Document:

exv10w1

 

EXHIBIT 10.1

ASSET PURCHASE AGREEMENT

dated April 26, 2006

by and between

AMERICAN MEDICAL SYSTEMS, INC.

and

BIO CONTROL MEDICAL (B.C.M), LTD.

 

 

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT, dated April 26, 2006 (this “Agreement”), is by and
between American Medical Systems, Inc., a Delaware corporation (“Purchaser”), and Bio
Control Medical (B.C.M), Ltd., an Israeli corporation (“Seller”).

Recitals

     A. Seller is in the business of developing devices, including active implantable devices, that
can affect the behavior of both muscles and nerves of the autonomic system (“Bio Control
Devices”) and manufacturing, marketing, selling and distributing such devices for use in
connection with a variety of medical conditions, including medical conditions that fall within a
field of use comprised of Urology, Gynecology, Colorectal Disorders, Sexual Dysfunction and related
pelvic disorders (the “Field of Use”) and others, principally in the field of cardiology,
that fall outside such Field of Use. For purposes of this Agreement, “Urology Business”
means Seller’s business of designing, manufacturing, marketing, selling and distributing Bio
Control Devices in the Field of Use.

     B. Seller has developed Intellectual Property (as defined herein) related to the Bio Control
Devices, including Intellectual Property applicable to Bio Control Devices generally and
Intellectual Property that is uniquely applicable to the Urology Business.

     C. Purchaser wishes to obtain an exclusive worldwide license to certain of Seller’s
Intellectual Property applicable to Bio Control Devices generally for use exclusively within the
Field of Use, as specified in the License Agreement (the “Licensed Intellectual Property”),
and Seller is willing to grant such a license.

     D. Purchaser wishes to purchase from Seller, and Seller wishes to sell to Purchaser, the
Urology Business of Seller, by purchasing certain of Seller’s assets, other than the Licensed
Intellectual Property, exclusively or primarily related to the Urology Business in consideration
for the Purchase Price (as herein defined) and the assumption by Purchaser of the Assumed
Liabilities (as herein defined).

Agreement

     In consideration of the foregoing, incorporated herein by this reference, and the
representations, warranties, covenants and agreements contained herein, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto
agree as follows:

ARTICLE 1

PURCHASE AND SALE OF ASSETS

	1.1	 	Purchase and Sale of Assets. Subject to the terms and conditions of this Agreement,
simultaneous with the execution hereof (the “Closing”), on the effective date hereof
(the “Closing Date”), Seller hereby sells, transfers, conveys, assigns and delivers to Purchaser and Purchaser purchases from Seller, free and
clear of any mortgage, lien, pledge, option, security interest, claim, charge, financing statement

 

 

	     	 	or other lien of any kind
whatsoever, whether or not of record (“Liens”),
all of Seller’s right, title and interest in and to those assets of Seller which, except as
expressly provided below, are exclusively or primarily used within the Urology Business,
whether or not appearing on the books and records of Seller, as specified in each of the
categories thereof more particularly described below (the “Purchased Assets”):

	 	(a)	 	Equipment and Inventory. Those items of equipment, tooling,
components, supplies and inventory specified on Exhibit 1.1(a) hereto.
	 
	 	(b)	 	Contracts. Those contracts and consulting agreements specified on
Exhibit 1.1 (b) hereto (collectively, the “Assigned Contracts”).
	 
	 	(c)	 	Transferred Intellectual Property. All of Seller’s rights in and to
the Intellectual Property specified on Exhibit 1.1(c) hereto, all reissues,
re-examinations and extensions thereof, and all invention records created by internal
and external personnel exclusively related to the Field of Use (hereinafter the
“Transferred Intellectual Property”):
	 
	 	(d)	 	Governmental Permits. All federal, state, local, foreign and other
governmental licenses, permits, approvals, authorizations, license applications,
registrations and other rights.
	 
	 	(e)	 	Equity Rights in Cytrix Israel. All of the equity ownership and rights
to acquire equity ownership, in Cytrix Israel, Ltd., an Israeli corporation
(“Cytrix Israel”);
	 
	 	(f)	 	Books and Records of Cytrix Israel. All corporate minute books,
records and seals of Cytrix Israel.
	 
	 	(g)	 	Goodwill. All of the goodwill of the Urology Business, including the
right to represent oneself as the successor to the Urology Business.

	1.2	 	Excluded Assets. All of Seller’s Assets other than those assets expressly enumerated
in the foregoing paragraph as Purchased Assets are excluded from the purchase and sale
provided for in Section 1.1, and are referred to herein as the “Excluded Assets.”
	 
	1.3	 	Assumption and Retention of Liabilities.

	 	(a)	 	Assumed Liabilities. Purchaser hereby assumes and agrees to perform,
and to pay or otherwise discharge, in accordance with the stated written terms of the
applicable obligations, the obligations of Seller under the Assigned Contracts listed
on Exhibit 1.3(a), but only to the extent such performance or payment first
arises in the ordinary course of the Urology Business after the Effective Time, and
specifically excluding any liabilities or obligations arising from or in connection
with any breach, violation, default or failure of performance of Seller or any third
party arising prior to the Effective Time. The obligations described in this
paragraph (a), to the extent assumed, are hereinafter collectively referred to as
the “Assumed Liabilities”. To the extent either party receives any third
party invoice relating to periods or portions thereof for which they are not liable
hereunder, the parties will apportion the amount due from the other party pursuant
to this Section, and the other party will promptly remit such amount to the invoiced
party.

