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EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement"), dated as of December 15, 1999,
is by and between American Medical Systems, Inc., a Delaware corporation
("Parent") and Urotek Ltd., an Israeli company ("Urotek").
W I T N E S S E T H:
WHEREAS, the parties hereto entered into the Agreement and Plan Merger
dated as of November 12, 1999, as amended (the "Merger Agreement") by and among
Parent, Persuade Merger Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent, and Influence, Inc., a Delaware corporation ("Influence"),
Urotek and certain other principal stockholders of Influence, pursuant to which
Influence merged with Merger Subsidiary resulting in Influence as the surviving
entity; and
WHEREAS, Xx. Xxxxxxxxx Xxxxx, through his personal holding company Urotek,
has agreed to retain pursuant to the terms of the Merger and as contemplated in
the Merger Agreement 225,000 shares of the common stock, par value $0.001 per
share, of Influence (the "Retained Common Stock"), which Retained Common Stock
shall not be converted into the right to receive Merger Consideration (as
defined in the Merger Agreement), and Parent agrees that Xx. Xxxxx, through
Urotek, will retain such Retained Common Stock, on the terms and conditions set
forth in this Agreement.
NOW THEREFORE, in consideration of the premises and the covenants and
agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01 Definitions. Unless otherwise defined herein, the capitalized
terms used herein shall have the respective meanings attributed to them in the
Merger Agreement. The following terms, as used herein, have the following
meanings:
"Additional Retained Merger Consideration" shall have the meaning ascribed
to it in Section 2.03(b) hereof.
"Additional Retained Series A Consideration" shall have the meaning
ascribed to it in Section 2.03(b)(i) hereof.
"Additional Retained Series D Consideration" shall have the meaning
ascribed to it in Section 2.03(b)(ii) hereof.
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in Minneapolis, Minnesota are authorized or required by
law to close.
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"Change in Control" shall have the meaning ascribed to it in Section
2.02(b) hereof.
"Charter" shall mean the Fourth Amended and Restated Certificate of
Incorporation of Parent as in effect as of the date hereof.
"Determination Date" shall have the meaning ascribed to it in Section
2.03(b) hereof.
"$" or "Dollar" shall mean and refer to United States dollars.
"Exchange Date" shall mean the date specified in the Parent Notice or
Urotek Notice, as the case may be, on which Urotek shall transfer, assign and
deliver the number of shares of Retained Common Stock to Parent as specified in
such Notice in exchange for Parent's transfer, assignment and delivery of the
Parent Shares to Urotek or its assigns; provided that the Exchange Date
specified in the Parent Notice or Urotek Notice, as the case may be, shall be
not less than 10 or more than 60 calendar days after the date when such Notice
is given, unless the parties shall otherwise agree.
"GAAP" shall have the meaning set forth in section 4.01(h) hereof.
"Governmental Authority" means any foreign, domestic, federal, territorial,
state or local governmental authority, quasi-governmental authority,
instrumentality, court, government or self-regulatory organization, commission,
tribunal or organization or any regulatory, administrative or other agency, or
any political or other subdivision, department or branch of any of the
foregoing.
"Material Adverse Effect" shall have the meaning ascribed to it in Section
4.01 hereof.
"Parent Shares" shall mean the shares of Series A Preferred Stock and
Series D Preferred Stock which shall be exchanged for the Retained Common Stock
in respect of the Retained Merger Consideration and Additional Retained Merger
Consideration, as the case may be, upon Urotek's transfer, assignment and
delivery to Parent of shares of Retained Common Stock, together with all
dividends and interest accrued or otherwise paid in accordance with the terms of
the Charter, whether or not declared, from the date that any Merger
Consideration in respect of which such Retained Merger Consideration or
Additional Merger Consideration becomes payable or is paid (as though such
Parent Shares were issued on the date of such reduction of Merger Consideration
pursuant to Section 2.01) through the Exchange Date or any Determination Date,
as the case may be.
"Parent Notice" shall mean the written notice given by Parent to Urotek of
Parent's election pursuant to Section 2.02(a) hereof to cause Urotek to
transfer, assign and deliver the number of shares of the Retained Common Stock
specified therein to Parent in exchange for Parent Shares.
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"Person" means an individual, corporation, partnership, limited liability
company, association, trust, estate or other entity or organization, including a
Governmental Authority.
"Retained Percentage" shall have the meaning set forth in Section 2.01(b)
hereof.
"Retained Common Stock" shall have the meaning set forth in the recitals
hereto.
"Retained Merger Consideration" shall have the meaning ascribed to it in
Section 2.01(a) hereof.
"Retained Series A Merger Consideration" shall have the meaning ascribed to
it in Section 2.03(a)(ii) hereof.
"Retained Series D Merger Consideration" shall have the meaning ascribed to
it in Section 2.03(a)(i) hereof.
"SEC" shall have the meaning ascribed to it in Section 4.02(i) hereof.
