EXHIBIT 99.1
PRIVATE & CONFIDENTIAL
DATED: APRIL 14, 2003
ASSET PURCHASE AND
TECHNOLOGY LICENSE AGREEMENT
BETWEEN
CRYOCATH TECHNOLOGIES INC.
AND
ENDOCARE, INC.
*** Certain confidential portions of this Exhibit were omitted by means of
marking such portions with an asterisk (the "▇▇▇▇"). This Exhibit has been filed
separately with the Secretary of the Commission without the ▇▇▇▇ pursuant to the
Company's Application Requesting Confidential Treatment under Rule 24b-2 under
the 1934 Act.
TABLE OF CONTENTS
ARTICLE PAGE NO.
1. Definitions and Interpretation........................................................... 2
PART A - LICENSE................................................................................. 9
2. Grant of rights.......................................................................... 9
3. Sublicenses.............................................................................. 10
4. Export Compliance........................................................................ 12
PART B - PURCHASE AND SALE....................................................................... 12
5. Acquisition.............................................................................. 12
PART C - COMPENSATION............................................................................ 12
6. General.................................................................................. 12
7. Royalties................................................................................ 13
8. Fees..................................................................................... 14
9. Accounting and Payment................................................................... 15
PART D - SERVICES................................................................................ 16
10. Manufacturing............................................................................ 16
11. R & D.................................................................................... 16
12. Provision of Technical Information....................................................... 16
13. Service Standards........................................................................ 17
PART E - PATENT.................................................................................. 17
14. Patent Prosecution and Maintenance....................................................... 17
15. Miscellaneous Provisions................................................................. 19
PART F - WARRANTY AND INDEMNITY.................................................................. 19
16. Representations and Warranties of Endocare............................................... 19
17. Representations and Warranties of CryoCath............................................... 24
18. Indemnification.......................................................................... 25
PART G - CONFIDENTIALITY, PUBLICITY AND NON-COMPETITION.......................................... 29
19. Confidential Information................................................................. 29
20. Publicity................................................................................ 32
21. Non-Competition.......................................................................... 32
PART H - TERM AND TERMINATION.................................................................... 34
22. Term and Termination..................................................................... 34
23. Dispute Resolution....................................................................... 36
PART I - MISCELLANEOUS........................................................................... 37
24. Notices.................................................................................. 37
25. Force Majeure............................................................................ 38
26. Assignments.............................................................................. 39
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27. Severability............................................................................. 39
28. Waiver................................................................................... 39
29. Legal Counsel............................................................................ 40
30. Governing Law and Jurisdiction........................................................... 40
31. Costs of Preparation..................................................................... 40
32. Independent Relationship................................................................. 40
33. Counterparts............................................................................. 41
34. Recording................................................................................ 41
35. Further Actions.......................................................................... 41
36. Transition Production.................................................................... 41
37. Entire Agreement......................................................................... 43
THIS AGREEMENT is made as of April 14, 2003.
BETWEEN: CRYOCATH TECHNOLOGIES INC., a
company organized and existing under
the laws of Quebec, with its
principal offices at ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇.
AND: ENDOCARE, INC., a corporation
organized and existing under the
laws of the State of Delaware, with
its principal offices at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
WHEREAS Endocare (as defined below) is engaged primarily in the
business of developing, manufacturing, selling and distributing
cryotherapy products for prostate, urology and oncology applications;
WHEREAS Endocare is also engaged in developing, manufacturing and
selling cryoprobes and related consoles (collectively, the "ENDOCARE
PRODUCTS");
WHEREAS Endocare owns certain processes, expertise, trade secrets,
know-how, technology, inventions, designs, plans, information (whether
or not confidential), and improvements, in each case whether or not
patented or patentable, regarding Endocare's proprietary argon gas
based cryoablation technology (collectively, the "ENDOCARE TECHNOLOGY")
as well certain fixtures, moulds and other related assets required in
connection with the manufacture of the Endocare Products;
WHEREAS CryoCath (as defined below) develops, manufactures, markets and
distributes various cryotherapy devices and systems which treat
cardiovascular diseases including, without limitation, ventricular and
atrial arrhythmias;
WHEREAS CryoCath, as part of such business, sells and intends to sell
cryosurgical systems (consisting of cryoprobes and related consoles)
designed for use solely and specifically for cardiovascular targets and
cardiovascular applications (collectively, the "CARDIOVASCULAR
PRODUCTS");
WHEREAS CryoCath desires to obtain from Endocare, and Endocare is
willing to grant to CryoCath, an exclusive, worldwide and perpetual
(subject to the termination provisions set out below) license to the
Technology (as defined below) to carry on the Business (as defined
below), subject to and in accordance with the terms and conditions set
out below;
WHEREAS certain royalties will be payable to Endocare for the sale of
Licensed Cardiovascular Products (as defined below), subject to and in
accordance with the terms and conditions set out below;
WHEREAS in addition to the grant of licenses as contemplated above,
Endocare wishes to sell, and CryoCath wishes to acquire, the Purchased
Assets (as defined below) to
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enable CryoCath to carry on the Business and to enjoy the benefits of
said licenses, subject to and in accordance with the terms and
conditions set out below;
WHEREAS CryoCath requires from Endocare, and Endocare agrees to provide
CryoCath with, certain services, subject to and in accordance with the
terms and conditions set out below.
NOW THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto have agreed as follows:
1. DEFINITIONS AND INTERPRETATION
In this Agreement, the following terms shall have the following
meanings:
1.1. "ACCUSED PARTY" has the meaning ascribed thereto in Section 22.2
hereof.
1.2. "AFFILIATE" means any Entity which (directly or indirectly) owns, is
owned by or is under common ownership with, a party to this Agreement,
or any Entity actually controlled by, controlling or under common
control with, a party to this Agreement. For the purposes of this
definition "OWNERSHIP" or "CONTROL" shall mean the possession (directly
or indirectly) of more than fifty percent (50%) of voting stock and/or
the ability to elect a majority of the board of directors.
1.3. "AUTHORIZED RECEIVING THIRD PARTIES" has the meaning ascribed thereto
in Subsection 19.1.3 hereof.
1.4. "BREACHING AUTHORIZED RECEIVING THIRD PARTY" has the meaning ascribed
thereto in Section 19.3 hereof.
1.5. "BUSINESS" means the development, manufacture, sale and distribution of
Licensed Cardiovascular Products for Cardiovascular Uses.
1.6. "BUSINESS DAY" means a day other than a Saturday, Sunday or statutory
holiday in New York, New York USA.
1.7. "CALENDAR QUARTER" means the three (3) month period from either January
1 to March 31, April 1 to June 30, July 1 to September 30, or October 1
to December 31; for greater certainty, January 1st, 2003 shall be the
first day of the first Calendar Quarter of 2003 notwithstanding the
Closing Date.
1.8. "CALENDAR YEAR" means the twelve (12) month period from January 1 to
December 31; for greater certainty, January 1st, 2003 shall be the
first day of Calendar Year 2003 notwithstanding the Closing Date.
1.9. "CANADA-US TAX TREATY" has the meaning ascribed thereto in Subsection
16.1.12 hereof.
1.10. "CARDIOVASCULAR PRODUCTS" has the meaning ascribed thereto in the
recitals hereof. For purposes of clarification, "Cardiovascular
Products" include, without limitation, any part,
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subsystem or other portion of a cryosurgical system or component
thereof (including, without limitation, a cryoprobe or related console)
designed solely and specifically for Cardiovascular Uses.
1.11. "CARDIOVASCULAR USES" means cardiovascular targets and cardiovascular
applications.
1.12. "CHARGING PARTY" has the meaning ascribed thereto in Section 22.2
hereof.
1.13. "CLOSING" means the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement to be
completed on the Closing Date.
1.14. "CLOSING DATE" means the date of this Agreement hereinabove stated.
1.15. "CONFIDENTIAL ARBITRATION INFORMATION" has the meaning ascribed thereto
in Section 23.5 hereof.
1.16. "CONFIDENTIAL INFORMATION" has the meaning ascribed thereto in Article
19 hereof.
1.17. "CONSENT" means any approval, consent, ratification, permission, waiver
or authorization, including without limitation any Governmental
Authorization and Regulatory Approval.
1.18. "CONSEQUENTIAL DAMAGES" means any consequential, indirect, special,
incidental, or punitive damages, or any damages for loss of profits,
revenue, savings, business or goodwill.
1.19. "CONTRACT" means any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied)
that is legally binding.
1.20. "CONTROL" means the possession (directly or indirectly) of more than
fifty percent (50%) of the voting stock of an Entity and/or the ability
to elect a majority of the board of directors of an Entity.
1.21. "CRYOCATH" means CryoCath Technologies Inc.
1.22. "CRYOCATH COVENANT" has the meaning ascribed thereto in Section 21.2
hereof.
1.23. "CRYOCATH FINANCIAL STATEMENTS" means the audited financial statements
of CryoCath dated September 30, 2002 for the twelve (12) month period
ending on September 30, 2002, together with the unaudited quarterly
financial statements of CryoCath dated December 31, 2002 for the three
(3) month period ending on December 31, 2002, in each case audited by
Ernst & Young, as filed by CryoCath pursuant to the Securities Act
(Quebec).
1.24. "CRYOCATH INDEMNIFIED PARTY" has the meaning ascribed thereto in
Section 18.2 hereof.
1.25. "CRYOCATH NEW OWNER" has the meaning ascribed thereto in Section 21.2
hereof.
1.26. "CRYOCATH RESTRICTED BUSINESS" has the meaning ascribed thereto in
Section 21.2 hereof.
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1.27. "CURE PERIOD" has the meaning ascribed thereto in Section 22.2 hereof.
1.28. "DISCLOSING PARTY" has the meaning ascribed thereto in Article 19
hereof.
1.29. "DISCLOSURE SCHEDULE" or "SCHEDULE" means the schedules provided by
Endocare to CryoCath at the Closing as set forth in Section 1.82.
1.30. "DISPUTE" has the meaning ascribed thereto in Section 23.2 hereof.
1.31. "ENCUMBRANCE" means any lien, pledge, hypothecation, charge, mortgage,
security interest, encumbrance, equitable interest, claim, right of
possession, lease, option, right of first refusal, preemptive right,
community property interest, or any restriction on the transfer of any
asset.
1.32. "ENDOCARE" means Endocare, Inc.
1.33. "ENDOCARE COVENANT" has the meaning ascribed thereto in Section 21.1
hereof.
1.34. "ENDOCARE INDEMNIFIED PARTY" has the meaning ascribed thereto in
Section 18.3 hereof.
1.35. "ENDOCARE NEW OWNER" has the meaning ascribed thereto in Section 21.1
hereof.
1.36. "ENDOCARE PRODUCTS" has the meaning ascribed thereto in the recitals
hereof.
1.37. "ENDOCARE RESTRICTED BUSINESS" has the meaning ascribed thereto in
Section 21.1 hereof.
1.38. "ENDOCARE TECHNOLOGY" has the meaning ascribed thereto in the recitals
hereof.
1.39. "ENTITY" means any firm, trust, partnership, joint venture,
corporation, company, group of persons, unincorporated body or other
business organization whatsoever.
1.40. "EXISTING SUPPLY AGREEMENT" means that certain Exclusive Market Access
and Supply Agreement made as of September 21, 2001, between CryoCath
and Endocare.
1.41. "FDA" means the United States Food and Drug Administration or its
successor in title.
1.42. "FORCE MAJEURE" has the meaning ascribed thereto in Section 25.1
hereof.
1.43. "GAAP" means Canadian generally accepted accounting principles.
1.44. "GOVERNMENTAL AUTHORIZATION" means any (a) permit, license,
certificate, franchise, concession, approval, consent, ratification,
permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or
authorization issued, granted, given or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement; or (b) right under any Contract with any Governmental
Body.
1.45. "GOVERNMENTAL BODY" means any (a) nation, principality, state,
commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature;
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(b) national, federal, provincial, state, local, municipal, foreign or
other government; (c) governmental or quasi-governmental authority of
any nature (including any governmental division, subdivision,
department, agency, bureau, branch, office, commission, council, board,
court or other tribunal, or other instrumentality of such governmental
or quasi-governmental authority); or (d) recognized securities
exchange.
1.46. "INDEPENDENT THIRD PARTY" means any Person other than CryoCath,
Endocare and their respective Affiliates.
1.47. "INTELLECTUAL PROPERTY RIGHTS" means any and all proprietary rights
provided under (a) patent law, (b) copyright law, (c) design patent or
industrial design law, (d) semi-conductor chip or mask work law, or (e)
any other statutory provision or common law principle which may provide
a right in either (i) ideas, formulae, algorithms, concepts, inventions
or know-how generally, including trade secret law, or (ii) the
expression or use of such ideas, formulae, algorithms, concepts,
inventions or know-how. For purposes of clarification, "Intellectual
Property Rights" do not include rights in trademarks, service marks,
logos or trade names or other similar rights. Notwithstanding anything
to the contrary, "Intellectual Property Rights" of Endocare shall not
include any rights to any patents or patent applications other than the
Patents.
1.48. "KNOWLEDGE" means: (a) in the case of an individual, knowledge of a
particular fact or other matter (i) if such individual is actually
aware of such fact or other matter, or (ii) if such individual should
have known or otherwise become aware of such fact or other matter in
the ordinary course and scope of such individual's employment; it being
understood by Endocare and CryoCath that for purposes of this
definition conducting an investigation of the existence of such fact or
other matter in connection with the negotiation or execution of this
Agreement or the transactions contemplated herein would be beyond the
ordinary course and scope of such individual's employment; and (b) in
the case of an Entity, such Entity will be deemed to have "Knowledge"
of a particular fact or other matter if any individual who is serving
as an executive officer of such Entity has Knowledge (as contemplated
by clause (a) above) of such fact or other matter. For purposes of this
definition, the executive officers of Endocare are ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇▇ and the executive officers of CryoCath are ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and ▇▇▇ ▇▇▇▇▇▇▇▇.