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	 	(b)	 	Retained Liabilities. Except for the Assumed Liabilities, Purchaser
shall not assume and hereby expressly disclaims any assumption of any other
liabilities, obligations, debts or payables of any nature of Seller, whether or not
related to the Urology Business, whether fixed or contingent, known or unknown,
liquidated or unliquidated, secured or unsecured, accrued or unaccrued, or otherwise
(the “Retained Liabilities”). The Retained Liabilities include, without
limitation:

	 	(i)	 	Liabilities of Cytrix Israel. All liabilities or
obligations of Cytrix Israel existing on the Closing Date or regardless of when
asserted, related to periods or portions thereof ending on or prior to the
Closing Date, except for those liabilities set forth in, and to the extent
funded by Seller under, Sections 1.6(a)(xii) and 4.5;
	 
	 	(ii)	 	Long-Term Debt. Any long-term debt, including
capitalized lease or other lease obligations, notes payable and other long-term
debt obligations or lease commitments of any kind;
	 
	 	(iii)	 	Tax Liabilities. Any Tax liabilities of Seller or its
Affiliates (including any Tax liabilities of Cytrix Israel) to the extent and
such Taxes relate to taxable period or portions thereof ending on or prior to
the Closing Date or relate to the transactions contemplated by this Agreement,
including without limitation any transfer, recording or conveyance Taxes or
value added taxes associated with the transactions contemplated by this
Agreement;
	 
	 	(iv)	 	Broker Payments. All amounts owed under any Contract
disclosed in Section 2.23 of the Disclosure Schedule; and
	 
	 	(v)	 	General Liabilities. Any environmental claims or
liabilities, warranty claims or liabilities, product claims or liabilities,
toxic tort, litigation or labor or employment claims or liabilities, automobile
liabilities, general liabilities, workers’ compensation claims and any similar
obligations or liabilities of Seller existing on the Closing Date or,
regardless of when asserted, related to periods or portions thereof ending on
or prior to the Closing Date.

	1.4	 	Purchase Price and Holdback.
	 
	 	 	In addition to assuming the Assumed Liabilities and subject to the terms and conditions of
this Agreement, in reliance on the representations, warranties and agreements of Seller
contained herein and in consideration of the sale, assignment, transfer and delivery of
the Purchased Assets, Purchaser agrees to pay to Seller the sum of US$25,000,000 (the
“Initial Purchase Price”). The Initial Purchase Price will be paid on Closing by
wire transfers, in immediately available funds, in the amount of US$22,500,000, less the
aggregate cash

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	 	 	amount set forth on Exhibit 1.6(a)(xi) (the “Closing Date
Payment”), to a bank account designated by Seller, and in the amount of US$2,500,000
(the “Holdback”) to U.S. Bank, National Association, as escrow agent (the
“Escrow Agent”), to be held pursuant to the terms of an Escrow Agreement dated of
even date herewith among Seller, Purchaser and Escrow Agent in the form attached hereto as
Exhibit 1.4 (the “Escrow Agreement”).
	 
	1.5	 	Additional Payments by Purchaser. As additional consideration for the Purchased
Assets and subject to the conditions set forth in this Section 1.5 and to Section 5.7,
Purchaser shall make the following payments (collectively, the “Contingent Purchase
Price,” together with the Initial Purchase Price, the “Purchase Price”) to Seller:

	 	(a)	 	US$7,500,000 (the “First Milestone Payment”) upon Purchaser’s
successful completion of the OUS pilot urge incontinence or frequency clinical trial
and corresponding data analysis, as set forth on Exhibit 1.5(a) hereof (the
“First Milestone”).
	 
	 	(b)	 	US$7,500,000 (the “Second Milestone Payment”) payable in two
installments as follows (the “Second Milestone”):

	 	(i)	 	US$5,000,000 at the time thirty (30) devices, assembled and
manufactured by the Purchaser or its third party subcontractors, are ready to
be implanted in patients for treatment of urge incontinence and/or frequency
and the Purchaser is authorized to apply the CE Mark according to the Active
Implantable Medical Device (AIMD) directives or once five (5) devices,
assembled and manufactured by the Purchaser or its third party subcontractors,
have been implanted in patients; and
	 
	 	(ii)	 	Contingent upon satisfaction of clause (b)(i), above,
US$2,500,000 at the time that all of the Designated Employees have completed
one (1) year of employment with Purchaser. In the event any of the Designated
Employees do not complete one year of employment, the Seller will provide an
alternative employee to Purchaser, or service in lieu of the work done by the
terminated Designated Employee. In such case, this portion of the Second
Milestone Payment will be delayed by the time such service is not provided to
the Purchaser. In its sole discretion, the Purchaser may choose not to accept
an alternative employee or services if it has found an acceptable replacement on its own. In such case, this
portion of the Second Milestone will be considered complete on the one (1)
year anniversary of the Designated Employee’s start date with the Purchaser
or its Affiliates.

	 	(c)	 	US$10,000,000 (the “Third Milestone Payment,” collectively with the
First Milestone Payment and the Second Milestone Payment, the “Milestone
Payments”) upon the final marketing approval by the U.S. Food and Drug
Administration (“FDA”) for the first cleared indication for a device arising out of the Purchased Assets (the
“Third Milestone,” collectively with the First
Milestone and the Second Milestone, the “Milestones”).

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	 	 	 	For the avoidance of doubt, the parties agree that the First and Second Milestones
are independent, and that either could be achieved prior to the other.
Notwithstanding the foregoing, any pending Milestones will be deemed to have been
achieved upon achievement of the Third Milestone.
	 
	 	 	 	Purchaser will notify Seller within thirty (30) days following achievement of each
Milestone, and will remit the corrresponding Milestone Payment within five (5)
business days following such notice, by a wire transfer of immediately available
funds to a bank account designated by Seller.
	 
	 	 	 	In the event Seller reasonably believes that a Milestone has been achieved and
Purcahser has failed to provide timely notice hereunder, Seller may notfy Purchaser
and Purchaser will remit the Milestone Payment within ten (10) business days
following such notice in the manner provided above, or will notfy Seller within such
period as to any dispute regarding completion of the Milestone.

	1.6	 	Closing. The Closing will be held at the offices of Oppenheimer Wolff & Donnelly
LLP, Suite 3300, 45 South Seventh Street, Minneapolis, Minnesota or such other place as the
parties may agree, at 9:00 a.m. on the Closing Date, local Minneapolis, Minnesota time, or
such other time and place as the parties may agree. All matters at the Closing will be
considered to take place simultaneously and no delivery of any document will be deemed
complete until all transactions and deliveries of documents are completed. The Closing will
be effective at 11:59 p.m. United States Central Standard Time on the Closing Date (the
“Effective Time”).