"Series A Exchange Price" shall have the meaning ascribed to it in Section
2.03(a)(ii) hereof.
"Series A Preferred Stock" shall mean the Series A Non-Voting Preferred
Stock, par value $.01 per share, of Parent, together with the rights and terms
associated with such preferred stock as set forth in the Charter.
"Series D Exchange Price" shall have the meaning ascribed to it in Section
2.03(a)(i) hereof.
"Series D Preferred Stock " shall mean the Series D Convertible Voting
Preferred Stock, par value $.01 per share, of Parent, together with the rights
and terms associated with such preferred stock as set forth in the Charter.
"Stockholders Agreement" shall mean the Stockholders Agreement, dated as of
September 25, 1998, among Warburg, Xxxxxx Equity Partners, L.P. ("Warburg"),
Parent and certain other investors of the Parent identified therein (the
"Investors"), as amended by Amendment No. 1 to the Stockholders Agreement, dated
as of July 27, 1999, among Warburg, Parent, the Investors and New Investors (as
defined therein). A copy of the Stockholders Agreement, as amended, is attached
hereto as Exhibit A.
"Transfer" shall have the meaning ascribed to it in Section 5.01(d) hereof.
"Urotek Notice" shall mean the written notice given by Urotek to Parent of
Urotek's election pursuant to Section 2.02(b) hereof to transfer, assign and
deliver the number of shares of Retained Common Stock specified therein to
Parent in exchange for Parent Shares.
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ARTICLE II. THE EXCHANGE
Section 2.01 Reduction of Merger Consideration.
(a) The amount of Merger Consideration to be paid by Parent in connection
with the Merger consisting of the Initial Merger Consideration,
Contingent Merger Consideration and Holdback Merger Consideration
shall be reduced and retained by Parent by an amount equal to the
product of (x) the amount of the Merger Consideration payable pursuant
to Article 2 of the Merger Agreement, multiplied by (y) the Retained
Percentage. The total Dollar value of the reductions to the payment of
the Merger Consideration made pursuant to this paragraph (a) as of the
Exchange Date shall be referred to herein as the "Retained Merger
Consideration."
(b) The "Retained Percentage" for purposes of this Section 2.01 shall
mean:
(i) with respect to the Initial Merger Consideration, a fraction
equal to 0.022507 (or such other fraction that AMS and the
Stockholders Representative shall agree in writing represents the
portion of the total Initial Merger Consideration that would have
been distributable pursuant to the Escrow and Exchange Agency
Agreement, dated the date hereof, between the Stockholders
Representatives, AMS and Norwest Bank Minnesota, National
Association to Urotek in respect of the Retained Common Stock);
(ii) with respect to the Contingent Merger Consideration, a fraction
equal to 0.025797; and
(ii) with respect to the Holdback Merger Consideration, a fraction
equal to 0.022879
Section 2.02 Optional Exchange.
(a) At any time after the date hereof, if Parent determines in its sole
discretion that it is necessary or advisable or in the best interests
of Parent to acquire the outstanding shares of Retained Common Stock,
Parent may upon delivery of the Parent Notice require and cause,
without further act, Urotek to transfer, assign and deliver to Parent
the number of shares of Retained Common Stock specified in the Parent
Notice in exchange for Parent Shares.
(b) At any time after (or in the case of clauses (ii) or (iii) below,
immediately prior to or after) (i) December 31, 2001, (ii) the
effective date of a registration statement registering Parent's
capital stock under the Securities Act for public distribution or
(iii) a Change in Control of Parent, Urotek may upon delivery of the
Urotek Notice cause, without further act, Parent to exchange the
number of shares of Retained Common Stock specified therein, which
shares Urotek shall transfer, assign and deliver to Parent, for Parent
Shares. As used herein, a "Change in Control" shall mean the
occurrence after the Effective Time of any of the following: (x) the
acquisition of voting securities (other than upon the exchange of any
class of preferred stock) of Person by any person or group of persons
that
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results in such person or group, together with its affiliates,
becoming, directly or indirectly, the beneficial owner of in excess of
50% of the outstanding voting securities of Parent; (y) a merger or
consolidation of Parent with any other corporation or legal entity
regardless of which entity is the survivor, other than a merger or
consolidation which would result in the voting securities (or
preferred stock convertible into voting securities) of Parent
outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or being converted into voting securities of
the surviving entity) in excess of 50% of the voting securities of
Parent or such surviving entity outstanding immediately after such
merger or consolidation; or (z) the sale or disposition of all or
substantially all of Parent's assets other than in a transaction in
which holders of the voting securities of Parent immediately prior to
such transaction receive voting securities of the acquiror of such
assets or its affiliate that represent in excess of 50% of the voting
securities of such entity after consummation of such transaction.