1.49. "LEGAL REQUIREMENT" means any federal, state, local, municipal, foreign
or other law, statute, legislation, constitution, principle of common
law, ordinance, code, treaty, regulation, or ruling issued, enacted,
adopted, passed, approved, promulgated, made, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
1.50. "LIABILITY" has the meaning ascribed thereto in Section 18.2 hereof.
1.51. "LICENSED CARDIOVASCULAR PRODUCT" means any Cardiovascular Product (a)
that incorporates, embodies or otherwise includes any of the
Technology, or (b) for which CryoCath's use, development, manufacture,
promotion, marketing, offer for sale, sale, distribution or
commercialization of such Cardiovascular Product would, in the absence
of the license granted to CryoCath in Section 2.1, infringe or
misappropriate any of
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Endocare's Intellectual Property Rights, including, without limitation,
any Patents. For purposes of clarification, "Licensed Cardiovascular
Products" shall not include any Cardiovascular Product that is not
argon gas-based.
1.52. "MANUFACTURING SERVICES" means the services to be provided to CryoCath
by Endocare as set out in Schedule 10.1.
1.53. "MINI-FLEX AGREEMENT" means that certain supply agreement by and
between Endocare and Mini-Flex Corporation dated as of March 24, 2003.
1.54. "NET SALES" means, in respect of a specified Calendar Quarter or
Calendar Year, the *** in respect of all units of all Licensed
Cardiovascular Products shipped, sold, transferred or otherwise
distributed by or on behalf of any of CryoCath and its Sub-licensees
during such Calendar Quarter or Calendar Year, including, without
limitation, but without duplication, transfers or sales among any of
CryoCath and its Sub-licensees, less (to the extent not already taken
into account and to the extent the following exclusions would be
deducted from net sales using the methodology used by CryoCath, and
approved by its independent auditors, in calculating net sales in
connection with CryoCath's preparation of the CryoCath Financial
Statements) *** . Notwithstanding the foregoing, with respect to any
unit of a Licensed Cardiovascular Product shipped, sold, transferred or
otherwise distributed by or on behalf of CryoCath to an Affiliate of
CryoCath, by any Sub-licensee to an Affiliate of such Sub-licensee, or
otherwise as part of a non-arms-length market transaction, "Net Sales"
will be calculated based on the greater of *** , less (to the extent
not already taken into account) the amounts set forth in (a) through
(e) of this Section 1.54.
1.55. "NEW TECHNOLOGY" has the meaning ascribed thereto in Section 12.1
hereof.
1.56. "NON-DISCLOSURE AGREEMENT" has the meaning ascribed thereto in Section
37.1 hereof.
1.57. "NON-SUING PARTY" has the meaning ascribed thereto in Subsection 14.3.3
hereof.
1.58. "ORDER" means any order, judgment, injunction, edict, decree, ruling,
determination, decision, opinion, verdict, sentence, subpoena, writ or
award issued, made, entered, rendered or otherwise put into effect by
or under the authority of any court, administrative agency or other
Governmental Body or any arbitrator or arbitration panel.
1.59. "PATENTS" means the (a) patents set out in Schedule 16.1.10 and (b) any
patents that may issue from the patent applications set out in Schedule
16.1.10; and (c) any future patents owned by Endocare containing one or
more claims that read on the Technology.
1.60. "PERMITTED ENCUMBRANCES" means (a) any Encumbrance for Taxes not yet
due or delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in
accordance with generally accepted accounting principles and (b) any
minor imperfections of title or similar Encumbrances
-----------------
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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which individually or in the aggregate with other such Encumbrances
does not impair the value and/or use of the property subject to such
Encumbrance.
1.61. "PERSON" means any individual, Entity or Governmental Body.
1.62. "POST-CLOSING CONSOLES" has the meaning ascribed thereto in Subsection
36.1.2 hereof.
1.63. "POST-CLOSING PROBES" has the meaning ascribed thereto in Subsection
36.1.2 hereof.
1.64. "PROCEEDING" means any action, suit, litigation, arbitration or
proceeding, including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding,
prosecution, contest, hearing, inquiry, inquest, audit, examination or
investigation commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental Body or any arbitrator or
arbitration panel.
1.65. "PURCHASED ASSETS" means collectively the assets set forth on Schedules
5.2 and 5.3 attached hereto.
1.66. "QUALITY INSPECTION GUIDELINES" means the current written quality
inspection guidelines of Endocare as set out in Schedule 1.66.
1.67. "R&D SERVICES" means the services to be provided to CryoCath by
Endocare as set out in Schedule 11.1.
1.68. "RECEIVING PARTY" has the meaning ascribed thereto in Article 19
hereof.
1.69. "REGULATORY APPROVAL" means the technical, medical and scientific
licenses, registrations, authorizations or approvals (including,
without limitation, supplements, amendments, post-approvals, pricing
and third party reimbursement approvals, marketing authorizations based
upon such approvals, including any prerequisite manufacturing approvals
or authorizations related thereto and labeling approvals), of any
national, federal, regional, provincial, state or local regulatory
agency, department, bureau, commission, council or other Governmental
Body, necessary for the development, manufacture, distribution,
marketing, promotion, commercialization, offer for sale, use, import,
export or sale of the Licensed Cardiovascular Products.
1.70. "REGULATORY AUTHORITY" means the FDA and TUV Rheinland.
1.71. "REMAINING PRODUCT MATERIALS" has the meaning ascribed thereto in
Subsection 36.1.3 hereof.
1.72. "SUBLICENSE AGREEMENT" means a written agreement between CryoCath and a
Sub-licensee.
1.73. "SUB-LICENSEE" means any Entity to which CryoCath grants a sublicense
in accordance with the terms of Article 3.
1.74. "SUING PARTY" has the meaning ascribed thereto in Subsection 14.3.3
hereof.
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1.75. "TAX" means any tax, including any income tax, franchise tax, capital
gains tax, estimated tax, gross receipts tax, surtax, excise tax, ad
valorem tax, Transfer Tax, property tax, business tax, occupation tax,
inventory tax, occupancy tax, withholding tax or payroll tax, levy,
assessment, tariff, impost, imposition, toll, duty, including any
customs duty, deficiency or fee, and any related charge or amount,
including any fine, penalty or interest, that is, has been or may in
the future be (a) imposed, assessed or collected by or under the
authority of any Governmental Body, or (b) payable pursuant to any
tax-sharing agreement or similar Contract.
1.76. "TECHNICAL INFORMATION" means all material information and know-how
that (a) are in the possession of Endocare, (b) Endocare has the right
to disclose, and (c) relate to any improvements, developments or
applications which utilize the Technology.
1.77. "TECHNOLOGY" means all Endocare Technology relating, whether or not
exclusively or in whole or in part, to the Licensed Cardiovascular
Products that is provided or disclosed to CryoCath by Endocare.
1.78. "THRESHOLD AMOUNT" has the meaning ascribed thereto in Subsection
18.5.1.
1.79. "TRANSFER TAXES" shall mean all federal, state, local or foreign sales,
use, transfer, real property transfer, mortgage recording, stamp duty,
value-added or similar Taxes that may be imposed on amounts payable
hereunder, together with any interest, additions to Tax or penalties
with respect thereto and any interest in respect of such additions to
Tax or penalties; but excluding all Taxes based on income.
1.80. "U.S." means the United States of America.
1.81. In this Agreement and any Schedule hereto, unless the context otherwise
requires:
(a) the singular includes the plural and vice versa, words
denoting any gender include all genders;
(b) the words "hereof", "herein" and "hereunder" and words of
similar import, when used in this Agreement, shall refer to
this Agreement as a whole and not to any particular provisions
of this Agreement;
(c) references to a "Schedule" are, unless otherwise specified, to
one of the Schedules attached to or referenced in this
Agreement, and references to an "Article" or a "Section" are,
unless otherwise specified, to one of the Articles or Sections
of this Agreement;
(d) unless otherwise indicated, all amounts set forth herein refer
to the lawful currency of the U.S.;
(e) headings to Articles and Sections in this Agreement are
included for convenience only and shall not affect the
construction and interpretation of this Agreement; and
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(f) if any action is required to be taken pursuant to this
Agreement on or by a specified date which is not a Business
Day, then such action shall be valid on or by the next
succeeding Business Day.
1.82. The following Schedules are attached to the Disclosure Schedule and
form an integral part of this Agreement:
Schedule 1.66 Quality Inspection Guidelines
Schedule 5.2 Purchased Assets Delivered at Closing
Schedule 5.3 Purchased Assets Delivered Post Closing
Schedule 10.1 Manufacturing Services
Schedule 11.1 R&D Services
Schedule 16.1.4 Required Consents
Schedule 16.1.8 Governmental Authorizations
Schedule 16.1.10 Technology
Schedule 16.1.11 ▇▇▇▇ of Materials
Schedule 36.1.2 Post-Closing Probes and Consoles
Schedule 36.1.3 Remaining Product Materials
PART A - LICENSE
2. GRANT OF RIGHTS
2.1. GRANT. Subject to and upon the terms and conditions of this Agreement,
Endocare hereby grants to CryoCath an exclusive, worldwide, perpetual
(subject to the provisions of Article 22), license, under Endocare's
Intellectual Property Rights, to use, modify, enhance, develop, make
derivatives, amend, and/or change the Technology solely to develop,
manufacture, promote, market, offer for sale, sell, distribute and/or
commercialize Licensed Cardiovascular Products for Cardiovascular Uses,
in each case with the right to sublicense in accordance with the
provisions of Article 3. For greater certainty, Endocare, including,
without limitation, any transferee, assignee or successor thereof,
shall not (and shall have no right to) use, modify, enhance, develop,
make derivatives, amend, and/or change the Technology, or authorize any
Person (including without limitation any Affiliate, but excluding
CryoCath and its permitted Sub-licensees) to perform such acts, to
develop, manufacture, promote, market, offer for sale, sell, distribute
and/or commercialize Licensed Cardiovascular Products for
Cardiovascular Uses, and any such purported authorization shall be null
and void. For greater certainty, the parties hereby agree and confirm
that the terms and conditions of the licenses granted herein, including
(without limitation) the aforementioned exclusivity, shall survive any
change in Control of Endocare or assignment or transfer or sale of all
or substantially all of the assets of Endocare, including without
limitation any assignment or transfer or sale of all or substantially
all of the assets of Endocare by operation of law or otherwise (which
change of Control, assignment, transfer or sale of all or substantially
all of the assets of Endocare shall be in accordance with this
Agreement) including without limitation any assignment, transfer or
sale of all or substantially all of the assets of Endocare resulting
from or in connection with Endocare's bankruptcy.
2.2. LICENSE RESTRICTIONS. For greater certainty, CryoCath shall not (and
shall have no right to), use, modify, enhance, develop, make
derivatives, amend, or change the
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Technology, or authorize any Person to perform such acts (and any such
purported authorization shall be null and void), (a) in connection with
any products other than argon-gas based Cardiovascular Products, (b)
for any purposes or uses other than Cardiovascular Uses, or (c) in any
other manner not expressly permitted in Section 2.1; provided, however,
that the foregoing shall not be construed as restricting any disclosure
to any Person and/or use of Technical Information by CryoCath to the
extent that such disclosure to such Person and/or use is excluded by
Section 19.1.6(a) from the confidentiality obligations imposed in
Subsections 19.1.1, 19.1.2, 19.1.3 and 19.1.5. In addition, CryoCath
shall not (and shall have no right to) market, promote or recommend the
use of any Licensed Cardiovascular Product for any purposes or uses
other than Cardiovascular Uses.
2.3. RESERVATION OF RIGHTS. Except for the rights and licenses expressly
granted to CryoCath in this Agreement, Endocare shall reserve and
retain all right, title and interest (including, without limitation,
all Intellectual Property Rights) in and to the Technology and Endocare
Technology. Nothing contained in this Agreement shall be construed as
conferring upon CryoCath or any third party (by implication, operation
of law, estoppel or otherwise) any license or right not expressly
granted by Endocare in this Agreement.
2.4. REGISTRATION OF LICENSE. cryoCath and Endocare shall cooperate, at
CryoCath's expense, to record this Agreement as required by
Governmental Bodies to establish, perfect or enforce the parties'
rights hereunder, provided that the terms of this Agreement shall not
be provided or otherwise disclosed except to the extent necessary to
effect such recordation.
2.5. CRYOCATH'S RIGHTS. Endocare and CryoCath acknowledge and agree that,
subject to the express terms of this Agreement, all business and other
decisions including, without limitation, decisions relating to
CryoCath's research, development, registration, manufacture, sale,
commercialization, design, price, distribution, marketing and promotion
of the Licensed Cardiovascular Products shall be within the sole
discretion of CryoCath.
2.6. COMMERCIALLY REASONABLE EFFORTS. Notwithstanding Section 2.5, CryoCath
shall employ commercially reasonable efforts (taking into account,
among other things, market conditions that may exist from time to time)
to develop, market and sell Licensed Cardiovascular Products in Canada,
the U.S. and in the majority of the European Union countries until ***
, at which time such obligation shall expire. Notwithstanding anything
herein contained, Endocare's sole and exclusive remedy, and CryoCath's
sole and exclusive liability, for any breach of this Section 2.6 shall
be Endocare's indemnification claims for damages pursuant to Article
18, but excluding Section 18.6.