	 	(a)	 	At the Closing, Seller shall deliver to Purchaser the following:

	 	(i)	 	Possession and control of the Purchased Assets, together with
such bills of sale and instruments of conveyance, transfer and assignment,
dated as of the Closing Date, as shall be sufficient to transfer to and vest in
Purchaser good, valid, and marketable title to the Purchased Assets, free and
clear of all Liens, together with documents evidencing release of any Lien on
the Purchased Assets;

	 	(ii)	 	Certified copies of resolutions duly adopted by the Board of
Directors and sole shareholder of Seller, each authorizing the execution and
delivery of this Agreement and all other documents being entered into by
Seller, related to, or arising from, this Agreement;
	 
	 	(iii)	 	An executed original of the License Agreement between Seller
and Purchaser in the form of Exhibit 1.6(a)(iii) attached hereto (the
“License Agreement”);
	 
	 	(iv)	 	An executed original of the Escrow Agreement, including
execution on behalf of the Escrow Agent;

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	 	(v)	 	An executed original of the Transition Services Agreement
between Purchaser and Seller in the form of Exhibit 1.6(a)(v) attached
hereto (the “Transition Services Agreement,” collectively with the
Escrow Agreement and the License Agreement, the “Ancillary
Agreements”);
	 
	 	(vi)	 	All Consents of or from all Governmental Authorities required
hereunder to consummate the transactions contemplated herein, and all Consents
of or from all Persons shall have been delivered, made or obtained, and
Purchaser shall have received copies thereof;
	 
	 	(vii)	 	Opinions of counsel to Seller, in the form of Exhibit
1.6(a)(vii) attached hereto;
	 
	 	(viii)	 	Letters of Resignation and Release of Claims, dated as of the Effective Time,
in substantially the form of Exhibit 1.6(a)(viii) attached hereto from
the officers and directors and Cytrix Israel;
	 
	 	(ix)	 	Applicable documentation regarding tax withholding pursuant to
Section 4.4(f).
	 
	 	(x)	 	Letters of assignment executed by Seller, and any other
required documentation, to consummate the transfer of the Funds from Seller to
Cytrix Israel as provided in Section 4.5 hereof;
	 
	 	(xi)	 	A certificate, in the form attached hereto as Exhibit
1.6(a)(xi), dated as of the Closing, and signed by the Seller’s Chief
Executive Officer, certifying as to any accrued vacation days or recuperation
pay (Dmei Havraa) accrued with respect to the Designated Employees and the
respective cash amounts needed to cover such benefits through the date of the
Closing.
	 
	 	(xii)	 	Copies of the executed employment agreements entered by and
between Cytrix Israel and the Designated Employees, copies of letters of
acknowledgment executed by the Designated Employees with respect to their
transfer to Cytrix Israel, and such other ancillary documents as Purchaser may
deem necessary;
	 
	 	(xiii)	 	A true copy of the notice of transfer of Cytrix Israel’s shares to Purchaser
to be filed with the Israeli Companies Registrar not later than seven (7)
calendar days following the Closing, in the form attached hereto as Exhibit
1.6(a)(xiii);
	 
	 	(xiv)	 	A validly executed share certificate covering Cytrix Israel’s
            shares to be issued to Purchaser at the Closing in the name of Purchaser, in
the form attached hereto as Exhibit 1.6(a)(xiv);
	 
	 	(xv)	 	A copy of the Shareholder Register of Cytrix Israel reflecting
the transfer of the Cytrix Israel’s shares to Purchaser, in the form attached
hereto as Exhibit 1.6(a)(xv) ;

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	 	(xvi)	 	Executed share transfer deed covering all of the Cytrix
Israel’s shares, in the form attached hereto as Exhibit 1.6(a)(xvi);
	 
	 	(xvii)	 	Certified copies of resolutions duly adopted by the Board of Directors of
Cytrix Israel with respect to the transfer of Cytrix Israel shares to
Purchaser; and
	 
	 	(xviii)	 	Such other duly executed agreements, deeds, certificates or other
instruments of conveyance, transfer and assignment as shall be necessary, in
the opinion of Purchaser, to vest in Purchaser good, valid and marketable title
to the Purchased Assets.

	 	(b)	 	At the Closing, Purchaser shall deliver to Seller the following:

	 	(i)	 	The Closing Date Payment;
	 
	 	(ii)	 	Executed originals of each of the License Agreement, the
Transition Services Agreement and the Escrow Agreement;
	 
	 	(iii)	 	Opinion of Oppenheimer Wolff & Donnelly LLP, counsel to
Purchaser, in the form of Exhibit 1.6(b)(iii) attached hereto;
	 
	 	(iv)	 	Certified copies of resolutions duly adopted by the Board of
Directors of Purchaser with respect to transaction; and
	 
	 	(v)	 	An Assumption Agreement in a mutually acceptable form and such
other instruments, certificates or documents as shall have been reasonably
requested by Seller for the assumption of the Assumed Liabilities; and
	 
	 	(vi)	 	All other documents required to be delivered by Purchaser in
connection with the transactions contemplated hereby, including the counterpart
signature pages of all other documents referred to in Section 1.6(a) to the
extent Purchaser is a party thereto.

	1.7	 	Further Assurances.

	 	(a)	 	After the Closing, Seller shall from time to time, at the request of Purchaser
and without further cost or expense to Purchaser, execute and deliver such other
instruments of conveyance and transfer as Purchaser may reasonably request in order to
more effectively consummate the transactions contemplated herein and to vest in
Purchaser good and marketable title to the Purchased Assets.
	 
	 	(b)	 	To the extent assets and rights of Seller in existence at the Effective Time
necessary for the conduct of the Urology Business, as currently conducted and as
contemplated to be conducted from and after the Closing (other than those disclosed in
Schedule 2.7 and other than those licensed pursuant to the License Agreement or placed
at the disposal of Purchaser under the Transition Service Agreement) are omitted from
the Purchased Assets, Seller will, at its own expense and without additional
consideration (except and

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	 	 	 	nominal consideration required), take all necessary action to
either: (i) transfer the omitted assets or rights to Purchaser, pursuant to a bill of
sale or assignment agreement, free and clear of all Liens, if the assets are
exclusively related to the Field of Use; or (ii) if the assets have application both
within and outside the Field of Use, license such assets to Purchaser for Purchaser’s
exclusive use in the Field of Use pursuant to an appropriate addendum to the License
Agreement.
	 