Section 2.03 Exchange. The outstanding shares of Retained Common Stock shall
be exchanged for Parent Shares as follows:
(a) On the Exchange Date, in exchange for Urotek's transfer, assignment
and delivery of shares of Retained Common Stock to Parent, Parent
shall:
(i) convert 67% of the Retained Merger Consideration (the "Retained
Series D Consideration") into the number of shares of Series D
Preferred Stock which results from dividing the amount of the
Retained Series D Consideration as of the Exchange Date by the
exchange price that is in effect for such share at the time of
exchange computed as provided herein (the "Series D Exchange
Price"); and
(ii) convert 33% of the Retained Merger Consideration (the "Retained
Series A Consideration") into the number of shares of Series A
Preferred Stock which results from dividing the amount of the
Retained Series A Consideration as of the Exchange Date by the
exchange price that is in effect for such share at the time of
exchange computed as provided herein (the "Series A Exchange
Price", together with the Series D Exchange Price, the "Exchange
Prices").
(b) In consideration for Urotek's transfer, assignment and delivery of
shares of Retained Common Stock to Parent on the Exchange Date, if on
any day after the Exchange Date, Parent reduces and retains additional
Merger Consideration pursuant to Section 2.01 hereof ("Additional
Retained Merger Consideration") that becomes due and payable by Parent
after the Exchange Date to the former holders of the Company Common
Stock or Company Preferred Stock pursuant to the Merger Agreement (a
"Determination Date"), Parent immediately upon payment of such Merger
Consideration to such holders shall:
(i) convert 67% of the Additional Retained Merger Consideration (the
"Additional Retained Series D Consideration") into the number of
shares of Series D Preferred Stock which results from dividing
the amount of the Additional
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Retained Series D Consideration as of the applicable
Determination Date by the Series D Exchange Price; and
(ii) convert 33% of the Additional Retained Merger Consideration (the
"Additional Retained Series A Consideration") into the number of
shares of Series A Preferred Stock which results from dividing
the amount of the Additional Retained Series A Consideration as
of the applicable Determination Date by the Series A Exchange
Price.
(c) The initial Series D Exchange Price shall be Ten Dollars ($10) and the
initial Series A Exchange Price shall be One Thousand Dollars
($1,000). These Exchange Prices shall be adjusted from time to time as
provided in Article 3 hereof.
Section 2.04 Mechanics of Exchange. On the Exchange Date, Urotek shall
surrender the certificate or certificates for the number of shares of Retained
Common Stock to be exchanged for Parent Shares as specified in the Parent Notice
or Urotek Notice, as the case may be, duly endorsed, at the office of Parent or
any transfer agent thereof, or notify Parent or its transfer agent that such
certificates have been lost, stolen or destroyed and execute an agreement
reasonably satisfactory to Parent to indemnify Parent from any loss incurred by
it in connection with such certificates. Thereupon, and on any Determination
Date thereafter, Parent shall promptly issue and deliver to Urotek a certificate
or certificates for the number of shares of Series A Preferred Stock and Series
D Preferred Stock to which Urotek is entitled. Such exchange shall be deemed to
have been made immediately prior to the close of business on the Exchange Date,
and (a) the shares of Retained Common Stock to be exchanged shall be converted
into the right to receive Retained Merger Consideration and Additional Retained
Merger Consideration and (b) Urotek shall be treated for all purposes as the
record holder of such shares of Series A Preferred Stock and Series D Preferred
Stock on such date.
Section 2.05 Fractional Shares. Fractional shares of Series A Preferred Stock
or Series D Preferred Stock may be issued upon exchange of the Retained Common
Stock. In lieu of any fractional share to which Urotek would otherwise be
entitled, the Parent may pay cash equal to the product (rounded to the nearest
cent) of such fraction multiplied by the per share fair market value of Series A
Preferred Stock or Series D Preferred Stock, as the case may be, as determined
in good faith by the Board of Directors of Parent as of the Exchange Date.
ARTICLE III. ADJUSTMENTS TO THE EXCHANGE PRICES
Section 3.01 Adjustment for Stock Splits and Combinations. If Parent shall at
any time or from time to time after the Effective Time effect a stock split or
subdivision of the outstanding shares of Series A Preferred Stock or Series D
Preferred Stock, as the case may be, the Series A Exchange Price or Series D
Exchange Price, as the case may be, in effect immediately before that
subdivision shall be proportionately decreased, and, conversely, if Parent shall
at any time or from time to time after the Effective Time combine the
outstanding shares of Series A Preferred Stock or Series D Preferred Stock,
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as the case may be, into a smaller number of shares, the Series A Exchange Price
or Series D Exchange Price, as the case may be, in effect immediately before the
combination shall be proportionately increased. Any adjustment under this
Section 3 shall become effective at the close of business on the date the stock
split, subdivision or combination becomes effective.