3. SUBLICENSES
3.1. RIGHT TO GRANT. Subject to the terms and conditions of this Agreement,
CryoCath shall have the right to grant sublicenses under the licenses
granted under Section 2.1 to
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Entities solely pursuant to valid and enforceable Sublicense
Agreements, each executed by CryoCath and the Sub-licensee.
Notwithstanding anything to the contrary, no Sub-licensee shall have
the right to grant further sublicenses. Any purported sublicense not
expressly permitted under this Section 3.1 shall be null and void.
3.2. TERMS OF SUBLICENSE AGREEMENTS. CryoCath shall provide Endocare with a
copy of each such Sublicense Agreement promptly upon execution thereof.
Each Sublicense Agreement shall (a) contain, among others, terms and
conditions substantially similar (with necessary substitution of
parties) to those set forth in Sections 2.2, 2.3, 9.1, 9.3, 15.1, 18.3
(with the indemnification provided in such provision expressly covering
Endocare Indemnified Parties) 21.2, 22.2, 23.2 and 23.4 and Articles 4,
19 (but excluding Section 19.4) and 30, (b) expressly withhold from the
Sub-licensee the right to grant further sublicenses, (c) include an
express designation of Endocare as an intended third party beneficiary
of CryoCath's rights in respect of the Technology and the
Sub-licensee's obligations under such Sublicense Agreement in respect
of the Technology, and (d) specify that Endocare shall have the right
to enforce any and all obligations of the Sub-licensee under the
Sublicense Agreement in respect of the Technology, provided, however,
that Endocare will not exercise any rights it may have against a
Sub-licensee for a breach of any Sublicense Agreement unless (i) such
breach is a material breach pertaining to the Technology, (ii) such
material breach, if committed by CryoCath hereunder, would be a
material breach of the provisions of this Agreement, and (iii) such
material breach is not cured within thirty (30) days of CryoCath
receiving written notice of such breach. In no event shall any
Sublicense Agreement grant to the Sub-licensee rights in or to the
Technology that are broader than those granted to CryoCath under this
Agreement.
3.3. ENFORCEMENT OF SUBLICENSE AGREEMENTS. CryoCath shall, at its own
expense, use commercially reasonable efforts to monitor Sub-licensees
and investigate each report and indication of breach of any Sublicense
Agreement, and CryoCath shall promptly report to Endocare any material
breach pertaining to the Technology discovered or learned of by
CryoCath. CryoCath will diligently enforce the terms and conditions of
each Sublicense Agreement, including, without limitation, (a) pursuing
appropriate judicial and administrative action and relief in the event
of any material breach by the Sub-licensee of any terms of the
Sublicense Agreement in respect of the Technology and (b) upon
Endocare's reasonable request, terminating the Sublicense Agreement
upon a material breach by the Sub-licensee of any terms of the
Sublicense Agreement in respect of the Technology if such material
breach has not been cured within thirty (30) days from the date of such
request by Endocare. Notwithstanding any of the foregoing to the
contrary, and in addition to any right Endocare has against any
Sub-licensee under applicable law (but subject to the limitations in
Section 3.2), any act or omission by a Sub-licensee which, if committed
by CryoCath, would be a breach of this Agreement shall be treated as if
such act or omission had been committed by CryoCath directly and
Endocare's sole and exclusive rights and remedies for such breach as
against CryoCath shall be those rights and remedies for such breach set
forth in this Agreement.
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4. EXPORT COMPLIANCE.
4.1. CryoCath will comply with any and all export regulations and rules of
the U.S. and all other countries now in effect or as may be issued from
time to time applicable to the Technology and Technical Information,
including without limitation, (a) all regulations and rules of the
Bureau of Export Administration of the U.S. Department of Commerce and
any other Governmental Body that has jurisdiction relating to the
export of technology from the U.S., and (b) all export/reexport
requirements of the U.S. Export Administration Regulations, in each
case to the extent applicable to the Technology and Technical
Information. Without limiting the generality of the foregoing, CryoCath
will not export, or authorize any Person to export, any Technology,
Technical Information or Licensed Cardiovascular Products, in any form,
to any country for which United States laws or regulations applicable
to the Technology and Technical Information (i) require an export
license or other Governmental Authorization for such export, without
first obtaining such license or Governmental Authorization, or (ii)
prohibit such export.
PART B - PURCHASE AND SALE
5. ACQUISITION
5.1. TRANSFER OF PURCHASED ASSETS. Subject to and upon the terms and
conditions of this Agreement, Endocare hereby sells, assigns,
transfers, conveys and delivers to CryoCath, and CryoCath hereby
acquires and accepts from Endocare, all of Endocare's right, title and
interest to and in the Purchased Assets.
5.2. DELIVERY OF PURCHASED ASSETS AT CLOSING. The parties agree and
acknowledge that the Purchased Assets identified on Schedule 5.2 shall
be delivered by Endocare to CryoCath at Closing.
5.3. DELIVERY OF BALANCE OF PURCHASED ASSETS. The parties agree and
acknowledge that the Purchased Assets identified on Schedule 5.3 shall
be delivered by Endocare to CryoCath as soon as practicable after
CryoCath's request therefor, but not later than thirty (30) days
following the Closing Date.
PART C - COMPENSATION
6. GENERAL
6.1. MODE OF PAYMENT; CURRENCY AND EXCHANGE. Payments to be made by either
party under this Agreement shall be paid by bank wire transfer in
immediately available funds to such bank account as is designated in
writing by the receiving party from time to time. All payments shall be
made in U.S. dollars. The rate of exchange to be used for royalties in
any such conversion from the currency in the country where the
applicable sales are made shall be the average daily closing exchange
rate for the relevant Calendar Quarter as determined in the final
edition of The Wall Street Journal (version distributed in New York,
New York USA).
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6.2. LATE PAYMENTS. If CryoCath fails to pay any amount on or before the
required payment date, then in addition to any other remedies Endocare
may have, CryoCath shall be liable for interest on such amount at a per
annum rate equal to *** (or, if less, the maximum rate permitted by
applicable law) for the period between the due date and the date
Endocare receives payment of such amount.
6.3. TAXES. In addition to the amounts payable as set forth in this
Agreement, (a) the parties agree to equally divide, be responsible for
and pay any Transfer Taxes on such amounts when due, and, if required
by any legal requirement, join in the execution of any Transfer Tax
returns and other documentation, including a California Resale
Certificate; (b) CryoCath shall pay all other Taxes imposed or based on
such amounts (excluding, for greater certainty, Taxes imposed or based
on Endocare's net income) imposed by any Canadian Governmental Body;
and (c) Endocare shall pay all other Taxes imposed or based on such
amounts (excluding, for greater certainty, Taxes imposed or based on
CryoCath's net income) imposed by any U.S. Governmental Body.
Notwithstanding the foregoing, CryoCath shall be entitled to deduct and
withhold from such amounts any applicable Canadian withholding taxes on
the royalty payments set forth in Article 7 and/or the fees set forth
in Article 8; provided that Endocare and CryoCath acknowledge and agree
that, to their Knowledge, no such withholding is required under current
Canadian law and such withholding shall only be required as a result of
a change in such law; provided further that to the extent such
withholding is required, CryoCath shall furnish to Endocare the
original or certified copy of a receipt or similar official document
evidencing payment of such withholding.
7. ROYALTIES
7.1. ROYALTIES ON NET SALES. CryoCath shall pay to Endocare, in accordance
with the terms and conditions set forth in Articles 6 and 9, royalties
on the Net Sales of all Licensed Cardiovascular Products, calculated on
the following basis:
7.1.1. *** ;
7.1.2. *** ;
7.1.3. *** ;
7.1.4. *** ;
7.1.5. *** ; and
7.1.6. *** .
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8. FEES
8.1. CryoCath shall pay to Endocare the following amounts and subject to the
following conditions:
8.1.1. Two Million Five Hundred Thousand U.S. dollars
(U.S.$2,500,000) by wire transfer on the Closing Date as per
the wire transfer instructions previously communicated to
CryoCath by Endocare;
8.1.2. Two Million Five Hundred Thousand U.S. dollars
(U.S.$2,500,000) on *** ;
8.1.3. Two Million Five Hundred Thousand U.S. dollars
(U.S.$2,500,000) *** , provided that such amount shall not,
for any reason whatsoever, be owed or payable before the first
(1st) Business Day following the expiry of the *** . Without
limiting the generality of the foregoing, the parties agree
that CryoCath may, at its sole discretion, reasonably request
that the Manufacturing Services be provided, in whole or in
part, during the *** . Upon receipt of such reasonable
request, Endocare shall promptly commence and diligently
continue providing the Manufacturing Services in accordance
with the provisions of this Agreement for the number of man
hours set out in Schedule 10.1, as per the details set out in
such reasonable request;
8.1.4. Two Million Five Hundred Thousand U.S. dollars
(U.S.$2,500,000) on *** , provided that such amount shall not,
for any reason whatsoever, be owed or payable before the first
(1st) Business Day following the expiry of the ***. Without
limiting the generality of the foregoing, the parties agree
that CryoCath may, at its sole discretion, reasonably request
that the R&D Services be provided, in whole or in part, during
the *** . Upon receipt of such reasonable request, Endocare
shall promptly commence and diligently continue providing the
R&D Services in accordance with the provisions of this
Agreement for the number of man hours set out in Schedule
11.1, as per the details set out in such reasonable request.
8.2. CONSIDERATION ALLOCATION. The parties shall use reasonable best efforts
to agree upon an allocation of the aggregate consideration payable by
CryoCath to Endocare, excluding royalties as between CryoCath and
Endocare, and to set forth such allocation in a schedule of allocation
within thirty (30) days of the Closing Date. Endocare and CryoCath
agree that, unless the parties cannot agree on such allocation after
such reasonable best efforts, and except as required by any applicable
Governmental Body or such party's independent auditors, each party
shall (a) report the license grant and sale of the Purchased Assets for
federal and state Tax purposes and for all accounting purposes in
accordance with the allocations set forth on such schedule of
allocation and (b) not take any position inconsistent with the
allocations set forth therein on any of their respective Tax returns or
financial statements.
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9. ACCOUNTING AND PAYMENT
9.1. PROVISION OF ROYALTY STATEMENT. Within thirty (30) days of the end of
each Calendar Quarter, CryoCath shall submit to Endocare a written
statement setting forth (a) the quantity and description of all
Licensed Cardiovascular Products shipped, sold, transferred or
otherwise distributed by or for CryoCath and Sub-licensees during such
Calendar Quarter, (b) the Net Sales from such Licensed Cardiovascular
Products, (c) the amount of royalties payable to Endocare for such
Licensed Cardiovascular Products, and (d) any rates of exchange used in
calculating such royalties, and the data with which such rates were
calculated.
9.2. SIMULTANEOUS PAYMENT. Simultaneously with the submission of each such
written statement (as described in Section 9.1), CryoCath shall pay to
Endocare a sum equal to the royalty due for such Calendar Quarter,
calculated in accordance with Article 7 (reconciled for any previous
overpayments or underpayments).
9.3. AUDIT OF RECORDS. For a period of three (3) years following expiry of
each Calendar Quarter (or portion thereof) during which this Agreement
is in effect, CryoCath shall keep at its usual place of business
accurate, complete and proper records and books of account as
sufficient to confirm CryoCath's compliance with this Agreement in
respect of such Calendar Quarter, including, without limitation,
records and books showing the quantity, description and sales of
Licensed Cardiovascular Products shipped, sold, transferred or
otherwise distributed by or for CryoCath during such Calendar Quarter,
all invoices therefor, and all Net Sales accrued therefrom. Upon ten
(10) Business Days prior written notice from Endocare, CryoCath shall
permit an independent certified public accounting firm selected by
Endocare and acceptable to CryoCath, acting reasonably, at Endocare's
expense, to examine pertinent books and records of CryoCath during
regular business hours at a mutually agreeable time as may be
reasonably necessary to verify the accuracy of the royalty reports and
payments hereunder. Such accounting firm shall keep confidential any
information that it learns or otherwise obtains from such examination
of such books and records of CryoCath, provided that such accounting
firm shall have the right to disclose to Endocare information
pertaining to any underpayments, overpayments or other inaccuracies in
the royalty reports or payments hereunder, and Endocare shall not
disclose such information to any Person except in connection with
enforcing its rights under and as set forth in this Agreement. If any
such examination reveals that CryoCath has underpaid the royalties owed
to Endocare for any Calendar Quarter by *** , CryoCath will reimburse
Endocare for all expenses reasonably incurred by Endocare in connection
with such examination.
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PART D - SERVICES
10. MANUFACTURING
10.1. MANUFACTURING SERVICES. Endocare will provide Manufacturing Services to
CryoCath, at no additional charge, in accordance with the provisions of
this Agreement, including, without limitation, Schedule 10.1. Endocare
shall use commercially reasonable efforts to provide the Manufacturing
Services by no later than the expiry of the six (6) month period
following the Closing Date.
11. R & D
11.1. R&D SERVICES. Endocare shall provide R&D Services to CryoCath, at no
additional charge, in accordance with the provisions of this Agreement
including, without limitation, Schedule 11.1. Endocare shall use
commercially reasonable efforts to provide the R&D Services by no later
than the expiry of the nine (9) month period following the Closing
Date.