	 	(c)	 	To the extent any of the Purchased Assets are not assigned or assignable to
Purchaser or if necessary consent to such assignment shall not have been obtained by
Seller as of the Closing Date, Seller shall hold in trust for the benefit of Purchaser
all of Seller’s right, title and interest to such Purchased Assets and, insofar as
permissible, from time to time, assign such interest to Purchaser. Seller shall
cooperate in any reasonable arrangement to the end that Purchaser shall be provided the
use and benefits of such Purchased Assets. Notwithstanding anything in this Agreement
to the contrary, neither this Agreement nor any document or instrument delivered
pursuant hereto shall constitute an assignment of any claim, contract, license, permit,
lease, commitment, sales order or purchased order or any claim or right or any benefit
arising thereunder or resulting therefrom, if an attempted assignment thereof without
the consent or approval of any other party thereto or issuer thereof would constitute a
breach thereof or in any way adversely affect the rights to be assigned.
	 
	 	(d)	 	Nothing in this Section 1.7 shall be deemed to waive any provision set forth in
Article 5 or release Seller from its obligation to defend, indemnify and hold Purchaser
harmless from any loss, liability or damage suffered by Purchaser resulting from any
failure by Seller to transfer and assign the Purchased Assets as required by this
Agreement.

	1.8	 	Allocation of Purchase Price. The Purchase Price shall be allocated among the
Purchased Assets in accordance with Purchaser’s allocation of such Purchase Price for
financial statement purposes as determined for purposes of Purchaser’s audited financial
statements.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF SELLER

     As a material inducement to Purchaser to enter into this Agreement, with the understanding
that Purchaser will be relying thereon in consummating the transactions contemplated hereunder,
Seller hereby represents and warrants to Purchaser that except as set forth in the Disclosure
Schedule delivered by Seller to Purchaser on the date hereof (the “Disclosure Schedule”),
the statements contained in this Article 2 are true and correct. Any item, information or
facts set forth in the Disclosure Schedule will be deemed adequate to disclose an exception to a
representation and warranty made in this Article 2 unless a reasonable person would not
reasonably understand the exception taken from the item, information or facts on their face. In
addition, any item, information or facts disclosed in one section or subsection of the Disclosure
Schedule will be deemed to be disclosed in all other applicable sections or subsections of the
Schedule if the relevance of such disclosure

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is reasonably apparent on its face or such disclosure
is specifically identified by cross reference or otherwise in the Disclosure Schedule. However,
the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate
to disclose an exception to a representation or warranty made herein (unless the representation or
warranty has to do with the existence of the document or other item itself). The disclosure of any
matter or item in the Disclosure Schedule shall not be deemed to constitute an acknowledgment that
any such matter is required to be disclosed.

	2.1	 	Corporate Organization and Power. Seller is a corporation duly organized and validly
existing under the laws of the State of Israel, and has all requisite corporate power and
authority, and all governmental licenses, governmental authorizations, governmental consents
and governmental approvals, required to carry on its business as now conducted and to own,
lease and operate the assets and properties of Seller as now owned, leased and operated.
Seller is duly qualified or licensed to do business as a foreign corporation and is in good
standing in every jurisdiction in which the character or location of its properties and assets
owned, leased or operated by Seller or the nature of the business conducted by Seller requires
such qualification or licensing, except where the failure to be so qualified, licensed or in
good standing in such other jurisdiction could not, individually or in the aggregate, have a
Material Adverse Effect.
	 
	2.2	 	Cytrix Israel. Cytrix Israel is a corporation duly organized and validly existing
under the laws of the State of Israel. All of the outstanding equity interest of Cytrix
Israel will be, as of the Closing, owned directly by Seller, free and clear of all Liens.
Except with respect to Purchaser’s rights to acquire all of Seller’s equity ownership interest
in Cytrix Israel under this Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments to which Cytrix Israel or Seller is a party of any
character relating to the issued or unissued equity interests in Cytrix Israel or obligating
Cytrix Israel to grant, issue or sell any equity interests in Cytrix Israel, by sale, lease,
license or otherwise.
	 
	2.3	 	Authorization. Seller has the full corporate power and authority to enter into this
Agreement and the Ancillary Agreements and to carry out the transactions contemplated herein
and therein. The Board of Directors and the shareholder of Seller have taken all
action required by law and Seller’s Articles of Association and otherwise to duly and
validly authorize and approve the execution, delivery and performance by Seller of this
Agreement, the Ancillary Agreements and the consummation by Seller of the transactions
contemplated herein and therein and no other corporate proceedings on the part of Seller
are, or will be, necessary to authorize this Agreement, the Ancillary Agreements or to
consummate the transactions contemplated hereby and thereby. This Agreement and the
Ancillary Agreements have been duly and validly executed and delivered by Seller and
constitute the legal, valid and binding obligations of Seller, enforceable against it in
accordance with their respective terms, subject to laws of general application relating to
bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting
creditors’ rights generally and rules of law governing specific performance, injunctive
relief or other equitable remedies.

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	2.4	 	Non-Contravention. Neither the execution, delivery and performance by Seller of this
Agreement or the Ancillary Agreements nor the consummation of the transactions contemplated
herein and therein will (a) contravene or conflict with the Articles of Association of Seller,
(b) contravene or conflict with or constitute a violation of any provision of any Applicable
Law binding upon or applicable to Seller, or any of the Purchased Assets; (c) result in the
creation or imposition of any Lien on any of the Purchased Assets, or (d) be in conflict with,
constitute (with or without due notice or lapse of time or both) a default under, result in
the loss of any material benefit under, or give rise to any right of termination,
cancellation, increased payments or acceleration under any terms, conditions or provisions of
any note, bond, lease, mortgage, indenture, license, contract, franchise, permit, instrument
or other agreement or obligation relating to the Urology Business and to which Seller is a
party, or by which any of Seller’s properties or assets used in the Urology Business may be
bound.
	 