Section 3.02 Adjustment for Dividends and Distributions. If Parent at any time
or from time to time after the Effective Time issues, or fixes a record date for
the determination of holders of Series A Preferred Stock or Series D Preferred
Stock, as the case may be, entitled to receive, a dividend or other distribution
payable solely in additional shares of (x) Series A Preferred Stock, to holders
of Series A Preferred Stock or (y) Series D Preferred Stock, to holders of
Series D Preferred Stock, in each such event the Series A Exchange Price or
Series D Exchange Price, as the case may be, that is then in effect shall be
decreased as of the time of such issuance or, in the event such record date is
fixed, as of the close of business on such record date, by:
(i) in the event that Parent distributes a dividend to holders of Series
A Preferred payable solely in Series A Preferred Stock, multiplying
the Series A Exchange Price then in effect by a fraction (A) the
numerator of which is the total number of shares of Series A
Preferred Stock issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date, and
(B) the denominator of which is the sum of the total number of shares
of Series A Preferred Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record
date; or
(ii) in the event that Parent distributes a dividend to holders of Series
D Preferred payable solely in Series D Preferred Stock, multiplying
the Series D Exchange Price then in effect by a fraction (A) the
numerator of which is the total number of shares of Series D
Preferred Stock issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date, and
(B) the denominator of which is the sum of the total number of shares
of Series D Preferred Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such record
date; plus
(iii) the number of shares of Series A Preferred Stock or Series D
Preferred Stock, as the case may be, issuable in payment of such
dividend or distribution; provided, however, that if such record date
is fixed and such dividend is not fully paid or if such distribution
is not fully made on the date fixed therefor, the Exchange Price for
such stock shall be recomputed accordingly as of the close of
business on such record date and thereafter the Exchange Price for
such stock shall be adjusted pursuant to this Section 3.02 to reflect
the actual payment of such dividend or distribution.
Section 3.03 Adjustments for Other Dividends and Distributions. If Parent at
any time or from time to time after the Effective Time issues, or fixes a record
date for the determination of holders of Series A Preferred Stock or Series D
Preferred Stock entitled to receive, a dividend or other distribution payable in
securities of Parent (other than (i)
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shares of Series A Preferred Stock, to holders of Series A Preferred Stock or
(ii) shares of Series D Preferred Stock, to holders of Series D Preferred Stock)
or other property, in each such event provision shall be made so that Urotek
shall receive upon exchange of the Retained Common Stock as contemplated herein,
in addition to the number of Parent Shares receivable thereupon, the amount of
securities of Parent or other property which it would have received had its
Retained Common Stock been exchanged into Series A Preferred Stock or Series D
Preferred Stock, as the case may be, on the date of such event and had it
thereafter, during the period from the date of such event to and including the
Exchange Date or Determination Date, as the case may be, retained such
securities or other property receivable by it as aforesaid during such period,
subject to all other adjustments called for during such period under this
Section 3 with respect to the rights of Urotek or with respect to such other
securities or other property by their terms. As used herein, the term "other
property" does not include cash.
Section 3.04 Adjustment for Reclassification, Exchange and Substitution. If at
any time or from time to time after the Effective Time, the Series A Preferred
Stock or Series D Preferred Stock, as the case may be, issuable upon the
exchange of the Retained Common Stock as contemplated herein is changed into the
same or a different number of shares of any class or series of stock, whether by
recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets provided for elsewhere in this Section 3), then
in any such event Urotek shall have the right thereafter to exchange such stock
into the kind and amount of stock and other securities and property receivable
upon such recapitalization, reclassification or other change by holders of the
number of shares of Series A Preferred Stock or Series D Preferred Stock, as the
case may be, into which such shares of Retained Common Stock could have been
exchanged into immediately prior to such recapitalization, reclassification or
change, all subject to further adjustment as provided herein or with respect to
such other securities or property by the terms thereof.
Section 3.05 Reorganization. If at any time or from time to time after the
Effective Time there is a capital reorganization of the Series A Preferred Stock
or Series D Preferred Stock (other than a recapitalization, subdivision,
combination, reclassification, exchange or substitution of shares provided for
elsewhere in this Section 3), as a part of such capital reorganization provision
shall be made so that Urotek shall thereafter be entitled to receive upon
exchange of the Retained Common Stock as contemplated herein the number of
shares of stock or other securities or property of the company to which a holder
of the number of shares of Series A Preferred Stock or Series D Preferred Stock,
as the case may be, deliverable upon exchange thereof would have been entitled
in such capital reorganization, subject to adjustment in respect of such stock
or securities by the terms thereof. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 3.05 with
respect to the rights of Urotek after such capital reorganization to the end
that the provisions of this Section 3 (including adjustment either of the Series
A Exchange Price or Series D Exchange Price then in effect and the number of
shares issuable upon exchange of the Retained Common Stock) shall be applicable
after that event and be as nearly equivalent as practicable.
