
pursuant to this Agreement.
The Holders (or the Holders' Representative, as applicable) shall
deliver to Radiance's stock transfer agent at or shortly after the Closing a
letter, substantially in the form of Exhibit A hereto, instructing the transfer
agent to distribute all distributions in respect of the Escrow Shares, other
than taxable dividends, to the Escrow Agent pursuant to Section 3 of this
Agreement.
2. Claims Against Escrow Fund. Pursuant to Section 9.2 of the Merger
Agreement, Radiance is entitled to make claims against the Escrow Fund for
Radiance Indemnifiable Damages. Unless this Agreement is terminated at an
earlier date, Radiance shall be entitled to make claims against the Escrow Fund
for such purpose at any time through and including May __, 2003 (one year after
the Effective Time) (the "Escrow Period") (unless this Agreement is terminated
at an earlier date pursuant to Section 5 hereof), but not thereafter.
Notwithstanding the foregoing, the Escrow Period shall be extended as it relates
to any claims for Radiance Indemnifiable Damages made during the Escrow Period
which remain in dispute and have not been resolved as of such date. Any claim by
Radiance against the Escrow Fund for Radiance Indemnifiable Damages during the
above time period shall be presented to the Escrow Agent as follows:
(a) Radiance shall notify the Escrow Agent and the Holders'
Representative in writing of any Radiance Indemnifiable Damages that Radiance
claims are subject to indemnification under Section 9.2 of the Merger Agreement.
The notice ("Notice of Claim") shall describe the claim and specify the amount
thereof.
(b) The Holders' Representative may contest Radiance's claim on
behalf of the Holders by giving the Escrow Agent and Radiance written notice of
such contest within 20 business days after receipt of such claim for
indemnification. If Radiance's indemnification claim remains in dispute and
unresolved for 30 days following Radiance's receipt of the written notice of
contest, the disputed claim shall be submitted to arbitration in accordance with
Section 8 below.
(c) If the Holders, or the Holders' Representatives, as
applicable, do not contest Radiance's indemnification claim pursuant to Section
2(b) above, then the Escrow Agent shall deliver to Radiance an amount from the
Escrow Fund equal to the dollar amount of the Radiance Indemnifiable Damages
claimed by Radiance in its Notice of Claim. For this purpose, Escrow Shares so
delivered shall be valued in accordance with the provisions of Section 2.1(b)(v)
of the Merger Agreement (the "Escrow Share Price"). In the event that the Escrow
Funds contains both Escrow Shares and cash, the Escrow Agent shall deliver both
Escrow Shares and cash to Radiance in the same ratio as then existing in the
Escrow Fund.
(d) If the Holders or the Holders' Representative, as applicable,
contest Radiance's indemnification claim pursuant to Section 2(b) above, the
Escrow Agent shall deliver an amount from the Escrow Fund to Radiance upon
receipt of either:
(i) a copy of a written settlement agreement signed by
both Radiance and the Holders' Representative, or
(ii) a copy of a final and nonappealable arbitration award
pursuant to the arbitration procedure in Section 8 below.
The amount to be delivered to Radiance by the Escrow Agent under
this Section 2(d) shall be equal to the dollar amount of Radiance Indemnifiable
Damages, as set forth in the settlement agreement or the arbitration award, as
applicable, determined using the Escrow Share Price, and shall be delivered in
the manner set forth in Section 2(c).
3. Dividends, Stock Splits, Interest and Other Distributions. Other than
taxable dividends (which shall be distributed to the Holders and shall not be
made part of the Escrow Fund), distributions declared in respect of the Escrow
Shares (including without limitation stock splits and
2
non-taxable stock dividends) and interest earned on any cash in the Escrow Fund
during the term of this Agreement shall be made part of the Escrow Fund. If the
Escrow Shares are reclassified or changed into other securities or property
pursuant to a reclassification of all shares of Radiance Common Stock or a
merger of Radiance, then such reclassified shares or other securities or
property, as the case may be, shall be made part of the Escrow Fund.