	2.5	 	Consents and Approvals.

	 	(a)	 	No consent, approval, order or authorization of or from, or registration,
notification, declaration or filing with (hereinafter sometimes separately referred to
as a “Consent” and sometimes collectively as “Consents”) any individual
or entity, including without limitation any Governmental Authority or Person, is
required in connection with the execution, delivery or performance of this Agreement or
the Ancillary Agreements by Seller or the consummation by Seller of the transactions
contemplated herein and therein other than as set forth in Schedule 2.5. There are no
facts or circumstances that would prevent or materially delay obtaining any of the
Consents.
	 
	 	(b)	 	As of the date hereof: (i) MedImpulse Holding Ltd., a Swiss corporation
(“MedImpulse”) is the “ultimate parent entity” of the Seller as such term is
defined under the Premerger Notification Rules (the “Rules”) to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
Act”); (ii) MedImpulse has not derived revenues in any manufacturing industry in
the 2005 calendar year; (iii) MedImpulse holds less than $11.3 million in total assets,
as determined in accordance with Section 801.11 of the Rules to the HSR Act and
(iv) MedImpulse had less than $113.4 million in annual net sales, as determined in
accordance with Section 801.11 of the Rules to the HSR Act.

	2.6	 	Financial Statements.

	 	(a)	 	From its inception through December 31 2005 Cytrix Israel was a dormant company
and therefore had no financial statements. During the period commencing on January
1st 2006 and ending on Closing Date, Cytrix Israel’s sole obligations are
the payment of salaries to Designated Employees and related supplementary costs
associated with the Designated Employees.
	 
	 	(b)	 	Seller has not maintained separate accounts or financial records for the
Urology Business and has not prepared or caused to be prepared any financial statements
of the Urology Business.

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	2.7	 	Purchased Assets. Seller has good and valid right, title and interest in and to the
Purchased Assets, free and clear of all Liens. Except as set forth on Schedule 2.7 and except
for assets of Seller that are used both in and out of the Field of Use but that are placed at
the disposal of Purchaser under the Transition Service Agreement, the Purchased Assets and
those Intellectual Property Rights licensed under the License Agreement comprise all of the
assets, both tangible and intangible, necessary for the continued conduct of the Urology
Business by Purchaser as the Urology Business has been heretofore conducted by Seller and as
contemplated to be conducted from and after the Closing, and there are no assets or properties
used by Seller in the conduct of the Urology Business that will not be transferred to
Purchaser hereunder or licensed under the License Agreement.
	 
	2.8	 	Manufacturing and Marketing Rights. Seller has not granted rights to manufacture,
produce, assemble, license, market, or sell any products in the Field of Use to any other
person and is not bound by any agreement that affects Seller’s right to develop, manufacture,
assemble, distribute, market or sell such products in the Field of Use.
	 
	2.9	 	FDA and Regulatory Matters. In connection with the Urology Business:

	 	(a)	 	Seller has obtained all necessary and applicable approvals, clearances,
authorizations, licenses and registrations required by Government Authorities to permit
the design, development, pre-clinical and clinical testing, manufacture and labeling of
its products within the Field of Use in jurisdictions where it currently conducts such
activities (collectively, the “Seller Licenses”). Seller is in compliance in
all material respects with the terms and conditions of each Seller License. Seller is
in compliance in all material respects with all Applicable Laws regarding registration,
licensing and certification for each site at which a product within the Field of Use is
manufactured, labeled, sold or distributed. All manufacturing operations performed by
or on behalf of Seller have been and are being conducted in all material respects in
compliance with the applicable quality systems regulations governing the production of
medical devices within the Field of Use in the European Union and all other countries
where such compliance is required. All non-clinical laboratory studies of products
sponsored by Seller and intended to be used to support regulatory clearance or
approval have been and are being conducted in compliance in all material respects
with the applicable regulations in the European Union and all other countries where
such compliance is required, governing the conduct of non clinical laboratory
investigations. Seller is in compliance in all material respects with all
applicable reporting requirements for all Seller Licenses or plant registrations
including, but not limited to, applicable adverse event reporting requirements.
Seller does not yet hold a Seller License in the United States, does not conduct any
activities described in this Section 2.9 in the United States, and does not
represent that its products satisfy Applicable Laws in the United States. The
Disclosure Schedule sets forth a list of all Seller Licenses.
	 
	 	(b)	 	Seller is in compliance in all material respects with the requirements of
Governmental Authorities and Applicable Laws relating to the maintenance,
compilation and filing of reports, including medical device reports, with regard to Seller’s
products within the Field of Use.

11

 

	 	(c)	 	Seller has not received any written notice or other written communication from
any Governmental Authority (i) contesting the pre-market clearance or approval of, the
uses of or the labeling and promotion of any of Seller’s products or (ii) otherwise
alleging any violation of Applicable Law by Seller.
	 
	 	(d)	 	There have been no recalls, field notifications or seizures ordered or adverse
regulatory actions taken or, to Seller’s Knowledge, threatened by any Governmental
Authority with respect to any of Seller’s products, including any facilities where any
such products are produced, processed, packaged or stored, and Seller has not within
the last three years, either voluntarily or at the request of any Governmental
Authority, initiated or participated in a recall of any product or provided post-sale
warnings regarding any product.
	 
	 	(e)	 	Seller has conducted all of its clinical trials with reasonable care and in all
material respects in accordance with all Applicable Laws and the stated protocols for
such clinical trials. To the extent that there have been any deviations from the
clinical protocols, such deviations have been handled in all material respects in
compliance with Applicable Laws.
	 
	 	(f)	 	All filings with and submissions to Governmental Authority made by Seller with
regard to Seller’s products, whether oral, written or electronically delivered, were
true, accurate and complete in all material respects as of the date made, and, to the
extent required to be updated, as so updated remain true, accurate and complete in all
material respects as of the date hereof, and do not materially misstate any of the
statements or information included therein, or omit to state a material fact necessary
to make the statements therein not misleading.

	2.10	 	Reimbursement/Billing. As Seller has not sold any products in the Urology Business,
there are no issues relating to reimbursement or billing applicable to the Urology Business.
	 