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Section 3.06 Certificate of Adjustment. In each case of an adjustment or
readjustment of either of the Exchange Prices for the number of shares of Series
A Preferred Stock or Series D Preferred Stock or other securities issuable upon
exchange of the Retained Common Stock, Parent, at its own expense, shall cause
its chief financial officer to compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to Urotek. The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based. No adjustment in either Series A Exchange
Price or Series D Exchange Price shall be required to be made unless such
adjustment thereto would result in an increase or decrease of at least one cent,
but any adjustments not made because of this sentence shall be carried forward
and taken into account in any subsequent adjustment otherwise required
hereunder.
Section 3.07 Notices of Record Date. Upon (i) the establishment by Parent of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, or (ii) any capital reorganization of Parent, any reclassification
or recapitalization of the capital stock of Parent, any merger or consolidation
of Parent with or into any other corporation, or any transfer of all or
substantially all the assets of Parent to any other person or any voluntary or
involuntary dissolution, liquidation or winding up of Parent, Parent shall mail
to Urotek at least 20 days prior to the record date specified therein a notice
specifying (x) the date on which any such record is to be taken for the purpose
of such dividend or distribution and a description of such dividend or
distribution, (y) the date on which any such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation or winding up is
expected to become effective, and (z) the date, if any, that is to be fixed as
to when the holders of record of Series A Preferred Stock or Series D Preferred
Stock, as the case may be, (or other securities) shall be entitled to exchange
their shares of Series A Preferred Stock or Series D Preferred Stock (or other
securities) for securities or other property deliverable upon such
reorganization, reclassification transfer, consolidation, merger, dissolution,
liquidation or winding up.
Section 3.08 Reservation of Stock Issuable upon Exchange. Parent shall at all
times reserve and keep available out of its authorized but unissued shares of
Series A Preferred Stock and Series D Preferred Stock, solely for the purpose of
effecting the exchange of the shares of the Retained Common Stock, such number
of its shares of Series A Preferred Stock and Series D Preferred Stock as shall
from time to time be sufficient to effect the exchange of all outstanding shares
of the Retained Common Stock; and if at any time the number of authorized but
unissued shares of Series A Preferred Stock or Series D Preferred Stock shall
not be sufficient to effect the exchange of all then outstanding shares of the
Retained Common Stock, Parent will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Series A Preferred Stock and/or Series D Preferred Stock to such
number of shares as shall be sufficient for such purpose.
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Section 3.09 Payment of Taxes. Parent will pay all transfer taxes or charges
that may be imposed with respect to the issue or delivery of shares of Series A
Preferred Stock or Series D Preferred Stock to Urotek pursuant to this
Agreement.
Section 3.10 No Impairment. Parent shall not amend its Certificate of
Incorporation or participate in any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action for the purpose of avoiding or seeking to avoid the observance
or performance of any of the terms to be observed or performed hereunder by
Parent, but shall at all times in good faith assist in carrying out all such
action as may be reasonably necessary or appropriate in order to protect the
exchange rights of Urotek against dilution or other impairment as provided
herein.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of Parent. Parent hereby
represents and warrants to Urotek:
(a) Organization and Good Standing: Certificate of Incorporation and
Bylaws. Parent 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 proposed to be conducted. Parent is duly qualified
to conduct business as a foreign corporation and is in good standing
as a foreign corporation in all jurisdictions where the properties
owned, leased or operated by it are located or where its business is
conducted, except where the failure to so qualify or be in good
standing is not reasonably likely to have a material adverse effect on
Parent's consolidated business, financial condition, results of
operations, assets, liabilities or prospects (a "Material Adverse
Effect").
(b) Corporate Power. Parent has all requisite legal and corporate power to
enter into, execute, deliver and perform its obligations under this
Agreement. This Agreement is a valid and binding obligations of
Parent, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy laws or other laws affecting
creditors' remedies generally or by equitable principles.
(c) Authorization, Etc.
(i) Corporate Action. All corporate action on the part of Parent
necessary for the execution and delivery of this Agreement, the
issuance of the shares of Series A Preferred Stock and Series D
Preferred Stock upon exchange of the shares of Retained Common
Stock, and the performance of Parent's obligations hereunder,
has been taken.
(ii) Valid Issuance. Any shares of Series A Preferred Stock and
Series D Preferred Stock issued upon exchange of the Retained
Common Stock, when issued in compliance with the provisions of
this Agreement, will be validly issued, and fully-paid and
non-assessable.
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(iii) No Preemptive Rights. No Person has any right of first refusal
or any preemptive or similar rights in connection with the
issuance of the shares of Series A Preferred Stock or Series D
Preferred Stock upon exchange of the shares of Retained Common
Stock or the issuance of any other securities by Parent.
(d) Noncontravention. The execution, delivery and performance of and
compliance with this Agreement and the issuance of the shares of
Series A Preferred Stock and Series D Preferred Stock upon exchange of
the Retained Common Stock will not result in nor constitute any
breach, default or violation of (i) any agreement, contract, lease,
license, instrument or commitment (oral or written) to which Parent is
a party or is bound or (ii) any law, rule, regulation, statute or
order applicable to Parent or its properties, nor result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any
of the properties or assets of Parent or any of its subsidiaries, any
of which breach, default or violation under clause (i) or (ii),
preceding, would have a Material Adverse Effect.