4. Voting Rights of Escrow Shares. Each Holder shall have the right to
vote his or her pro rata number of Escrow Shares in the Escrow Fund (as set
forth in Schedule A of this Agreement) on any issues that come for a vote before
the stockholders of Radiance. Prior to any vote of Radiance stockholders during
the term of this Agreement, Radiance shall cause to be delivered to the Holders
appropriate voting and proxy materials in the same manner as provided to other
stockholders of Radiance so as to permit the Holders to exercise their voting
rights with respect to the Escrow Shares.
5. Termination. This Agreement shall terminate and the Escrow Agent
shall have no further responsibilities hereunder upon the earlier to occur of:
(i) the expiration of the Escrow Period set forth in Section 2 above; and (ii)
Radiance's delivery to the Escrow Agent of written notice that Radiance has
elected to terminate this Agreement (which election shall be at Radiance's sole
option and in its sole discretion). Provided the Escrow Agent has received a
Notice of Claim within the Escrow Period, the Escrow Agent shall reserve from
the Escrow Fund an amount sufficient to pay any outstanding claims ("Reserve
Claims") of Radiance against the Escrow Fund on that date. For purposes of
establishing the reserve, any Escrow Shares so reserved shall be valued at the
Escrow Share Price, or if not traded on the Nasdaq, on the primary national
exchange on which such stock is traded, for the twenty trading days ending on
the trading day preceding the establishment of such reserve. This Agreement
shall continue in force as to the amount so reserved until the resolution of
such Reserve Claims upon receipt of either: (i) a copy of a written settlement
agreement signed by both Radiance and Holders' Representative; or (ii) a copy of
a final and nonappealable arbitration award pursuant to the arbitration
procedure set forth in Section 8 below (the "Final Resolution"). Upon the Final
Resolution of each Reserve Claim, on a claim-by-claim basis, the Escrow Agent
shall distribute to Radiance the amount that Radiance is entitled to receive
with respect to such Reserve Claim. Escrow Shares so delivered shall be valued
at the Escrow Share Price. Upon the Final Resolution of all Reserve Claims and
the distribution to Radiance of all reserved amounts to which Radiance is
entitled pursuant to such claims, all remaining reserved amounts shall be
promptly distributed to the Holders. Any distribution of any portion of the
Escrow Fund held in the name of the Holders' Representative shall be made to the
Holders according to the percentages shown in Schedule A of Exhibit A hereto.
6. The Escrow Agent.
(a) Radiance shall pay the Escrow Agent's fee for its ordinary
services under this Agreement in accordance with the fee schedule set forth on
Schedule B attached hereto.
(b) In performing any duties under this Agreement, the Escrow
Agent shall not be liable for damages, losses, or expenses, except for gross
negligence or willful misconduct on the part of the Escrow Agent. The Escrow
Agent shall not incur any such liability for (i) any act or failure to act made
or omitted in good faith, (ii) any action taken or omitted in reliance upon any
instrument, including any written statement or affidavit provided for in this
Agreement that such agent shall in good faith believe to be genuine, or (iii)
forgeries, fraud, impersonations, or determining the scope of any representative
authority. In addition, the Escrow Agent may consult
3
with legal counsel in connection with its duties under this Agreement and shall
be fully protected in any act taken, suffered, or permitted by it in good faith
in accordance with the advice of counsel. The Escrow Agent is not responsible
for determining and verifying the authority of any such person acting or
purporting to act on behalf of any party to this Agreement.