	2.11	 	Compliance with Applicable Laws. With respect to the Urology Business and the
Purchased Assets, Seller has not violated or infringed, nor is it in violation or infringement
of, any Applicable Law or any order, writ, injunction or decree of any Governmental Authority
in connection with its activities, and Seller and each of its officers, directors, agents and
employees have complied with all Applicable Laws. No claims have been filed against Seller
alleging a violation of any Applicable Law in connection with the Urology Business and the
Purchased Assets.
	 
	2.12	 	Permits. The Disclosure Schedule sets forth all approvals, authorizations,
certificates, consents, licenses, orders and permits and other similar authorizations of all
Governmental Authorities (and all other Persons) materially necessary for Seller to conduct
the Urology Business and own and operate the Purchased Assets (the “Permits”). Each
Permit is valid and in full force and effect and none of the

12

 

	 	 	Permits will be terminated, revoked, modified or become terminable or impaired in any respect for any reason, except as
would not have a Material Adverse Effect. Seller has conducted the Urology Business in
compliance with all material terms and conditions of the Permits.
	 
	2.13	 	Litigation. There are no (a) actions, suits, claims, hearings, arbitrations,
proceedings (public or private) or governmental investigations that have been brought by or
against any Governmental Authority or any other Person (collectively, “Proceedings”),
nor any investigations or reviews by any Governmental Authority against or affecting Seller,
pending or, to Seller’s Knowledge, threatened, against or by Seller relating to the Urology
Business or any of the Purchased Assets or which seek to enjoin or rescind the transactions
contemplated by this Agreement or the Ancillary Agreements; or (b) existing orders, judgments
or decrees of any Governmental Authority naming Seller as an affected party in connection with
the Urology Business or otherwise affecting any of the Purchased Assets.
	 
	2.14	 	Contracts.

	 	(a)	 	The Disclosure Schedule lists the following Contracts of Seller and Cytirx
Israel relating to the Urology Business or the Field of Use (collectively, the
“Scheduled Contracts”):

	 	(i)	 	Each Contract relating to all machinery, tools, equipment and
other tangible personal property (other than inventory and supplies) owned,
leased or used by Seller.
	 
	 	(ii)	 	Each supply, manufacturing, marketing, distribution or sale
agreement or similar Contract.
	 
	 	(iii)	 	Each consulting, development, joint development, research and
development or similar Contract, and each contract under with Seller has
granted or obtained a license to Intellectual Property, other than
commercial software licenses.
	 
	 	(iv)	 	All acquisition, partnership, joint venture, teaming
arrangements or other similar Contracts.
	 
	 	(v)	 	Any Contract under which Seller has agreed not to compete or
has granted to a third party an exclusive right that restricts or otherwise
adversely affects the ability of Seller to conduct its Urology Business.
	 
	 	(vi)	 	All Contracts with the Designated Employees and all benefit
plans applicable to the Designated Employees.
	 
	 	(vii)	 	All Contracts for clinical or marketing trials relating to
Seller’s products and all Contracts with physicians, hospitals or other
healthcare providers, or other scientific or medical advisors.

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	 	(b)	 	Seller has delivered to Purchaser true and correct copies (or summaries, in the
case of any oral Contracts) of all such Scheduled Contracts. Except as specified in the
Disclosure Schedule, none of the Scheduled Contracts contain a provision requiring the
consent of any party with respect to the consummation of the transactions contemplated
herein. No notice of default arising under any Scheduled Contract has been delivered
to or by Seller. Each Scheduled Contract is a legal, valid and binding obligation of
Seller, and each other party thereto, enforceable against each such party thereto in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ rights
generally and subject to general principles of equity, and neither the Seller nor any
other party thereto is in breach, violation or default thereunder.

	2.15	 	Labor and Employment Matters Concerning the Designated Employees.

	 	(a)	 	Seller has previously delivered to Purchaser complete information regarding the
Designated Employees, including their base salaries and bonus and contributions to
Manager’s Insurance and provident funds. The Designated Employees are employed by
Cytrix Israel on an “at-will” basis. The Designated Employees have been employed
solely in the State of Israel, and, other than in connection with occasional business
travel, have not rendered services to Seller or Cytrix Israel in any other
jurisdiction.
	 
	 	(b)	 	In connection with the Urology Business, Seller is and has been in compliance
in all material respects with all Applicable Laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including without
limitation any such Applicable Laws respecting employment discrimination and
occupational safety and health requirements, and has not and is not engaged in any
unfair labor practice. There is no unfair labor practice complaint against Seller
pending or, to Seller’s Knowledge, threatened before the National Labor Relations Board
or any other comparable Governmental Authority. There is no labor strike, dispute, slowdown or stoppage actually pending
or, to Seller’s Knowledge, threatened against or directly affecting Seller. No
labor representation question exists respecting the employees of Seller and there is
not pending or, to Seller’s Knowledge, threatened any activity intended or likely to
result in a labor representation vote respecting the employees of Seller. No
grievance or any arbitration proceeding arising out of or under collective
bargaining agreements is pending and no claims therefor exist or, to Seller’s
Knowledge, have been threatened. No collective bargaining agreement is binding and
in force against Seller or currently being negotiated by Seller. Seller has not
experienced any significant work stoppage or other significant labor difficulty.
Seller is not delinquent in payments to any persons for any wages, salaries,
commissions, bonuses or other direct or indirect compensation for any services
performed by them or amounts required to be reimbursed to such persons, including
without limitation any amounts due under any Benefit Plan. Upon termination of the
employment of any person, neither Seller, Purchaser nor any subsidiary of Purchaser

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	 	 	 	will, by reason of any agreement or understanding to which Seller is a party, be
liable to any of such persons for so-called “severance pay” or any other payments.
Within the twelve-month period prior to the date hereof there has not been any
expression of intention to Seller by any Designated Employee to terminate such
employment.
	 