(e) Consents, Etc. Assuming the accuracy of the representations and
warranties of Urotek in Section 4.02 hereof on the date hereof and on
each Exchange Date and Determination Date, no consent, approval, order
or authorization of, or designation, registration, declaration or
filing with, any federal, state, local or provincial or other
governmental authority or other person on the part of Parent is
required in connection with the valid execution and delivery of this
Agreement or the issuance of the shares of Series A Preferred Stock or
the Series D Preferred Stock upon exchange of the Retained Common
Stock; other than, if required, filings or qualifications under
applicable state securities laws, which filings or qualifications, if
required, will be timely filed or obtained by Parent.
(f) Offering. Assuming the accuracy of the representations and warranties
of Urotek in Section 4.02 hereof on the date hereof and on each
Exchange Date and Determination Date, the issuance of shares of Series
A Preferred Stock and Series D Preferred Stock issued upon exchange of
the shares of Retained Common Stock will not result in a violation of
the requirements of Section 5 of the Securities Act or the
qualification or registration requirements of any applicable state
securities laws.
(g) Capitalization. The capitalization of Parent consists of 32,282,116
shares, currently consisting of (i) 8,000,000 shares of common stock,
$.01 par value per share ("Common Stock"), (ii) 6,000,000 shares of
non-voting common stock, $.01 par value per share ("Non-Voting Common
Stock"), (iii) 32,116 shares of Series A Preferred Stock, (iv)
4,050,0000 shares of Series B Convertible Voting Preferred Stock, $.01
par value per share (the "Series B Preferred Stock"), (v) 6,000,000
shares of Series C Convertible Non-Voting Preferred Stock, $.01 par
value per share (the "Series C Preferred Stock"), (vi) 4,800,000
shares of Series D Convertible Voting Preferred Stock, $.01 par value
per share (the "Series D Preferred Stock"), and (vii) 3,400,000 shares
of Series E Convertible Non-Voting Preferred Stock, $.01 par value per
share (the "Series E Preferred Stock"). On the
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date hereof, (i) no shares of Common Stock, (ii) no shares of
Non-Voting Common Stock, (iii) 28,115 shares of Series A Preferred
Stock, (iv) 680,000 shares of Series B Preferred Stock, (v) 3,370,000
shares of Series C Preferred Stock, (vi) 336,144 shares of Series D
Preferred Stock and (vii) 1,163,856 shares of Series E Preferred Stock
were issued and outstanding.
(h) Financial Statements. The Parent has previously furnished to Urotek
true and complete copies of the following financial statements for the
Parent: (i) statements of financial condition as of December 31, 1998,
and the related statements of operations and statements of changes in
financial position for the period from September 10, 1998 through
December 31, 1998, all certified by Ernst & Young LLP, independent
accountants, and (ii)(A) unaudited statements of financial condition
as of October 2, 1999, (B) unaudited statements of operations for the
three and nine month periods ended October 2, 1999 and October 3, 1998
and (C) unaudited statements of cash flows for the three and nine
month periods ended October 2, 1999. All such financial statements
have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a basis consistent with prior
periods (except for the omission of notes to the unaudited financial
statements), fairly present the consolidated financial condition of
the Parent as of dates thereof, and the results of operations of the
Parent for the periods indicated, and, in the case of unaudited
statements, subject to normal and recurring year-end adjustments.
Specifically, without limitation, such financial statements reflect,
as of their respective dates, all material accrued liabilities and
adequate reserves for all material un-accrued liabilities and for all
reasonably anticipated material losses of the Parent. The books of
account of the Parent fully and fairly reflect all of the transactions
of such companies and are complete and accurate. The Parent is not
subject to any undisclosed material liability not (i) reflected in its
October 2, 1999 unaudited financial statements referred to above or in
the notes to the December 31, 1998 financial statements or (ii)
incurred in the ordinary course of business since October 2, 1999. For
purposes of this Agreement, all financial statements of the Parent
shall be deemed to include any notes to such financial statements.
(i) Compliance with Laws. The Parent is not (i) subject to the terms or
provisions of any material judgment, decree, order, writ or injunction
or (ii) in violation of any terms or provisions of any laws, rules, or
regulations, except where such violations do not and are not likely to
have a Material Adverse Effect.
(j) Title to Property and Assets. Parent owns and possesses its properties
and assets free and clear of all mortgages, deeds of trust, liens,
encumbrances, security interests and claims except as reflected in the
financial statements and except for statutory liens for the payment of
current taxes that are not yet delinquent and liens, encumbrances and
security interests which arise in the ordinary course of business and
which do not affect material properties and assets of Parent and its
subsidiaries. With respect to the property and assets it leases, each
of Parent and each of its subsidiaries is in compliance with such
leases in all material respects.