(c) If any controversy arises between the parties to this
Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it. The Escrow Agent
may hold the Escrow Fund and may wait for settlement of any such controversy by
arbitration pursuant to Section 8 hereof, by final appropriate legal proceedings
or other means as, in the Escrow Agent's discretion, may be required, despite
what may be set forth elsewhere in this Agreement. In such event, the Escrow
Agent will not be liable for interest or damage. Furthermore, the Escrow Agent
may at its option, file an action of interpleader requiring the parties to
answer and litigate any claims and rights among themselves. Upon initiating such
action, the Escrow Agent shall be fully released and discharged of and from all
obligations and liabilities imposed by the terms of this Agreement, except for
obligations or liabilities arising by reason of the prior gross negligence or
willful misconduct on the part of the Escrow Agent.
(d) The Holders, to the extent of the Escrow Fund only, and
Radiance shall indemnify and hold harmless the Escrow Agent and shall share
equally any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and attorneys' fees) which it may incur or
which may be imposed on it in connection with the performance of the Escrow
Agent's duties under this Agreement, including but not limited to any litigation
arising from this Agreement, but not including losses, claims, damages,
liabilities or expenses arising out of gross negligence or willful misconduct on
the part of the Escrow Agent.
(e) The Escrow Agent may resign at any time upon giving at least
30 days' written notice to the parties; provided, however, that no such
resignation shall become effective until the appointment of a successor escrow
agent which shall be accomplished as follows: The parties shall use their best
efforts to mutually agree on a successor escrow agent within 30 days after
receiving such notice. If the parties fail to agree upon a successor escrow
agent within such time, the Escrow Agent shall have the right to appoint a
successor escrow agent authorized to do business in the state of California. The
successor escrow agent shall execute and deliver an instrument accepting such
appointment, and it shall, without further acts, be vested with all the estates,
properties, rights, powers and duties of the predecessor Escrow Agent as if
originally named as the Escrow Agent. Upon such appointment, the predecessor
Escrow Agent shall be discharged from any further duties and liability under
this Agreement, except for obligations or liabilities arising by reason of the
prior gross negligence or willful misconduct on the part of the Escrow Agent.
(f) Any company into which the Escrow Agent may be merged or with
which it may be consolidated, or any company to whom the Escrow Agent may
transfer a substantial amount of its escrow business, shall be the successor to
the Escrow Agent without the execution or filing of any paper or any further act
on the part of any of the parties to this Agreement, anything herein to the
contrary notwithstanding.
(g) The Escrow Agent shall not sell, encumber or otherwise
dispose of the Escrow Shares held as a part of the Escrow Fund, except that the
Escrow Agent shall, upon the written direction of the Holders' Representative
and Radiance, effect a sale or other disposition of the Escrow Shares in a
transaction involving (i) the receipt by the stockholders of Radiance of cash in
4
any merger or reorganization in exchange or partly in exchange for shares of
Common Stock of Radiance; (ii) the sale of all or substantially all of the
assets of Radiance for cash and the distribution to stockholders of Radiance of
the proceeds of such sale as a liquidating distribution; or (iii) a cash tender
offer for all or a part of the shares of Common Stock of Radiance. In the event
of any receipt of cash by the Escrow Agent as a result of any of such
transactions or as a result of a Milestone Payment, the Escrow Agent shall
invest and reinvest all cash funds from time to time comprising the Escrow Fund,
together with the earnings thereon, in money market savings accounts or
certificates of deposit at the Escrow Agent which are insured by the Federal
Deposit Insurance Corporation up to applicable limits (a "Money Market Fund").
The Escrow Agent is authorized to liquidate in accordance with its customary
procedures any portion of the Escrow Fund consisting of investments to provide
for payments required to be made under this Agreement.