	 	(c)	 	Seller does not have any employment contract with any of the Designated
Employees or any other consultant or person, of the Urology Business, which is not
terminable by it at will without liability, upon sixty (60) calendar days prior notice.
Schedule 2.15 hereto lists all employment, engagement, consulting, non-competition,
intellectual property assignment and/or confidentiality agreements between Seller and
any Designated Employee of Seller with respect to the Urology Business. Except as
contained in the agreements listed on Schedule 2.15, Seller does not have any deferred
compensation agreements or bonus, incentive, profit-sharing, or pension plans currently
in force and effect, or any understanding with respect to any of the foregoing.
	 
	 	(d)	 	Neither Seller nor, to Seller’s knowledge, any of the Designated Employees of
the Urology Business, is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment, decree or
order of any court or administrative agency, that would interfere with the use of such
person’s best efforts to promote the interests of Seller, or that would conflict with
the Urology Business as conducted and as proposed to be conducted. Neither the
execution nor delivery of this Agreement, nor the carrying on of the Urology Business
by the employees and consultants of Seller, nor the conduct of the Urology Business as
proposed to be conducted, will conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract, covenant or
instrument under which, to the knowledge of Seller any of such Designated Employees is
now obligated.
	 
	 	(e)	 	Seller is not a party to any collective bargaining contract, collective labor
agreement or other contract or arrangement with a labor union, trade union or
other organization or body involving the Designated Employees, or is otherwise
required (under any legal requirement, under any contract or otherwise) to provide
benefits or working conditions beyond the minimum benefits and working conditions
required by law to be provided pursuant to rules and regulation of the Israeli
Histadrut (General Federation of Labor), the Coordinating Bureau of Economic
Organization and the Industrialists’ Association. Seller has not recognized or
received a demand for recognition from any collective bargaining representative with
respect to the Designated Employees. Seller has complied with all applicable
employment laws. Notwithstanding the generality of the prior sentence, (i) Cytrix
Israel does not have and is not subject to, and no employee of Cytrix Israel
benefits from, any extension order (tzavei harchava) or any general contract or
arrangement with respect to employment or termination of employment except those
extension orders that apply to all Israeli companies generally; (ii) all of
Designated employees at the Urology Business are “at will” employees subject to the
termination notice provisions included in their employment agreements or applicable
law; (iii) Cytrix Israel obligations to provide statutory severance pay to its

15

 

	 	 	 	employees of the Urology Business pursuant to the Israeli Severance Pay Law
(5723-1963) are fully funded or accrued on the books and records of Cytrix Israel;
(v) all amounts that Cytrix Israel is legally or contractually required either (x)
to deduct from its employees’ salaries or to transfer to such employees’ pension or
provident, life insurance, incapacity insurance, continuing education fund or other
similar funds, as the case may be or (y) to withhold from its employees’ salaries
and benefits and to pay to any Governmental Authority as required by the Israeli
Income Tax Ordinance of Israel [New Version], 1961, as amended and Israeli National
Insurance Law or otherwise have, in each case, been duly deducted, transferred,
withheld and paid, and Cytrix Israel does not have any outstanding obligation to
make any such deduction, transfer, withholding or payment; (vi) Cytrix Israel is in
compliance in all material respects with all applicable legal requirements and
contracts relating to employment, employment practices, wages, bonuses and other
compensation matters and terms and conditions of employment related to its
Designated Employees, including but not limited to The Prior Notice to the Employee
Law 2002, The Notice to Employee (Terms of Employment) Law 2002, The Prevention of
Sexual Harassment Law (5758-1998), and The Employment by Human Resource Contractors
Law 1996; and (vii) in cases where an Designated Employee is entitled to an
insurance policy according to his or her employment agreement all obligations of
Cytrix Israel with respect to statutorily required severance payments to its
Designated Employees have been fully satisfied or have been fully funded by
contributions to appropriate insurance funds pursuant to the Israeli Severance Pay
Law (5723-1963). Cytrix Israel has not engaged any employees whose employment would
require special licenses or permits, and there are no unwritten policies or customs
which, by extension, could entitle employees to rights or benefits in addition to
what they are entitled by law. Cytrix Israel has not engaged any consultants,
sub-contractors or freelancers who, according to Israeli law, would be entitled to
the rights of an employee vis a vis Seller, including rights to severance pay, vacation, recuperation pay (Dmei Havaraa)
and other employee-related statutory benefits.
	 
	 	(f)	 	Each of the Designated Employees is currently devoting one hundred percent
(100%) of his or her business time to the conduct of the business of Seller. Seller is
not aware of any Designated Employee planning to work less than full time in the
future.

	2.16	 	Urology Business Intellectual Property.

	 	(a)	 	The Disclosure Schedule lists all Urology Business Intellectual Property that
is the subject of an invention disclosure and/or record, that is registered with, has
been applied for, or has been issued by the U.S. Patent and Trademark Office, U.S.
Copyright Office or a corresponding foreign governmental or public authority, or that
is licensed to or from any third party(ies), including, in the case of licensed
Intellectual Property included therein, a description of the license agreement, the
name and address of the licensee or licensor, as the case may be, and the date and term
of the agreement and the royalties or other fees payable thereunder. Seller has

16

 

	 	 	 	delivered or made available to Purchaser complete and accurate copies of
correspondence, litigation documents, agreements, file histories and office actions
relating to the patents and patent applications and invention disclosures listed in the
Disclosure Schedule. Each item of Urology Business Intellectual Property owned,
licensed or used by Seller immediately prior to the Effective Time hereunder will be
owned, licensed or available for use by Purchaser or its Subsidiaries on identical
terms and conditions immediately after the Effective Time pursuant to this Agreement or
the License Agreement.
	 
	 	(b)	 	Seller owns, free and clear of any Lien, and possesses all right, title and
interest, or holds a valid license, in and to all Urology Business Intellectual
Property, and has taken all reasonable action to protect the Urology Business
Intellectual Property. All patents included in the Urology Business Intellectual
Property are valid and enforceable. To the Knowledge of the Seller, the Transferred
Intellectual Property and the Intellectual Property licensed under the License
Agreement constitutes all the Intellectual Property necessary to the conduct of the
Urology Business as it is currently conducted and as it is currently contemplated to be
conducted. There are no royalties, fees, honoraria or other payments payable by Seller
to any Person by reason of the ownership, development, modification, use, license,
sublicense, sale, distribution or other disposition of the Urology Business
Intellectual Property other than salaries and sales commissions paid to employees and
sales agents in the ordinary course of business. Seller has taken all reasonable
security measures to protect the secrecy, confidentiality and value of the Urology
Business Intellectual Property.
	 