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Section 4.02. Representations and Warranties by Urotek. Urotek represents and
warrants to Parent as follows:
(a) Organization and Good Standing: Certificate of Incorporation and
Bylaws. Urotek is a corporation duly organized, validly existing and
in good standing under the corporate laws of Israel. Urotek is a
non-U.S. Person within the meaning of Regulation S promulgated
pursuant to the Securities Act of 1933, as amended.
(b) Corporate Power. Urotek has all requisite legal and corporate power to
enter into, execute, deliver and perform its obligations under this
Agreement. This Agreement is a valid and binding obligations of
Urotek, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy laws or other laws affecting
creditors' remedies generally or by equitable principles.
(c) Authorization. All corporate and legal action on the part of Urotek,
its officers, directors and stockholders necessary for the execution
and delivery of this Agreement and the performance of Urotek's
obligations hereunder has been taken.
(d) Noncontravention. The execution, delivery and performance of and
compliance with this Agreement will not result in nor constitute any
breach, default or violation of (i) any agreement, contract, lease,
license, instrument or commitment (oral or written) to which Urotek is
a party or is bound or (ii) any law, rule, regulation, statute or
order applicable to Urotek or its properties.
(e) Consents, Etc. No consent, approval, order or authorization of, or
designation, registration, declaration or filing with, any federal,
state, local or provincial or other governmental authority or other
person on the part of Urotek is required in connection with the valid
execution and delivery of this Agreement.
(f) Investment Intent; Authority. Urotek is acquiring the shares of Series
A Preferred Stock and Series D Preferred Stock issuable upon exchange
of the shares of Retained Common Stock for investment for Urotek's own
account, and not as nominee or agent for investment and not with a
view to or for resale in connection with any distribution or public
offering thereof within the meaning of the Securities Act.
(g) Shares Not Registered. Urotek understands and acknowledges that
neither the shares of Series A Preferred Stock nor the shares of
Series D Preferred Stock issuable upon exchange of the shares of
Retained Common Stock will be registered under the Securities Act or
qualified under any state securities laws in reliance upon one or more
exemptions from registration or qualification under the Securities Act
and such state securities laws, and that Parent's reliance upon such
exemption is predicated upon Urotek's representations set forth in
this Agreement. Urotek understands and acknowledges that resale of the
shares of
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Series A Preferred Stock and Series D Preferred Stock issuable upon
exchange of the shares of Retained Common Stock may be restricted
indefinitely unless they are subsequently registered under the
Securities Act and qualified under state law or an exemption from such
registration and such qualification is available.
(h) Disposition. In no event will Urotek make a disposition of any of the
shares of Series A Preferred Stock or Series D Preferred Stock
issuable upon exchange of the shares of Retained Common Stock, unless
such preferred stock shall have been registered under the Securities
Act, unless and until (i) it shall have notified Parent with a
statement of the circumstances surrounding the proposed disposition
and (ii) it shall have furnished Parent with an opinion of counsel
reasonably satisfactory to Parent to the effect that (A) such
disposition will not require registration of such securities under the
Securities Act, and (B) that appropriate action necessary for
compliance with the Securities Act has been taken.
(i) Accredited Investor. Urotek is an "accredited investor" within the
meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
ARTICLE V. ADDITIONAL COVENANTS
Section 5.01 Covenants.
(a) The parties hereto shall each take all such action within their
reasonable control as may be necessary or appropriate from time to
time to cause the exchange of the Retained Common Stock for shares of
Series A Preferred Stock and Series D Preferred Stock as contemplated
herein to be effected on the Exchange Date and any Determination Date.
(b) The parties hereto hereby acknowledge and consent to the provisions of
this Agreement, and covenant and agree to execute and deliver, or
cause to be executed and delivered, such documents or instruments, and
to take, or cause to be taken, such actions, as may be necessary or
desirable to effect the purposes of this Agreement, including, without
limitation, to effect or evidence the transfer, assignment and
delivery of (i) the shares of Retained Common Stock to Parent and (ii)
shares of Series A Preferred Stock and Series D Preferred Stock to
Urotek, each as acquired by Parent or Urotek, as the case may be,
pursuant to this Agreement.
(c) On the Exchange Date, Urotek shall execute and deliver to Parent the
counterpart signature page to the Stockholders Agreement attached
hereto as Exhibit B, and upon such execution and delivery Urotek shall
become a party to the Stockholders Agreement, and be subject to all of
the obligations and entitled to all of the rights of an Investor (as
such term is defined therein).