12. PROVISION OF TECHNICAL INFORMATION
12.1. TECHNICAL MEETINGS. Upon reasonable request by CryoCath, to be made no
more frequently than once per quarter, Endocare shall, at no cost to
CryoCath, until *** (a) describe to CryoCath orally any improvement to
the Technology developed or acquired (whether by license, assignment or
otherwise (to the extent permitted by the terms under which such
improvement was acquired)) by Endocare since the previous request, and
(b) provide CryoCath with an existing written summary (if any) of such
improvements. In addition, upon reasonable request by CryoCath, to be
made no more frequently than once per year, Endocare shall, at no cost
to CryoCath, until *** , make certain Endocare personnel having the
required expertise available for face-to-face meetings with appropriate
CryoCath personnel at Endocare's facilities; at each such meeting, such
Endocare personnel will answer questions posed by such CryoCath
personnel to identify Technology developed or acquired (whether by
license, assignment or otherwise (to the extent permitted by the terms
under which such improvement was acquired)) by Endocare since the
previous meeting ("NEW TECHNOLOGY"); following each such meeting,
Endocare shall provide to CryoCath written and electronic materials in
Endocare's possession that constitute or contain Technical Information
relating to any New Technology identified during such meeting; provided
however, that (i) Endocare shall have no obligation to provide any
portions of such materials that do not constitute or contain such
Technical Information, and (ii) Endocare shall have no obligation to
develop, produce or otherwise create any such materials for
Cardiovascular Uses or otherwise. Without limiting the generality of
the foregoing, the improvements and New Technology provided by Endocare
to CryoCath under this Section 12.1, solely to the extent they relate
to Endocare's proprietary argon gas based cryoablation technology,
shall be deemed "Technology" for the purposes of this Agreement, and
any Technical Information provided by Endocare to CryoCath under this
Section 12.1, solely to the extent it relates to Endocare's proprietary
argon gas based cryoablation technology, shall be deemed "Technical
Information" for the purposes of this Agreement. Notwithstanding
anything to the contrary, the provisions of this Section 12.1 shall not
apply to any improvement or item of Technology acquired by Endocare if
(A) the
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description, identification or other disclosure of such improvement or
item of Technology to CryoCath or any Sub-licensee, or (B) the use,
modification, enhancement, development, making of derivatives,
amendment, and/or change of such improvement or item of Technology by
CryoCath or any Sub-licensee, would result in the payment of royalties
or other consideration to the Person from which such improvement or
item of Technology was acquired, unless and until CryoCath pays
directly to such Person (or reimburses Endocare for) any such royalties
or other consideration.
13. SERVICE STANDARDS
13.1. LEVEL OF SERVICES. Endocare covenants and agrees that the Manufacturing
Services and the R&D Services will be performed in a professional and
workmanlike manner. CryoCath's sole and exclusive remedy, and
Endocare's sole and exclusive liability, for any breach of this Section
13.1 shall be reperformance by Endocare, at no cost to CryoCath, of the
portions of such services that caused such breach in a professional and
workmanlike manner.
PART E - PATENT
14. PATENT PROSECUTION AND MAINTENANCE.
14.1. ISSUED PATENTS. Endocare shall be responsible, at Endocare's sole
expense, to pay all maintenance fees and annuities with respect to the
issued Patents identified by Schedule 16.1.10. Except as expressly set
forth in the following sentence, Endocare shall have the sole right and
authority, at Endocare's sole expense, over the prosecution and
maintenance of all patent applications identified by Schedule 16.1.10.
CryoCath shall have the right, at its sole expense and reasonable
discretion, but subject to all terms and conditions of this Agreement,
to request that Endocare file continuation, continuation-in-part, and
divisional patent applications with respect to the patent applications
set forth in Schedule 16.1.10, and Endocare agrees to comply with such
requests, but only to the extent that (a) such requests are reasonable
and Endocare determines in good faith that such requests are not
adverse to Endocare's interests (including, without limitation, its
interests in the Patents and/or its other patents and patent
applications), and (b) CryoCath pays in advance all of Endocare's costs
and expenses incurred in connection with complying with such requests,
including, without limitation, reasonable outside counsel fees and
allocated costs of inside counsel. Upon CryoCath's request which may be
made no more frequently than once per month, Endocare shall provide
documents pertaining to the filing, prosecution, or maintenance of
Patents and patent applications, including but not limited to office
actions, requests for terminal disclaimer, and request for reissue or
reexamination. Except as expressly set forth in this paragraph or
elsewhere in this Agreement, Endocare shall have no obligations with
respect to any issued Patents or patent applications (whether or not
included within the Patents).
14.2. INVENTIONS. Endocare shall have no obligations with respect to any
inventions for which it has not filed a patent application or obtained
a patent, including, without limitation, any obligation to file or
prosecute any patent applications for such inventions in any country or
otherwise attempt to obtain patent protection for such inventions.
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14.3. INFRINGEMENT BY THIRD PARTIES. If either CryoCath or Endocare becomes
aware of an infringement of any Patents, it will notify the other party
in writing to that effect. Any such notice shall include any evidence
in the notifying party's possession to support an allegation of such
infringement by such third party. Endocare shall have the right, but
not the obligation, during a period of one hundred and twenty (120)
days from the date of said notice, to seek discontinuance of such
infringement (including, without limitation, by bringing legal
proceedings against the third party infringer) and failing this (i.e.,
the seeking of discontinuance in the time period), CryoCath shall have
the right, but not the obligation, to bring legal proceedings against
the third party infringer for such infringement to the extent arising
out of Cardiovascular Uses.
14.3.1. Each party shall bear all the expenses of any suit brought by
it in accordance with Section 14.3.
14.3.2. If CryoCath elects to bring suit against the third party
infringer in accordance with Section 14.3, Endocare shall have
the right, at its own expense, to appear and otherwise join in
any such action using counsel of Endocare's own choice and at
Endocare's own expense.
14.3.3. Subject to Section 14.4, legal proceedings contemplated by
Section 14.3 will be controlled by the party bringing the suit
(the "SUING PARTY"), provided that (a) the other party (the
"NON-SUING PARTY") will reasonably cooperate with the Suing
Party in such proceedings (including, without limitation, by
joining such suit as a necessary or indispensable party at the
Suing Party's request), (b) the Suing Party will consult with
the Non-Suing Party on all matters pertaining to the
litigation, and in particular, it will not settle the
infringement without first discussing the terms of the
settlement with the Non-Suing Party and taking the Non-Suing
Party comments duly into account, and (c) the Non-Suing Party
shall have the right to be advised by independent counsel of
its own choosing at its own expense. In any event, the
Non-Suing Party shall not (and shall have no right to) settle
the litigation, or grant a license or sublicense of any
Patents to the third party infringer, without the prior
written consent of the Suing party.
14.3.4. Any damages and any award of costs obtained as a result of
legal proceedings contemplated by Section 14.3 shall, unless
expressed otherwise, be shared on the following basis: (a)
first, to reimburse each party for its documented
out-of-pocket legal expenses relating to the proceedings; (b)
and secondly, any remaining amounts shall be retained by the
Suing Party.
14.3.5. Notwithstanding anything to the contrary, the value of any
damages and other recovery obtained by CryoCath (whether
obtained as a result of court judgment or settlement) in legal
proceedings contemplated by Section 14.3 in connection with
any infringement of a Patent by a third party (less CryoCath's
documented out-of-pocket legal expenses relating to the legal
action and/or settlement negotiations that resulted in such
damages and other recovery), to the extent such damages or
other recovery are calculated based on the defendant's product
sales or on CryoCath's lost sales, lost revenues or lost
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profits, shall be deemed Net Sales subject to CryoCath's
royalty obligations under Article 7.
14.3.6. CryoCath shall not accuse or notify any third party of
infringement of any Patent, or authorize any Person to perform
such acts, without Endocare's prior written approval, unless
and until CryoCath receives the right to bring legal
proceedings against such third party infringer in accordance
the terms of Section 14.3.
14.3.7. For purposes of clarification and notwithstanding anything in
this Agreement to the contrary, CryoCath shall have no right
to take legal action against any third party in connection
with any infringement or potential infringement of any Patents
not arising out of Cardiovascular Uses.
14.4. ALLEGATIONS OF INVALIDITY. If any Person institutes proceedings against
either party regarding the validity of and/or seeking revocation of any
of the Patents (including, without limitation, a declaratory judgment
action or a counterclaim or affirmative defense in an infringement suit
brought under Section 14.3), such party will notify the other party in
writing to that effect. Endocare shall have the right, at its sole
expense, and CryoCath shall assist Endocare, to join such proceedings
as a party (if Endocare is not already a party thereto). Regardless of
whether Endocare becomes a party to such proceedings, Endocare shall
have the right to control such proceedings to the extent they affect in
any way the validity and/or revocation of any Patents. Endocare will
consult with CryoCath and take CryoCath's reasonable comments into
account in connection with such proceedings.
15. MISCELLANEOUS PROVISIONS
15.1. The parties shall keep one another informed of the status of their
respective activities regarding any litigation or settlement thereof
concerning the Licensed Cardiovascular Products and/or the Technology
or any actual or threatened infringement relating thereto or the
Patents, to the extent that such litigation relates to Cardiovascular
Uses and/or Licensed Cardiovascular Products.
PART F - WARRANTY AND INDEMNITY
16. REPRESENTATIONS AND WARRANTIES OF ENDOCARE
16.1. Endocare represents and warrants to CryoCath as of the Closing Date
(except as set forth on Endocare's disclosure schedule furnished to
CryoCath, which exceptions shall be deemed to be representations and
warranties as if made hereunder) as set forth in the following
Subsections of this Section, and acknowledges that CryoCath is relying
upon such representations and warranties in entering into this
Agreement.
16.1.1. Due Organization. Endocare is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware and has full power and authority under
applicable corporate law to own, lease and operate its
Properties and to carry on its affairs as they are presently
conducted.
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16.1.2. Authority; Binding Nature of Agreement. The execution,
delivery and performance by Endocare of this Agreement have
been duly authorized by all necessary corporate action on the
part of Endocare. This Agreement constitutes the legal, valid
and binding obligation of Endocare, enforceable against
Endocare by CryoCath in accordance with its terms, except as
may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights
generally, and (b) laws relating to the availability of
specific performance, injunctive relief, or other equitable
remedies.
16.1.3. No Bankruptcy. There has not been filed any petition or
application, or any Proceeding commenced which has not been
discharged, by or, to Endocare's Knowledge, against Endocare
with respect to any Properties of Endocare, under any Legal
Requirement relating to bankruptcy, reorganization, fraudulent
transfer, compromise, arrangements, insolvency, readjustment
of debt or creditors' rights, and no assignment has been made
by Endocare for the benefit of creditors.
16.1.4. Non-Contravention; Consents. Neither the execution and
delivery of this Agreement by Endocare, nor the consummation
or performance of any of the transactions contemplated herein
by Endocare, will directly or indirectly, with or without
notice or lapse of time:
(a) to Endocare's Knowledge, contravene, conflict with or
result in a violation of any Legal Requirement or any
Order to which Endocare or any of the Purchased
Assets are subject;
(b) contravene, conflict with or result in a violation of
the provisions of Endocare's articles of
incorporation and by-laws, including all amendments
thereto;
(c) result in the imposition or creation of any
Encumbrance, other than a Permitted Encumbrance, upon
or with respect to any of the Purchased Assets.
Except as set forth on Schedule 16.1.4 attached hereto, to
Endocare's Knowledge, Endocare will not be required to make
any filing with or give any notice to, or to obtain any
Consent from, any Person in connection with the execution and
delivery of this Agreement or the consummation or performance
of any of the transactions contemplated herein.
16.1.5. Tangible Purchased Assets. Each item of Purchased Assets that
is tangible personal property and is identified in Schedules
5.2 and 5.3 is in good condition and repair, ordinary wear and
tear excepted.
16.1.6. Title to Purchased Assets. Endocare owns, and has good and
valid title to, free and clear of any Encumbrance, other than
Permitted Encumbrances, all of the Purchased Assets, wherever
they may be located.
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16.1.7. Compliance with Legal Requirements. To Endocare's Knowledge,
no Governmental Body has proposed or is considering any Legal
Requirement that, if adopted or otherwise put into effect, (a)
would be reasonably likely to have a material adverse effect
on the Purchased Assets or on the ability of Endocare to
comply with or perform any covenant or obligation under this
Agreement, or (b) would be reasonably likely to have the
effect of preventing, delaying, making illegal or interfering
with the transactions contemplated herein.
16.1.8. Governmental Authorizations. To Endocare's Knowledge, Schedule
16.1.8 identifies each Governmental Authorization that is
necessary or material to the manufacture of the Licensed
Cardiovascular Products as conducted by Endocare as of the
Closing Date. Endocare holds all Governmental Authorizations
identified on Schedule 16.1.8 and has delivered to CryoCath
accurate and complete copies of all such Governmental
Authorizations held by Endocare, including all renewals
thereof and all amendments thereto, to the extent tangible
copies of such Governmental Authorizations are in its
possession. To Endocare's Knowledge, each Governmental
Authorization identified in Schedule 16.1.8 is valid and in
full force and effect. Endocare has notified the FDA and TUV
Rheinland of its intent to transfer the Governmental
Authorizations identified in Schedule 16.1.8 to CryoCath. For
purposes of clarification, Endocare makes no representation or
warranty regarding the transferability of any Governmental
Authorization.
16.1.9. Proceedings; Orders. (a) To Endocare Knowledge, there is no
pending Proceeding against Endocare (and it has not been
served with notice of process of any such Proceeding) and (b)
neither Endocare nor, to Endocare's Knowledge, any other
Person, has threatened to commence any Proceeding (i) that
directly relates to the Purchased Assets and/or the Technology
(including, without limitation any of the Patents) or any part
thereof; or (ii) that challenges, or that is reasonably likely
to have the effect of preventing, delaying, making illegal or
interfering with, any of the transactions contemplated herein.