7. Holders' Representative. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, or such successor as may
be agreed upon by a majority in interest of the Holders and identified to
Radiance by such Holders in writing, shall act as representative of the Holders
(the "Holders' Representative"). The Holders' Representative may, but shall not
be required to, take any and all action that may be necessary or appropriate on
behalf of the Holders with respect to this Agreement, including, without
limitation, objecting to any claim by Radiance against the Escrow Fund, engaging
counsel to represent the Holders in connection with any such claim, engaging any
other professionals or other consultants in connection with any such claim,
negotiating and settling any such claim, supervising and directing counsel and
any other professionals or other consultants in connection with any such claim,
and authorizing the sale of any of the Escrow Shares. The Holders'
Representative may, on behalf of the Holders, take any action that the Holders'
Representative in good ▇▇▇▇▇ ▇▇▇▇▇ to be in the best interests of the Holders
and shall, on behalf of the Holders, take any action that the Holders'
Representative may be instructed or expressly authorized to take by a majority
in interest of the Holders, including contesting or settling any claim by
Radiance. To the maximum extent permitted by law, the Holders' Representative
shall have no liability of any kind or nature whatsoever with respect to any
action or omission taken by the Holders' Representative on behalf of the
Holders, where such action is taken either with the consent or the express
authorization of a majority in interest of the Holders or is otherwise taken in
good faith on behalf of the Holders.
8. Arbitration. All disputes or controversies arising under or in
connection with this Agreement shall be settled exclusively by final and binding
arbitration in accordance with Section 9.13 of the Merger Agreement.
9. Tax Reporting. Each Holder shall deliver to the Escrow Agent a
completed Form W-9 from which Escrow Agent shall prepare and file with the
Internal Revenue Service all tax reports that the Escrow Agent is required to
prepare, if any, on the Escrow Fund for the benefit of the Holders.
10. Governing Law. This Agreement shall be governed by the laws of the
State of California without regard to principles of conflicts of laws.
11. Amendments; Modifications. This Agreement may not be amended or
modified except pursuant to a written agreement signed by each of the parties
hereto.
12. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given on the same day if delivered personally, or by
facsimile transmission with voice confirmation of receipt, or shall be deemed
given on the date receipt is confirmed if mailed by
5
registered or certified mail or commercial overnight courier (e.g., Federal
Express, DHL, Network Courier, Sonic, etc.), return receipt or confirmation of
delivery requested, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to Radiance: Radiance Medical Systems, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Stradling, Yocca, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holders'
Representative: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
c/o Endologix Medical Systems, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Holders' Representative
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the
Escrow Agent:
--------------
--------------
--------------
13. Effect on Successors in Interest, Assignees. This Agreement shall
inure to the benefit of and be binding upon the heirs, administrators,
executors, assignees and successors of each of the parties hereto.
14. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
RADIANCE MEDICAL SYSTEMS, INC.
By
--------------------------------------
Title
-----------------------------------
HOLDERS' REPRESENTATIVE on behalf of
herself and as representative of the
individual shareholders of Endologix
Medical Systems, Inc.
----------------------------------------
Print Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Holders' Representative
COMMONWEALTH LAND TITLE COMPANY
By
--------------------------------------
Title
-----------------------------------
7
EXHIBIT A
▇▇▇▇▇ ▇▇▇▇▇▇ Shareholder Services, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Radiance Medical Systems, Inc.
Ladies and Gentlemen:
The following shares of Common Stock of Radiance are currently being
held by _______________________, as Escrow Agent pursuant to that certain Escrow
Agreement, dated as of ________________ by and among Radiance, the undersigned
and the Holders (the "Escrow Agreement"):
Share certificate no. No. of Radiance shares
represented
[insert certif. numbers] [insert number of shares]
We hereby instruct you to pay and deliver any certificates representing
stock splits or non-taxable stock dividends, or any other form of distribution
made by Radiance in respect of the shares identified above (except for taxable
dividends) to ____________________, as Escrow Agent pursuant to the terms of the
Escrow Agreement.
-----------------------------------
[Names]
1
SCHEDULE A
Number of % of Total
Holder Name Escrow Shares Escrow Shares
-------------------------------- ----------------- -----------------
Total:
---------- ----------
100.0
1
SCHEDULE B
FEE SCHEDULE
See attached.
1