(d) Urotek shall not sell, transfer, assign, pledge or otherwise dispose
of ("Transfer") the Retained Common Stock, or any portion
thereof, (except to Xx. Xxxxx provided that Xx. Xxxxx agrees in
writing to be bound by the terms and conditions
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of this Agreement), without the prior written consent of Parent, which
consent shall not be unreasonably withheld. Urotek shall notify Parent
of any proposed Transfer of the Retained Common Stock, or any portion
thereof, in writing 30 days prior to the date of such proposed
Transfer. Urotek acknowledges and agrees that any attempted Transfer
in violation of this Section 5.01(d) shall result in the automatic
exchange of the Retained Common Stock for the right to receive Parent
Shares as contemplated by and in accordance with Article II hereof.
(e) The certificate for the shares of Retained Common Stock shall be
stamped or otherwise imprinted with a legend in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF THE EXCHANGE AGREEMENT, DATED AS OF DECEMBER
15, 1999, BY AND BETWEEN AMERICAN MEDICAL SYSTEMS, INC. AND UROTEK
LTD. ("EXCHANGE AGREEMENT") AND CANNOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED OR OTHERWISE DISPOSED OF IN VIOLATION THEREOF."
(f) Urotek hereby acknowledges and agrees that other than as specifically
required by the terms of the Charter, neither Parent nor Influence is
at any time obligated to make, pay or declare any dividends or other
distributions to any holders of shares of their respective capital
stock, including, without limitation, Urotek.
ARTICLE VI. MISCELLANEOUS
Section 6.01. Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) if
personally delivered, when so delivered, (ii) if mailed, two Business Days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid and addressed to the intended recipient as set forth below,
(iii) if given by facsimile, once such notice or other communication is
transmitted to the facsimile number specified below and electronic confirmation
is received, provided that such notice or other communication is promptly
thereafter mailed in accordance with the provisions of clause (ii) above or (iv)
if sent through an overnight delivery service in circumstances to which such
service guarantees next day delivery, the day following being so sent:
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If to Urotek:
To: Urotek Ltd.
0 Xxxxxxxxx Xx.
Xxxxxxxx X
ISRAEL 46728
Attn: Xx. Xxxxxxxxx Xxxxx
Fax: 000-0-000-0000
With a copy to:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 1002
Attn: Xxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
If to Parent:
To: American Medical Systems, Inc.
00000 Xxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attn: Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Xxxxxxxxxxx Xxxxx & Xxxxxxxx LLP
Plaza VII
00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
and
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxx
Fax: (000) 000-0000
Any party may give any notice, request, demand, claim or other
communication hereunder using any other means (including ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any party may
change the address to which notices, requests, demands, claims
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and other communications hereunder are to be delivered by giving the other
parties notice in the manner herein set forth.
Section 6.02 Amendments; No Waivers. Any provision of this Agreement may be
amended, waived or modified upon the written consent of the Urotek and the
Purchaser to be bound by such amendment, waiver or modification.
Section 6.03 Expenses. All costs, fees and expenses incurred in connection
with the negotiation, preparation, execution, delivery and performance of this
Agreement and in closing and carrying out the transactions contemplated hereby
shall be paid by the party incurring such cost or expense.
Section 6.04 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Except as expressly set forth herein, no party hereto may
assign either this Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of each other party.
Section 6.05 Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the internal laws of the State of Minnesota
(regardless of the laws that might otherwise govern under applicable principles
of conflicts of law).
Section 6.06 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts and the signatures delivered by facsimile, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall become effective when
each party hereto shall have received a counterpart hereof signed by the other
parties hereto.
Section 6.07 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Agreement. This
Agreement supersedes all prior and contemporaneous oral and written agreements
and understandings between the parties with respect to the transaction or
transactions contemplated by this Agreement. Neither this Agreement nor any
provision hereof is intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
Section 6.08 Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. All references to an Article or Section include all subparts thereof.
Section 6.09 Severability. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated
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hereby in substantially the same manner as originally set forth at the later of
the date this Agreement was executed or last amended.
Section 6.10 Construction. The parties hereto intend that each representation,
warranty and covenant contained herein shall have independent significance. If
any party has breached any representation, warranty or covenant contained herein
in any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) that the party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty or covenant.
Section 6.11 Cumulative Remedies. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
Section 6.12 Third Party Beneficiaries. No provision of this Agreement shall
create any third party beneficiary rights in any Person not a party hereto
(Following Page is the Signature Page)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
AMERICAN MEDICAL SYSTEMS, INC. UROTEK LTD. INC.
a Delaware corporation an Israeli corporation
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxxxx Xxxxx
--------------------------- ----------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxxxx Xxxxx
------------------------- --------------------------
Title: President and CEO Title: Director
------------------------ -------------------------
Xxxxxxxxx Xxxxx, M.D. hereby absolutely and unconditionally guarantees the
prompt payment and performance of all of the agreements, covenants and
obligations of Urotek Ltd. under the foregoing Agreement between American
Medical Systems, Inc. and Urotek Ltd.
/s/ Xxxxxxxxx Xxxxx
------------------------------
XXXXXXXXX XXXXX, M.D.
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