To Endocare's Knowledge, there is no proposed Order that, if
issued or otherwise put into effect, (A) would be reasonably
likely to have an adverse effect on the Purchased Assets
and/or the Technology (including, without limitation any of
the Patents) or any part thereof or on the ability of Endocare
to comply with or perform any covenant or obligation under
this Agreement, or (B) would be reasonably likely to have the
effect of preventing, delaying, making illegal or otherwise
interfering with the transactions contemplated herein.
16.1.10. Technology. To Endocare's Knowledge, there are no pending or
threatened, claims asserted against Endocare by any Person
that such Person has any ownership rights over the Technology
and/or Endocare's Intellectual Property Rights in the
Technology as they relate to Licensed Cardiovascular Products
or Cardiovascular Uses. Endocare has the right to grant the
licenses and other rights in Article 2 hereof. Without
limiting the generality of the foregoing:
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(a) Endocare has received no written notice or otherwise
has no Knowledge that any products or services
manufactured, produced, used or sold by Endocare
incorporating, embodying or otherwise including the
Technology or any part thereof infringes any
Intellectual Property Rights of any Person;
(b) as of the Closing Date, the Patents and the patent
applications identified by Schedule 16.1.10 are
subsisting;
(c) Endocare has not granted and it is not obliged to
grant a license, assignment option, preemptive right,
or right of first refusal in respect of the
Technology and/or Endocare's Intellectual Property
Rights in the Technology as they relate to
Cardiovascular Products or Cardiovascular Uses,
except in favor of CryoCath as contemplated in this
Agreement;
(d) upon full satisfaction by Endocare of its obligations
under Articles 2, 5, 10, 11 and 13, Endocare will
have provided or disclosed to CryoCath, to the extent
requested by CryoCath in accordance with the other
terms of this Agreement or otherwise required to be
provided by Endocare under the other terms of this
Agreement without request by CryoCath, all material
Endocare Technology relating to the Licensed
Cardiovascular Products in Endocare's possession at
the Closing;
(e) with respect to the Patents and patent applications
identified by Schedule 16.1.10, Endocare has paid all
maintenance and renewal fees and annuities for which
the failure to pay such fees and annuities prior to
the Closing Date would result in the permanent,
irrevocable and irreversible forfeiture of Endocare's
rights to the corresponding Patents and patent
applications; and
(f) to Endocare's Knowledge (but in any event,
notwithstanding Section 1.48, without any duty of
investigation of any kind, whether or not in the
ordinary course and scope of any the employment of
any Endocare employee), no Person is infringing any
of Endocare's Intellectual Property Rights in the
Technology in connection with Cardiovascular Products
or Cardiovascular Uses where such infringement has
had a material adverse effect on the business of
manufacturing Licensed Cardiovascular Products as
conducted by Endocare as of the Closing Date.
Each of the Persons listed in Schedule 16.1.10 has executed
and delivered to Endocare an agreement regarding the
protection of proprietary information in substantially the
form previously provided to CryoCath, and to Endocare's
Knowledge, such agreements are valid and enforceable and have
not been materially breached.
16.1.11. ▇▇▇▇ of Materials. The ▇▇▇▇ of materials attached hereto as
Schedule 16.1.11 is true, complete and accurate, and presents
fairly all costs and expenses
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associated with the manufacture of the Licensed Cardiovascular
Products as conducted by Endocare as of the Closing Date.
16.1.12. Residency. Endocare is a resident of the U.S. within the
meaning of the Convention between Canada and the United States
of America with respect to Taxes on Income and on Capital
(1980), as amended from time to time (the "CANADA-U.S. TAX
TREATY").
16.1.13. Commission. CryoCath will not be liable for any brokerage
commission, finders' fee or other like payment in connection
with the transactions contemplated hereby because of any
action taken, or agreement or understanding reached, by or on
behalf of Endocare.
16.1.14. Suppliers. To the Knowledge of Endocare, the relationship of
the Endocare with its suppliers is a good commercial working
relationship. No supplier material or necessary to the
manufacture of the Licensed Cardiovascular Products
manufactured by Endocare as of the Closing Date, has cancelled
or otherwise terminated, or, to Endocare's Knowledge,
threatened in writing or orally to cancel or otherwise
terminate, its relationship with Endocare during the last
twelve (12) months, or has during the last twelve (12) months
decreased materially, or, to Endocare's Knowledge, threatened
in writing or orally to (a) decrease or limit materially, its
services, supplies or materials to Endocare or (b) alter in
any material respect the continuity of such dealings with
CryoCath upon the consummation of the transactions
contemplated hereby. Notwithstanding the foregoing, the
Mini-Flex Agreement, which CryoCath has elected not to assume,
restricts the ability of Mini-Flex to supply certain bellows
assemblies to parties other than Endocare and its assignees.
16.2. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN SECTION 16.1, ENDOCARE MAKES
NO REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR
NON-INFRINGEMENT OF THIRD PARTY RIGHTS, OR ANY WARRANTIES THAT MAY
ARISE FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE.
Without limiting the generality of the foregoing, nothing in this
Agreement shall be construed as: (a) a warranty or representation by
Endocare as to the validity or scope of any patent, whether within the
Patents or otherwise; (b) an obligation to bring or prosecute actions
or suits against third parties for infringement of any patent, whether
within the Patents or otherwise; or (c) conferring a right to use in
advertising, publicity, promotion or otherwise any trademark or trade
name.
17. REPRESENTATIONS AND WARRANTIES OF CRYOCATH
17.1. CryoCath represents and warrants to Endocare as at the Closing Date as
set forth in the following Subsections of this Section, and
acknowledges that Endocare is relying upon such representations and
warranties in entering into this Agreement.
17.1.1. Due Organization. CryoCath is a company duly organized,
validly existing and in good standing under the laws of the
Province of Quebec and has full
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power and authority under applicable corporate law to own,
lease and operate its Properties and to carry on its affairs
as they are presently conducted.
17.1.2. Authority; Binding Nature of Agreement. The execution,
delivery and performance by CryoCath of this Agreement have
been duly authorized by all necessary corporate action on the
part of CryoCath. This Agreement constitutes the legal, valid
and binding obligation of CryoCath, enforceable against
CryoCath by Endocare in accordance with its terms, except as
may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights
generally, and (b) laws relating to the availability of
specific performance, injunctive relief, or other equitable
remedies.
17.1.3. No Bankruptcy. There has not been filed any petition or
application, or any Proceeding commenced which has not been
discharged, by or, to CryoCath's Knowledge, against CryoCath
with respect to any Properties of CryoCath, under any Legal
Requirement relating to bankruptcy, reorganization, fraudulent
transfer, compromise, arrangements, insolvency, readjustment
of debt or creditors' rights, and no assignment has been made
by CryoCath for the benefit of creditors.
17.1.4. Non-Contravention; Consents. Neither the execution and
delivery of this Agreement by CryoCath, nor the consummation
or performance of any of the transactions contemplated herein
by CryoCath, will directly or indirectly, with or without
notice or lapse of time:
(a) to CryoCath's Knowledge, contravene, conflict with or
result in a violation of any Legal Requirement or any
Order to which CryoCath is subject; or
(b) contravene, conflict with or result in a violation of
the provisions of CryoCath's articles of
incorporation and by-laws, including all amendments
thereto;
To CryoCath's Knowledge, CryoCath will not be required to make
any filing with or give any notice to, or to obtain any
Consent from, any Person in connection with the execution and
delivery of this Agreement or the consummation or performance
of any of the transactions contemplated herein.
17.1.5. Compliance with Legal Requirements. To CryoCath's Knowledge,
no Governmental Body has proposed or is considering any Legal
Requirement that, if adopted or otherwise put into effect, (a)
would be reasonably likely to have a material adverse effect
on the Purchased Assets or on the ability of CryoCath to
comply with or perform any covenant or obligation under this
Agreement, or (b) would be reasonably likely to have the
effect of preventing, delaying, making illegal or interfering
with the transactions contemplated herein.
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17.1.6. Proceedings; Orders. (a) To CryoCath's Knowledge, there is no
pending Proceeding against CryoCath (and it has not been
served with notice of process of any such Proceeding) and (b)
neither CryoCath nor, to CryoCath's Knowledge, any other
Person, has threatened to commence any Proceeding that
challenges, or that is reasonably likely to have the effect of
preventing, delaying, making illegal or interfering with, any
of the transactions contemplated herein. To CryoCath's
Knowledge, there is no proposed Order that, if issued or
otherwise put into effect, would be reasonably likely to have
the effect of preventing, delaying, making illegal or
otherwise interfering with the transactions contemplated
herein.
17.1.7. Commission. Endocare will not be liable for any brokerage
commission, finders' fee or other like payment in connection
with the transactions contemplated hereby because of any
action taken, or agreement or understanding reached, by or on
behalf of CryoCath.
17.1.8. Financial Statements. The CryoCath Financial Statements fairly
present in all material respects the properties, assets,
liabilities, financial condition, results of operations,
changes in shareholders' equity and cash flows of CryoCath as
at the respective dates of September 31, 2002 and December 31,
2002 and for the periods referred to in such financial
statements, all in accordance with GAAP, applied consistently
and in accordance with past practices. As of the date hereof,
there has been no change in the CryoCath's accounting polices
since December 31, 2002. Except to the extent reflected or
reserved for in the CryoCath Financial Statements, CryoCath
has no liabilities or obligations which (i) would have a
material adverse effect on the business, financial condition
or results of operation of CryoCath or (ii) that would
normally be shown on a balance sheet prepared in accordance
with GAAP, except liabilities or obligations incurred in the
ordinary course of business since December 31, 2002.
17.1.9. Residency. CryoCath is a resident of Canada within the meaning
of the Canada-U.S. Tax Treaty.
18. INDEMNIFICATION
18.1. SURVIVAL. All of the representations and warranties made by the parties
in Articles 16 and 17 of this Agreement shall be continuing and shall
survive the execution hereof and any investigation made at any time by
or on behalf of the other party until *** , except that (a) any claim
asserted in writing in respect of any such representations and
warranties prior to *** shall survive until finally resolved and
satisfied in full (b) any representations and warranties relating to
Tax matters shall survive until *** ; (c) any representation and
warranty made in Subsections 16.1.2, 16.1.6 and 17.1.2 shall be *** ;
and (d) any representation and warranty in respect of which a claim
based on fraud or intentional misrepresentation is made shall be *** .
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18.2. ENDOCARE INDEMNIFICATION COVENANT. Endocare shall indemnify and hold
harmless CryoCath, its Affiliates and their respective employees,
officers, directors and agents (each, a "CRYOCATH INDEMNIFIED PARTY")
from and against any and all claims, demands, lawsuits, proceedings,
settlement amounts, liability, loss, damage, cost and expense
(including reasonable legal fees whether or not involving a third
party) (collectively, "LIABILITY") which may be asserted against a
CryoCath Indemnified Party or which a CryoCath Indemnified Party may
incur, suffer or be required to pay resulting from, arising out of or
in connection with or attributable to (a) the breach by Endocare of any
representation or warranty of Endocare contained in this Agreement; (b)
any failure of Endocare to duly perform, observe or fulfill any term,
provision, covenant or agreement contained herein; (c) any
noncompliance by Endocare with any bulk sales Legal Requirement or any
other Legal Requirement having similar effect in respect of the
transactions contemplated herein; (d) the failure to remit withholding
Taxes (including, for greater certainty, all penalties, interest and
interest on penalties and all reasonable costs) in respect of amounts
payable to Endocare hereunder; (e) Endocare's failure to pay Taxes that
created a Permitted Encumbrance on the Purchased Assets prior to the
Closing; or (f) except as provided in Article 36, Endocare's ownership
or operation of the Purchased Assets prior to Closing, including its
manufacture of Licensed Cardiovascular Products.
18.3. CRYOCATH INDEMNIFICATION COVENANT. CryoCath shall indemnify and hold
harmless Endocare, its Affiliates and their respective employees,
officers, directors and agents and its employees, officers, directors
and agents (each, an "ENDOCARE INDEMNIFIED PARTY") from and against any
Liability which may be asserted against the Endocare Indemnified Party
or which the Endocare Indemnified Party may incur, suffer or be
required to pay resulting from, arising out or in connection with or
attributable to (a) the breach by CryoCath of any representation or
warranty of CryoCath contained in this Agreement; (b) any failure by
CryoCath to duly perform, observe or fulfill any term, provision,
covenant or agreement contained herein or (c) CryoCath's ownership or
operation of the Purchased Assets or the Business on or after the
Closing.
18.4. NOTICE OF CLAIM; DEFENSE. If any Proceeding is filed or initiated
against any party entitled to the benefit of indemnity hereunder,
written notice thereof shall be given to the indemnifying party as
promptly as practicable (and in any event within ten (10) days after
the service of the citation or summons); provided, however, that the
failure of any indemnified party to give timely notice shall not affect
rights to indemnification hereunder except to the extent that the
indemnifying party demonstrates actual damage caused by such failure.
After such notice, if the indemnifying party shall acknowledge in
writing to the indemnified party that the indemnifying party shall be
obligated under the terms of its indemnity hereunder in connection with
such Proceeding, then the indemnifying party shall be entitled, if it
so elects, to take control of the defense and investigation of such
Proceeding and to employ and engage attorneys of its own choice to
handle and defend the same, such attorneys to be reasonably
satisfactory to the indemnified party, at the indemnifying party's
cost, risk and expense (unless (a) the indemnifying party has failed to
assume the defense of such Proceeding or (b) the named parties to such
Proceeding include both of the indemnifying party and the indemnified
party, and the indemnified party and its counsel determine in good
faith that there may be one or more legal defenses available to such
indemnified party that are different from or additional to those
available to the indemnifying party and that joint representation would
be inappropriate), and to compromise or settle such Proceeding, which
compromise or settlement shall be
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made only with the written consent of the indemnified party, such
consent not to be unreasonably withheld. The indemnified party may
withhold such consent if such compromise or settlement would adversely
affect the conduct of business or requires less than an unconditional
release to be obtained. If (i) the indemnifying party fails to assume
the defense of such Proceeding within fifteen (15) days after receipt
of notice thereof pursuant to this Section 18.4, or (ii) the named
parties to such Proceeding include both the indemnifying party and the
indemnified party and the indemnified party and its counsel determine
in good faith that there may be one or more legal defenses available to
such indemnified party that are different from or additional to those
available to the indemnifying party and that joint representation would
be inappropriate, the indemnified party against which such Proceeding
has been filed or initiated will (upon delivering notice to such effect
to the indemnifying party) have the right to undertake, at the
indemnifying party's cost and expense, the defense, compromise or
settlement of such Proceeding on behalf of and for the account and risk
of the indemnifying party; provided, however, that such Proceeding
shall not be compromised or settled without the written consent of the
indemnifying party, which consent shall not be unreasonably withheld.
In the event the indemnified party assumes defense of the Proceeding,
the indemnified party will keep the indemnifying party reasonably
informed of the progress of any such defense, compromise or settlement
and will consult with, when appropriate, and consider any reasonable
advice from, the indemnifying party of any such defense, compromise or
settlement. The indemnifying party shall be liable for any settlement
of any action effected pursuant to and in accordance with this Section
18.4 and for any final judgment (subject to any right of appeal), and
the indemnifying party agrees to indemnify and hold harmless the
indemnified party from and against any Liability by reason of such
settlement or judgment.
Regardless of whether the indemnifying party or the indemnified party
takes up the defense, the indemnifying party will pay reasonable costs
and expenses in connection with the defense, compromise or settlement
for any Proceeding under this Section 18.4 as they come due, subject to
the limitations set forth in this Section 18.4.
The indemnified party shall cooperate in all reasonable respects with
the indemnifying party and such attorneys in the investigation, trial
and defense of such Proceeding and any appeal arising therefrom;
provided, however, that the indemnified party may, at its own cost,
participate in the investigation, trial and defense of such Proceeding
and any appeal arising therefrom. In the event the indemnifying party
does not pay all expenses due under this Section 18.4 when due, the
indemnified party shall be entitled to settle any Proceeding under this
Section 18.4 without the consent of the indemnifying party and without
waiving any rights the indemnified party may have against the
indemnifying party.
18.5. LIMITATIONS OF LIABILITY.
18.5.1. Threshold Amount. Neither indemnifying party shall have any
liability with respect to the matters described in Sections
18.2 and 18.3 above unless and until the aggregate amount of
Liability equals or exceeds *** (the "THRESHOLD AMOUNT"). At
such time as the aggregate amount of Liability exceeds the
Threshold Amount, the applicable indemnified party or parties
shall be indemnified to the full extent of all such Liability
(including Liability counted in determining whether the
aggregate amount of Liability equals or
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exceeds the Threshold Amount); provided, however, that this
Subsection 18.5.1 shall not apply to (a) any intentional or
fraudulent breach of a representation or warranty set forth
herein by Endocare or CryoCath or any fraudulent breach of a
covenant or obligation set forth herein by Endocare or
CryoCath; or (b) any breach by Endocare or CryoCath of the
representations or warranties set forth in Subsections 16.1.2,
16.1.6 or 17.1.2; or (c) Endocare's indemnification
obligations under Section 18.2(e).
18.5.2. Limitation of Liability. Except as set forth in this
Subsection 18.5.2, the Liability of Endocare pursuant to this
Agreement shall in any event, in the aggregate, be limited to
*** . Except as set forth in this Subsection 18.5.2, the
Liability of CryoCath pursuant to this Agreement shall in any
event, in the aggregate, be limited to *** . The limitation of
liability set out in this Subsection 18.5.2 shall not apply to
(a) any intentional or fraudulent breach of a representation
or warranty set forth herein by Endocare or CryoCath or any
willful misconduct intending to and actually resulting in a
breach of a covenant or obligation (or any fraudulent breach
of a covenant or obligation) set forth herein by Endocare or
CryoCath; (b) any breach by Endocare or CryoCath of the
representations or warranties set forth in Subsections 16.1.2,
16.1.6 or 17.1.2; (c) any breach by Endocare or CryoCath of
the obligations set forth in Part G; (d) Endocare's
indemnification obligations under Sections 18.2(c) and
18.2(e); or (f) any breach by CryoCath of the obligations set
forth in Sections 6, 7, or 8.
18.5.3. Consequential Damages. Except as set forth in this Subsection
18.5.3, the Liability of either party hereunder shall exclude
Consequential Damages, even if the indemnifying party has been
advised of or otherwise is aware of the possibility of such
damages. The aforesaid exclusion shall not apply to any
intentional or fraudulent breach of a representation or
warranty set forth herein by Endocare or CryoCath or any
willful misconduct intending to and actually resulting in a
breach of a covenant or obligation (or any fraudulent breach
of a covenant or obligation) set forth herein by Endocare or
CryoCath.
18.6. EXCLUSIVITY. Subject to the provisions of Part H, the parties hereto
acknowledge and agree that the indemnity obligations set forth in this
Article 18 shall be the exclusive remedy of the indemnified parties
with respect to Liability resulting or arising in any manner from or
with respect to this Agreement or the transactions contemplated hereby,
whether such claims arise out of contract, tort, or violation of law,
except that this exclusivity limitation shall not apply to (a) any
intentional or fraudulent breach of a representation or warranty set
forth herein by Endocare or CryoCath or any willful misconduct
intending to and actually resulting in a breach of a covenant or
obligation (or any fraudulent breach of a covenant or obligation) set
forth herein by Endocare or CryoCath; or (b) any breach by Endocare or
CryoCath of the obligations set forth in Part G.
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PART G - CONFIDENTIALITY, PUBLICITY AND NON-COMPETITION
19. CONFIDENTIAL INFORMATION
19.1. Each party (the "RECEIVING PARTY") understands that the other party
(the "DISCLOSING PARTY") has disclosed or may disclose Confidential
Information. The purpose of this Article 19 is to prevent the
unauthorized disclosure or use of Confidential Information.
For purposes of this Agreement, "CONFIDENTIAL INFORMATION" shall mean
any information disclosed by the Disclosing Party to the Receiving
Party in connection with this Agreement (including the terms of this
Agreement) (a) that is identified to the Receiving Party as, or that
the Receiving Party knows (or should know, acting reasonably, in light
of the circumstances under which such information is disclosed) is, the
Disclosing Party's confidential or proprietary information, and (b)
that is not generally known to the public at the time it is disclosed
to the Receiving Party. Confidential Information may include, but shall
not be limited to, trade secrets, know-how, negative know-how,
formulas, patterns, compilations, programs, devices, methods,
techniques, processes, inventions, source codes, diagrams, marketing
and pricing information, business strategies and information regarding
customers and suppliers. Notwithstanding any the foregoing to the
contrary, all Technology and Technical Information (including, without
limitation, all Technology and Technical Information described or
embodied in the Purchased Assets) will constitute Confidential
Information of Endocare.
The Receiving Party agrees as follows:
19.1.1. the Receiving Party shall hold and maintain all Confidential
Information of the Disclosing Party in strictest confidence
and shall only use such Confidential Information solely and
exclusively for the purposes of, or as permitted under, this
Agreement;
19.1.2. the Receiving Party shall not, without the prior written
approval of the Disclosing Party, use for its own benefit,
publish or otherwise disclose to others, or permit the use by
others for their benefit or to the detriment of the Disclosing
Party, any of the Confidential Information of the Disclosing
Party. The Receiving Party may, subject to first having
provided prior written notice to the Disclosing Party, make
disclosures to the extent (a) required to comply with the
Receiving Party's obligations under applicable securities
laws, including, without limitation, the Securities Act of
1933, as amended and the Securities Exchange Act of 1934, as
amended, but only after the Receiving Party consults with the
Disclosing Party regarding the necessity and form of any such
disclosure, and provides the Disclosing Party a reasonable
opportunity to review the proposed disclosure and comment
thereon, and (b) required by law or by court order, provided
that, prior to any such required disclosure, the Receiving
Party shall give the Disclosing Party reasonable advance
notice of any such disclosure and shall reasonably cooperate
with the Disclosing Party in protecting against any such
disclosure and/or obtaining a protective order narrowing the
scope of such disclosure and/or use of the Confidential
Information.
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19.1.3. the Receiving Party shall restrict access to the Confidential
Information of the Disclosing Party to those of its officers,
directors, consultants, contractors and employees who (a) need
such access in order to execute the transactions or render the
services contemplated hereunder or obtain Regulatory Approvals
for the Licensed Cardiovascular Products and (b) any permitted
Sub-licensee, lender, investor or financial partner approached
and/or retained by the Receiving Party to finance partially or
totally the transactions contemplated herein, including any of
the representatives, agents, advisors, directors or officers
of such entities who have a reasonable need to know the
Confidential Information for the purpose of evaluating the
Receiving Party and/or the transactions contemplated herein;
provided the Persons set forth under (a) and (b) above
(collectively, the "AUTHORIZED RECEIVING THIRD PARTIES") have
entered into written agreements with the Receiving Party
requiring them to comply with obligations and restrictions
that are at least as protective of the Confidential
Information as the terms and conditions of this Article 19;
and provided, further, such Authorized Receiving Third Party
is not a competitor of the Disclosing Party. For purposes of
this Subsection 19.1.3, a competitor of Endocare is a Person
engaged in the CryoCath Restricted Business and a competitor
of CryoCath is a Person engaged in the Endocare Restricted
Business. The Receiving Party further agrees that it will
advise each of the persons to whom it provides access to any
of the Confidential Information of the Disclosing Party
pursuant to the foregoing sentence that such persons are
strictly prohibited from making any use for their benefit or
to the detriment of the Disclosing Party, from publishing or
otherwise disclosing to others, or from permitting others to
use, any of the Confidential Information of the Disclosing
Party;
19.1.4. the Confidential Information of the Disclosing Party will not
be used in any way against the Disclosing Party's interests,
including, without limitation, to file any patent application
relating to such Confidential Information, to provide any
reexamination or any interference with any patent application
which has been filed or will be filed by the Disclosing Party
relating to the Confidential Information, and will not be used
to amend any claim in any pending patent application to expand
the claim to read on, cover, or dominate any invention
(whether or not patentable) disclosed in such Confidential
Information;
19.1.5. the Receiving Party shall take all necessary action to protect
the confidentiality of the Disclosing Party's Confidential
Information and avoid the unauthorized use, disclosure,
publication, and dissemination of the Disclosing Party's
Confidential Information;
19.1.6. the Disclosing Party and the Receiving Party agree that the
obligations of confidentiality and non-use imposed in
Subsections 19.1.1, 19.1.2, 19.1.3 and 19.1.5 shall apply to
each item of Confidential Information for a period of fifteen
(15) years following the disclosure date thereof, and such
obligations will not apply to information to the extent:
(a) such information is now or becomes (through no
improper action or inaction by Receiving Party) part
of the public domain, but only after such information
has become part of the public domain; or
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(b) such information is already known to the Receiving
Party at the time of disclosure and is not subject to
any confidentiality obligations or restrictions; or
(c) such information was rightfully disclosed to the
Receiving Party by a third party without restriction
and without violation of Disclosing Party's rights;
or
(d) such information can be shown by clear and
convincing, contemporaneously created written
evidence to have been independently developed by the
Receiving Party without use of any Confidential
Information of the Disclosing Party or by employees
of the Receiving Party who have had no access to any
such Confidential Information;
provided, however, that without limiting the other provisions
of this Agreement, nothing in this Article 19 shall be
construed as granting, in any way, any type of assignment or
license under any patent, trademark, trade secret or copyright
of Disclosing Party or any other entity.
19.2. Each party, as the Receiving Party, will notify the other party, as the
Disclosing Party, of any actual or suspected unauthorized use or
disclosure of the Disclosing Party's Confidential Information of which
the Receiving party has Knowledge. The Receiving Party will reasonably
cooperate with the Disclosing Party in the investigation and
prosecution of such unauthorized use or disclosure.
19.3. Any unauthorized use or disclosure of the Disclosing Party's
Confidential Information by an Authorized Receiving Third Party (a
"BREACHING AUTHORIZED RECEIVING THIRD PARTY") shall be deemed a breach
of this Article 19 by the Receiving Party and the Disclosing Party
shall have the same rights and remedies against the Receiving Party as
it would if such unauthorized use or disclosure had been made by the
Receiving Party; provided, however, that if (a) the Receiving Party had
entered into a written agreement with the Breaching Authorized
Receiving Third Party prohibiting such unauthorized use or disclosure
of the Confidential Information of the Disclosing Party and (b) upon
becoming aware of such unauthorized use or disclosure by the Breaching
Authorized Receiving Third Party, the Receiving Party takes all
necessary action to safeguard and maintain the secrecy, confidentiality
and value of the Disclosing Party's Confidential Information and avoid
further unauthorized use or disclosure of the Disclosing Party's
Confidential Information by said Breaching Authorized Receiving Third
Party, including, without limitation, appropriate judicial action and
relief against said Breaching Authorized Receiving Third Party, then,
notwithstanding anything to the contrary herein contained, the
Disclosing Party shall not be permitted to terminate this Agreement
solely because of such breach, but will otherwise be entitled to all
other rights and remedies provided hereunder.
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19.4. *** , the parties further covenant and agree to maintain, in all
material respects, procedures and processes of the type and nature
currently and regularly used by each party to safeguard *** . The
parties agree and acknowledge that a breach of the foregoing covenant
set forth in this Section 19.4 shall not constitute a breach under this
Agreement, unless and until the failure to comply with the foregoing
covenant leads to an *** . The party having knowledge of such *** shall
promptly disclose such knowledge to the other party, and the parties
then will jointly cooperate with each other in a commercially
reasonable fashion to investigate and prevent such *** .
Notwithstanding anything to the contrary, nothing in this Section 19.4
shall be construed as derogating from either party's obligations under
Article 2.
20. PUBLICITY
20.1. Except as provided in Article 19, a party may not use the name of the
other party in any publicity, advertising or in any other public way
and, may not issue press releases or otherwise publicize or disclose
any information related to: (a) the Licensed Cardiovascular Products;
(b) the terms or conditions of this Agreement; or (c) any information
relating to the subject matter hereof, without the prior written
consent of the other party or except as otherwise permitted pursuant to
this Agreement. Notwithstanding the foregoing, after the execution of
the Agreement, the parties may issue press releases to announce the
execution of this Agreement without the written consent of the other
party, provided, that the other party has been given an opportunity to
review and comment on such press release; each of the parties shall use
its best efforts to ensure that such initial press releases are issued
on the same day. Following such initial press releases, either party
may use the specific information contained therein, or in any
subsequent public announcements or publications made by the other party
or by mutual agreement of the parties, in its investor relations and
public relations activities.
21. NON-COMPETITION
21.1. ENDOCARE COVENANT NOT TO COMPETE. Endocare *** hereby grants CryoCath a
covenant not to compete (the "ENDOCARE COVENANT") on the terms and
conditions set forth in this Section 21.1. Endocare covenants and
agrees that, *** , Endocare shall not, directly or indirectly, engage
in, participate in or carry on, or authorize, assist or finance any
Person (other than CryoCath) to engage in, participate in or carry on,
any business utilizing cryotherapy applications (whether or not
including the Technology) for any and all Cardiovascular Uses
including, without limitation, the Business (the "ENDOCARE RESTRICTED
BUSINESS") anywhere in the world, whether individually or in
partnership or association with any one or more Persons, and whether as
a principal, partner, shareholder, subsidiary, investor, owner (except
through ownership of less than *** of the outstanding stock of a
company engaged in any of the Endocare Restricted Business anywhere in
the world, where such stock is listed on a recognized securities
exchange, quoted on a national market system or actively traded
-----------------
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
- 33 -
in the over-the-counter market), agent, consultant or in any other
capacity. It is further agreed that, subject to compliance with the
next following paragraph, the Endocare Covenant shall not apply to any
Endocare New Owner, including as a consequence of the transfer or
assignment of the Endocare Covenant by operation of law to such
Endocare New Owner or as a consequence of the sale of all or
substantially all of the assets of Endocare to such Endocare New Owner.
For greater certainty, notwithstanding Section 26 but subject to
compliance with the next following paragraph, the Endocare Covenant
will not bind the surviving corporation resulting from the merger of
Endocare with or into an Endocare New Owner nor will it bind an
Endocare New Owner which acquires all or substantially all of the
assets of Endocare.
In addition, Endocare shall not, directly or indirectly, permit or
tolerate that the Technology and/or Endocare's Intellectual Property
Rights in the Technology (except with respect to Confidential
Information that has become generally known to the public through no
act or omission of Endocare or any Authorized Receiving Third Party of
Endocare) be made available to any Endocare New Owner for
Cardiovascular Uses, and Endocare shall take all appropriate measures
to ensure compliance with the foregoing.
Endocare shall use reasonable commercial efforts to cause any Endocare
New Owner to agree to be bound by the provisions of this Section 21.1
to the same extent and in the same manner as Endocare. For the purposes
hereof, "ENDOCARE NEW OWNER" shall mean any Person which acquires
Control of Endocare or who acquires all or substantially all of
Endocare's assets on an arm's length basis.
This Section 21.1 does not in any manner limit the generality of the
provisions of Section 2.1.
21.2. CRYOCATH COVENANT NOT TO COMPETE. CryoCath *** hereby grants Endocare a
covenant not to compete (the "CRYOCATH COVENANT") on the terms and
conditions set forth in this Section 21.2. CryoCath covenants and
agrees that, *** , CryoCath shall not, directly or indirectly, engage
in, participate in or carry on, or authorize, assist or finance any
Person to engage in, participate in or carry on, any business utilizing
cryotherapy applications (whether or not including the Technology) for
any and all urological targets and urological applications (including
cryosurgery of the prostate) (the "CRYOCATH RESTRICTED BUSINESS")
anywhere in the world, whether individually or in partnership or
association with any one or more Persons, and whether as a principal,
partner, shareholder, subsidiary, investor, owner (except through
ownership of less than *** of the outstanding stock of a company
engaged in any of the CryoCath Restricted Business anywhere in the
world, where such stock is listed on a recognized securities exchange,
quoted on a national market system or actively traded in the
over-the-counter market), agent, consultant or in any other capacity.
It is further agreed that, subject to compliance with the next
following paragraph, the CryoCath
-----------------
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
- 34 -
Covenant shall not apply to any CryoCath New Owner, including as a
consequence of the transfer or assignment of the CryoCath Covenant by
operation of law to such CryoCath New Owner or as a consequence of the
sale of all or substantially all of the assets of CryoCath to such
CryoCath New Owner. For greater certainty, notwithstanding Section 26
but subject to compliance with the next following paragraph, the
CryoCath Covenant will not bind the surviving corporation resulting
from the merger of CryoCath with or into a CryoCath New Owner nor will
it bind a CryoCath New Owner which acquires all or substantially all of
the assets of CryoCath.
In addition, CryoCath shall not, directly or indirectly, permit or
tolerate that the Technology and/or Endocare's Intellectual Property
Rights in the Technology (except with respect to Confidential
Information that has become generally known to the public through no
act or omission of CryoCath or any Authorized Receiving Third Party of
CryoCath), be made available to any CryoCath New Owner for any uses
other than Cardiovascular Uses, and CryoCath shall take all appropriate
measures to ensure compliance with the foregoing.
CryoCath shall use reasonable commercial efforts to cause any CryoCath
New Owner to agree to be bound by the provisions of this Section 21.2
to the same extent and in the same manner as CryoCath. For the purposes
hereof, "CRYOCATH NEW OWNER" shall mean any Person which acquires
Control of CryoCath or who acquires all or substantially all of
CryoCath's assets on an arm's length basis.
This Section 21.2 does not in any manner limit the generality of the
provisions of Section 2.2.
PART H - TERM AND TERMINATION
22. TERM AND TERMINATION
22.1. TERM. This Agreement shall be effective commencing on the Closing Date
and shall remain in effect until terminated with the mutual agreement
of the parties, unless terminated by a party pursuant to the provisions
of this Agreement.
22.2. TERMINATION. Except as otherwise set forth in this Agreement, either
party may terminate this Agreement for the uncured material breach of
this Agreement by the other party, unless such terminating party has
committed an uncured material breach of this Agreement, as follows:
(a) the party contending there is a material breach of this
Agreement (the "CHARGING PARTY") must first give written
notice to the breaching party (the "ACCUSED PARTY") of the
nature of the breach. If the Accused Party has not, within the
Cure Period, cured such breach the Charging Party will have
the right, but not the obligation, to terminate this Agreement
immediately upon written notice following the expiry of the
Cure Period;
(b) as used in this Section 22.2, "CURE PERIOD" will have the
following meaning:
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(i) where the breach relates to (A) a failure to comply
with Legal Requirements, (B) a breach of a party's
non-competition covenant, or (C) the unauthorized use
of a party's Confidential Information, or (D) a
breach of a party's obligations under Section 2.1 and
Section 2.2, the Cure Period will mean the ten (10)
days following the Accused Party's receipt of written
notice of such breach;
(ii) in all other cases, the Cure Period will mean the
thirty (30) days following the Accused Party's
receipt of written notice of such breach.
Notwithstanding anything in this Article 22 to the contrary, Endocare
may not terminate this Agreement under this Section 22.2 after all four
U.S. $2.5 million payments set out in Article 8 have been made by
CryoCath in accordance with this Agreement, notwithstanding any breach
or default of this Agreement committed by CryoCath (whether or not
material or cured, and regardless of the gravity or gross negligence,
willful misconduct or bad faith of CryoCath). Without limiting the
generality of the foregoing, in the event that Endocare has notified
CryoCath in writing of a material breach by CryoCath under this
Agreement pursuant to Section 22.2 prior to CryoCath having made all
four U.S. $2.5 million payments set out in Article 8, CryoCath shall be
entitled to pay all of the unpaid portions of the four U.S. $2.5
million payments set out in Article 8, and if CryoCath pays such unpaid
portions prior to the expiration of the Cure Period, Endocare may not
terminate this Agreement under this Section 22.2. For purposes of
clarification, nothing in this Section 22.2 shall preclude Endocare
from exercising all rights and remedies available under applicable law,
excluding any termination of this Agreement, to prevent CryoCath and
Sub-licensees from using the Technology in connection with purposes or
uses other than Cardiovascular Uses, or from using the Technology in
any manner not permitted under the terms and conditions of this
Agreement (including, without limitation, Article 2), whether or not
CryoCath has made all four U.S.$2.5 million payments set out in Article
8 in accordance with this Agreement.
22.3. EFFECT OF TERMINATION.
22.3.1. Upon termination of this Agreement pursuant to Section 22.2,
all licenses granted pursuant to Article 2 and all sublicenses
granted pursuant to Article 3 will immediately terminate.
22.3.2. Upon termination of this Agreement pursuant to Section 22.2,
CryoCath will promptly return to Endocare or destroy all
tangible, electronic and other embodiments and copies of all
(a) Confidential Information of Endocare, (b) all Technology
(including New Technology) and (c) all Technical Information.
22.3.3. Upon any termination of this Agreement by Endocare, the due
date of any royalties accrued prior to such termination will
be accelerated and such royalties will become immediately due
and payable, and all other payments hereunder (including,
without limitation, the four U.S. $2.5 million payments set
out in Article 8) will become immediately due and payable,
regardless of whether any conditions to the accrual of such
payments were satisfied prior to such termination.
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22.4. SURVIVAL. Notwithstanding any termination of this Agreement, the
parties agree that Articles and Sections (as applicable) 1, 3.3, 4,
6.1, 6.2, 6.3, 9, 14.3 (the provisions of Section 14.3 shall only
survive with respect to any suits or other legal proceedings that
commenced prior to the termination of this Agreement), 14.4 (the
provisions of Section 14.4 shall only survive with respect to any suits
or other legal proceedings that commenced prior to the termination of
this Agreement), 15 (the provisions of Article 15 shall survive only
with respect to any suits or other legal proceedings that commenced
prior to the termination of this Agreement), 16 (subject to Section
18.1), 17 (subject to Section 18.1), 18, 19 (excluding Section 19.4),
20, 21, 22, 23, 27 to 30 (inclusive), 36 and 37 of this Agreement shall
continue in effect after termination of this Agreement.
22.5. Neither Endocare nor CryoCath shall be liable to the other, because of
any termination of this Agreement in accordance with the terms hereof,
for compensation, reimbursement or damages: (a) for the loss of
prospective profits, anticipated sales or goodwill; (b) on account of
any expenditures, investments or commitments made by either party; or
(c) for any other reason whatsoever based upon the result of such
termination.
23. DISPUTE RESOLUTION
23.1. NEGOTIATION. The parties agree to consult and negotiate in good faith
to try to resolve any dispute, controversy or claim that arises out of
or relates to this Agreement. Except as provided in Section 23.3, no
formal dispute resolution shall be used by either party unless and
until the chief executive officers of each party shall have attempted
to meet in person to achieve such an amicable resolution, provided that
if such meeting has not taken place within ten (10) days following the
receipt by one party of a written request to negotiate from the other
party, either party shall be entitled to defer the dispute, controversy
or claim to arbitration in the manner set out below.
23.2. ARBITRATION. Subject to the reservation of the parties under Section
23.3, any dispute, controversy, disagreement or claim that arises out
of or relates to this Agreement that is not resolved under Section
23.1, including without limitation any questions regarding its
existence, formation, validity, enforceability, performance or
termination (a "DISPUTE"), shall be settled by final and binding
arbitration in accordance with the applicable arbitration rules of the
International Chamber of Commerce. Judgment upon the award rendered by
the arbitrators may be entered in any court of competent jurisdiction.
The seat of arbitration shall be New York, New York, USA. The
arbitration shall be conducted in the English language by three (3)
arbitrators. The two (2) party appointed arbitrators shall have
knowledge of and experience in technology licensing and, if practically
possible, in the medical device industry.
23.3. SPECIAL RULES. The parties hereby stipulate that any arbitration
hereunder shall be subject to the following rules: (a) the arbitrators
may not award or assess punitive damages against either party; and (b)
each party shall bear its own costs and expenses of the arbitration and
one-half (1/2) of the fees and costs of the arbitrators, subject to the
power of the arbitrators, in their sole discretion, to award all such
reasonable costs, expenses and fees to the prevailing party.
23.4. INJUNCTIVE RELIEF. Each party acknowledges and agrees that the breach
by it of any of the provisions of Articles 19 (excluding Section 19.4)
and 21 would cause serious and
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irreparable harm to the other party which could not adequately be
compensated for in damages. Therefore, notwithstanding the provisions
of Sections 18.6, 23.1, 23.2 and 30.1, each party hereby expressly
reserves, upon such breach or threatened breach by a party, the right
to seek injunctive, equitable or similar relief from any court of
competent jurisdiction, and the provisions of this Section shall not be
construed so as to be in derogation of any other remedy which the other
party may have in the event of such a breach. For greater certainty,
nothing in this Agreement shall be construed as restricting in any
manner whatsoever each party's right to seek injunctive, equitable or
similar relief against any Person other than the other party.
23.5. CONFIDENTIALITY. The parties undertake as a general principle to keep
confidential all information concerning the existence of the
arbitration, all awards in the arbitration, all materials in the
proceedings created or used for the purpose of the arbitration, and all
materials and information produced during the arbitration
("CONFIDENTIAL ARBITRATION INFORMATION") and not in the public domain,
save and to the extent that disclosure may be required of a party by
legal duty, to protect or pursue a legal right or to enforce or set
aside an award in bona fide legal proceedings before a competent court.
Each party shall obtain and deposit with the arbitrators a signed
confidentiality undertaking from its independent experts and
consultants regarding the Confidential Arbitration Information.
PART I - MISCELLANEOUS
24. NOTICES
24.1. ADDRESS DETAILS All notices or other communications to a party required
or permitted hereunder shall be deemed given if in writing and
delivered personally or sent by telecopy (with confirmation of
transmission) or certified mail (fare pre-paid and return receipt
requested) to such party at the following address (or at such other
addresses as shall be specified by like notice):
If to CryoCath, to: CryoCath Technologies Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇-▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to: CryoCath Technologies Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇-▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: President and CEO
Fax (▇▇▇) ▇▇▇-▇▇▇▇
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and if to Endocare, to: Endocare, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President and CEO
Fax (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
CryoCath and Endocare may change their respective above-specified
recipient and/or mailing address by notice to the other party given in
the manner prescribed herein.
24.2. TIME OF RECEIPT. Any notice required or permitted to be given
concerning this Agreement shall be deemed to have been received by the
party to whom it is addressed:
24.2.1. if delivered by hand, upon receipt at the premises referred to
above; or
24.2.2. if sent by post or by courier, on the date it was received as
recorded on the return receipt if received on a Business Day,
and otherwise on the next Business Day; or
24.2.3. if sent by facsimile (confirmed by letter sent by first class
post), at the time of receipt shown on the transmission
confirmation report if received on a Business Day, and
otherwise on the next Business Day.
24.3. LANGUAGE OF NOTICE. Any notice or other document served by one party on
the other in accordance with the terms of this Agreement shall be in
the English language and shall not be validly served unless this
condition is complied with.
25. FORCE MAJEURE
25.1. Failure of any party to perform its obligations under this Agreement
(except for payment of moneys due under this Agreement) shall not
subject such party to any liability to the other party or place such
party in breach of any term or condition of this Agreement if such
failure is due to any cause beyond the reasonable control of such
non-performing party ("FORCE MAJEURE"). Causes of non-performance
constituting Force Majeure shall include, without limitation, acts of
God, fire, explosion, flood, drought, war, riot, act of terrorism,
sabotage, embargo, strikes or other labour trouble, failure in whole or
in part of suppliers to deliver on schedule materials, equipment or
machinery, interruption of or delay in transportation, a national
health emergency or compliance with any order or regulation of any
government entity acting with colour of right. The party affected shall
promptly notify the other party of the condition constituting Force
Majeure as defined herein and shall exert commercially reasonable
efforts to eliminate, cure and overcome any such causes and to resume
performance of its obligations promptly; provided, however, that
nothing contained herein shall require any party to settle on terms
- 39 -
unsatisfactory to such party any strike, lock-out or other labour
difficulty, any investigation or proceeding by any public authority, or
any litigation by any third party. If a condition constituting Force
Majeure as defined herein exists for more than thirty (30) consecutive
days, the parties shall meet to negotiate a mutually satisfactory
resolution to the problem, if practicable.
26. ASSIGNMENTS
26.1. Neither this Agreement nor any or all of the rights and obligations of
a party hereunder shall be assigned, delegated, sold, transferred,
sublicensed (except as expressly permitted hereunder) or otherwise
disposed of, by operation of law or otherwise, to any third party,
without the prior written consent of the other party. Any attempted
assignment, delegation, sale, transfer, sublicense or other
disposition, by operation of law or otherwise, of this Agreement or of
any rights or obligations hereunder contrary to this Section 26.1 shall
be a material breach of this Agreement by the attempting party, and
shall be void and without force or effect; provided, however, either
party may, without such consent, assign the Agreement, together with
all of its rights and obligations hereunder (solely under the condition
that the assigning party remain fully responsible and liable to the
other party for its duties and obligations under this Agreement), in
connection with the transfer or sale of all or substantially all of its
assets or in the event of its merger or consolidation or change in
Control or similar transaction.
26.2. This Agreement shall be binding upon, and inure to the benefit of, each
party and its permitted successors and assigns.
27. SEVERABILITY
27.1. In the event that any Article or any part of any Article contained in
this Agreement is declared invalid or unenforceable by the judgment or
decree by consent or otherwise of a Court of competent jurisdiction not
subject to appeal, all other Articles or parts of Articles contained in
this Agreement shall remain in full force and effect and shall not be
affected thereby for the term of this Agreement, and such Article or
part thereof shall be enforced to the maximum extent possible so as to
effect the intent of the parties and shall be reformed without further
action by the parties to the extent necessary to make such provision
valid and enforceable.
28. WAIVER
28.1. No relaxation, forbearance, failure, delay or indulgence by either
party in enforcing any of the terms and conditions of this Agreement or
the granting of time by either party to the other shall waive,
prejudice, affect or restrict the rights and powers of that said party
hereunder nor shall any waiver by either party of any breach hereof
operate as a waiver of or in relation to any subsequent or any
continuing breach hereof.
28.2. A waiver by one party of a breach by the other of any term of this
Agreement shall not prevent the subsequent enforcement of that term and
shall not be deemed a waiver of any subsequent breach.
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29. LEGAL COUNSEL
29.1. Each party hereto acknowledges that it has been represented by legal
counsel in connection with this Agreement and that it has participated
in the drafting hereof. In interpreting and applying the terms and
provisions of this Agreement, the parties agree that no presumption
shall exist or be implied against either party.
30. GOVERNING LAW AND JURISDICTION
30.1. This Agreement shall be governed by and construed and interpreted, and
all disputes relating to or arising in connection with this Agreement
(or the subject matter thereof) shall be resolved, in accordance with
the laws of the State of New York, USA (as permitted by Section 5-1401
of the New York General Obligations Law or any similar successor
provision) excluding any conflicting laws, rules or principals that
might refer such construction to the laws of another jurisdiction;
provided that issues relating to the validity and enforceability of
patents shall be governed by the laws of the jurisdiction by which such
patent was granted. This Agreement shall not be governed by the United
Nations Convention on Contracts for the International Sale of Goods,
the application of which is hereby expressly excluded. Subject to the
provisions of Article 23, the parties hereby agree that the exclusive
place of jurisdiction for any action, suit or proceeding relating to
this Agreement shall be in the state and federal courts located in New
York, New York, USA and each such party hereby irrevocably and
unconditionally shall submit to the jurisdiction of such courts for
purposes of any such proceeding. Each party hereby irrevocably waives
any objection it may have to the venue of any action, suit or
proceeding brought in such courts or to the convenience of the forum.
Final judgment in any such proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment, a certified or
true copy of which shall be conclusive evidence of the fact and the
amount of any indebtedness or liability of any party therein described.
Any such proceeding between the parties shall be conducted in the
English language.
31. COSTS OF PREPARATION
31.1. The parties hereto shall pay their own respective legal costs incurred
in the drafting and negotiation of this Agreement.
32. INDEPENDENT RELATIONSHIP
32.1. Nothing in this Agreement shall be deemed to create an employment,
agency, joint venture or partnership relationship between the parties
hereto or any of their respective agents or employees, or any other
legal arrangement that would impose liability upon one party for the
act or failure to act of the other party. Neither party shall have any
power to enter into any contracts or commitments or to incur any
liabilities in the name of, or on behalf of, the other party, or to
bind the other party in any respect whatsoever. Further, nothing in
this Agreement shall entitle either party to make any representation or
give a warranty on behalf of the other party.
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33. COUNTERPARTS
33.1. This Agreement shall become binding when any one or more counterparts
hereof, individually or taken together, shall bear the signatures of
each of the parties hereto. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against
either party whose signature appears thereon, but all of which taken
together shall constitute but one and the same instrument.
34. RECORDING
34.1. If required by or desirable in accordance with applicable law, each
party shall have the right, at any time, to record, register, or
otherwise notify this Agreement in appropriate governmental or
regulatory offices anywhere in the world, and each party shall provide
reasonable assistance to the other in effecting such recording,
registering or notifying. Notwithstanding the foregoing, prior to
recording, registering, or otherwise notifying this Agreement, the
party desiring to so record, register, or notify shall provide a copy
of all materials to be filed for review, comment and approval by the
other party, such approval not unreasonably to be withheld or delayed.
35. FURTHER ACTIONS
35.1. Each party shall execute, acknowledge and deliver such further
instruments, and to do all other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this
Agreement including, without limitation, any filings with any antitrust
agency which may be required.
36. TRANSITION PRODUCTION
36.1. The parties hereby terminate the Existing Supply Agreement in its
entirety, including without limitation, the survival provision set
forth in Section 8.6 of the Existing Supply Agreement. The parties
hereby set forth in this Article 36 their agreement with respect to the
supply of Endocare Products to CryoCath.
36.1.1. Reconciliation of Amounts Owed. The parties agree that as of
the Closing, CryoCath is entitled to a *** rebate, offset by a
*** receivable, under the Existing Supply Agreement. The ***
balance thereof representing all amounts outstanding under the
Existing Supply Agreement will be deducted from the ***
payment to Endocare on the Closing Date under Subsection 8.1.1
of this Agreement.
36.1.2. Post-Closing Probes and Consoles. Schedule 36.1.2 set forth
the total manufacturing costs of a cryoprobe and a cryoconsole
system and bills of materials setting forth the cost of
components for such products. Endocare shall supply to
CryoCath (a) twenty (20) (the "POST-CLOSING CONSOLES") and
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*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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(b) such number of cryoprobes required in order to complete
CryoCath's open purchase order numbers 01620, 01997, 01998 and
01999 (the "POST-CLOSING PROBES"). CryoCath shall pay to
Endocare (a) an amount equal *** and (b) an amount equal to
*** , in each case based on the amounts set forth in Schedule
36.1.2. The parties shall agree in good faith on a payment,
production and delivery schedule for the Post-Closing Consoles
and Post-Closing Probes; provided, however, that such payment,
production and delivery shall occur no later than May 15,
2003.
36.1.3. Remaining Product Materials. Within five (5) days of the
Closing Date, CryoCath shall purchase from Endocare all the
components set forth on Schedule 36.1.3 (the "REMAINING
PRODUCT MATERIALS") and pay to Endocare an amount equal to ***
. The parties shall agree in good faith on a delivery schedule
for the Remaining Product Materials. Delivery of the Remaining
Product Materials shall be on an "ex works Endocare Irvine
factory" basis.
36.1.4. Warranty Obligations.
(a) Endocare warrants that the Post-Closing Consoles
shall be manufactured in accordance with the Quality
Inspection Guidelines and shall be in working order
at the time of delivery to CryoCath. Subject to the
preceding sentence, the Post-Closing Consoles shall
be purchased by CryoCath on an "as is" basis.
Endocare shall have no warranty obligations (a) with
respect to cryoconsole systems supplied by Endocare
to CryoCath under the Existing Supply Agreement prior
to the Closing Date, which obligations CryoCath
hereby assumes, and (b) subject to the first sentence
of this Subsection 36.1.4(a) (for which Endocare's
warranty obligations shall be limited to Endocare's
manufacturing costs for such nonconforming
Post-Closing Consoles), with respect to the
Post-Closing Consoles.
(b) Endocare warrants that the Post-Closing Probes are
free from defect in material, design and workmanship.
Notwithstanding anything to the contrary in the
Existing Supply Agreement or herein and except as
provided in this Article 36, CryoCath assumes
liability in respect of the warranty obligations for
the Post-Closing Probes and the cryoprobes supplied
by Endocare to Cryocath under the Existing Supply
Agreement, in consideration for Endocare's payment to
CryoCath of *** at Closing.
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*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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37. ENTIRE AGREEMENT
37.1. This Agreement (including its Schedules) sets forth the entire
agreement and understanding of the parties relating to the subject
matter hereof, and merge all prior agreements (other than that certain
Mutual Nondisclosure Agreement dated September 7, 2001, as amended as
of November 14, 2001 (the "NONDISCLOSURE AGREEMENT")) and discussions
between them and all prior memoranda of intent or understanding,
including, without limitation, the Confidential Term Sheet dated
January 17, 2003 and the Existing Supply Agreement. Any modification or
amendment of any provision of this Agreement will be effective only if
in writing and signed by an authorized representative of both parties.
In the event the terms of this Agreement and the terms of the
Nondisclosure Agreement conflict, the terms of this Agreement shall
control.
[REMAINDER OF THE PAGE LEFT BLANK]
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IN WITNESS whereof this Agreement has been executed and delivered the
day and year first before written.
CRYOCATH TECHNOLOGIES INC.
Signed: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President and CEO
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ENDOCARE, INC.
Signed: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title: Chief Financial Officer
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