	 	(c)	 	All personnel, including employees, agents, consultants and contractors, who
have contributed to or participated in the conception or development, or both, of the
Urology Business Intellectual Property on behalf of Seller and all officers and
technical employees of Seller either (i) have been a party to “work-for-hire”
arrangements or agreements with Seller in accordance with Applicable Law that has
accorded Seller full, effective, sole, exclusive and original ownership of all
tangible and intangible property thereby arising, and (ii) have executed appropriate
instruments of assignment in favor of Seller as assignee that have conveyed to
Seller effective, sole and exclusive ownership of all tangible and intangible
property arising thereby.
	 
	 	(d)	 	To the Knowledge of the Seller, the conduct of the Urology Business by Seller
has not infringed, misappropriated or conflicted with and does not infringe,
misappropriate or conflict with any intellectual property right of any other Person.
Seller has not received any notice from any third party of any infringement,
misappropriation or violation by Seller of any intellectual property right of any third
party and no notice has been received by Seller challenging Seller’s ownership or claim
to invention priority to any of the Urology Business Intellectual Property. No claim
by any third party contesting the validity of any Urology Business Intellectual
Property has been made, is currently outstanding or, to the Knowledge of Seller, is
threatened or reasonably expected to arise. To the

17

 

	 	 	 	Knowledge of Seller, no third party
is infringing any Urology Business Intellectual Property right of Seller.

	2.17	 	Insurance. The Disclosure Schedule contains an accurate and complete list of all
insurance policies owned or held by Seller in connection with or relating to the Urology
Business, including, but not limited to, general liability, specifying the insurer the policy
number, and the term of the coverage. All present policies are in full force and effect and
all premiums with respect thereto have been paid. Seller has not been denied any form of
insurance and no policy of insurance has been revoked or rescinded during the past five (5)
years.
	 
	2.18	 	Tax Matters.

	 	(a)	 	Cytrix Israel is not a party to any agreement, contract, arrangement or plan
that (i) has resulted or would result, separately or in the aggregate, in connection
with this Agreement or any change of control of Cytrix Israel, in the payment of any
“excess parachute payments” within the meaning of Section 280G of the Code or similar
provisions under any foreign laws; or (ii) would obligate Cytrix Israel to provide
“gross-up” benefits with respect to any excise tax due on any “excess parachute
payments” within the meaning of Section 280G of the Code or similar provisions under
any foreign laws.
	 
	 	(b)	 	Cytrix Israel is not involved in, subject to, or a party to any joint venture,
partnership, contract or other arrangement that is treated as a “partnership” for
federal, state, local or foreign income Tax purposes. Cytrix Israel does not own any
interest in an entity that is classified as an entity that is “disregarded as an entity
separate from its owner” under Treasury Regulations Section 301.7701-3(b).
	 
	 	(c)	 	The Seller and its shareholder are not subject to any restrictions or
limitations pursuant to Part E2 of the Israeli Income Tax Ordinance.

	2.19	 	Product Liability Claims. In connection with the Urology Business, Seller has never
received a claim, or incurred any uninsured or insured liability, for or based upon failure to
warn, breach of product warranty, strict liability in tort, general negligence, negligent
manufacture of product, negligent provision of services or any other allegation of liability,
including or resulting in, but not limited to, product recalls, arising from the materials,
design, testing, manufacture, packaging, labeling (including instructions for use) or sale of
its products or from the provision of services (“Product Liability Claim”). Seller
has disclosed to Purchaser each Product Liability Claim received by Seller.
	 
	2.20	 	Relations with Suppliers. In connection with the Urology Business, no material
current supplier of Seller has canceled any contract or order for provision of, and there has
been no threat by any such supplier not to provide, raw materials, products, supplies or
services in the scope of the businesses of Seller either prior to or following the Effective
Time. The Disclosure Schedule lists each supplier to Seller relating to the Urology Business
that is the source of a particular raw material, product, supply or service with respect to
which locating and qualifying a replacement source would involve significant cost or delay.

18

 

	 
	2.21	 	Indemnification Obligations. Except for the Indemnification Obligations set forth in
the Assigned Contracts hereto, Seller is not a party to any Contract in connection with the
Urology Business that contains any provisions requiring Seller to indemnify any Person.
	 
	2.22	 	Absence of Certain Business Practices. In connection with the Urology Business,
neither Seller, any director, officer, employee or agent of Seller, nor any other person
acting on behalf of Seller, has, directly or indirectly, given or agreed to give any gift or
similar benefit or agreed to make or made any payment to any customer, supplier, governmental
employee or other person who is or may be in a position to help or hinder the business of
Seller, taken as a whole (or assist it in connection with any actual or proposed transaction)
which (a) would reasonably be expected to subject Seller or Purchaser to any damage or penalty
in any civil, criminal or governmental litigation proceeding, or (b) violated or violates any
Applicable Law.
	 
	2.23	 	Brokers. Except as set forth in the Disclosure Schedule, neither Seller nor any of
its directors, officers or employees has employed any broker, finder, or financial advisor or
incurred any liability for any brokerage fee or commission, finder’s fee or financial advisory
fee, in connection with the transactions contemplated hereby.
	 
	2.24	 	Chief Scientist; Government Grants. Neither Seller nor Cytrix Israel are (a) part of
the Chief Scientist Program or (b) party to any governmental grant plan, including the Israeli
Investment Center.
	 
	2.25	 	Disclosure. No representation or warranty by Seller in this Agreement and no
statement contained or to be contained in any document, certificate or other writing furnished
or to be furnished by Seller to Purchaser, contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading. There is no fact that has not been disclosed to Purchaser of which any officer
or director of Seller is aware which has or could reasonably be expected to have a Material
Adverse Effect on the Purchase Assets.
	 
	2.26	 	Investigation by Purchaser. Notwithstanding anything to the contrary in this
Agreement (including Section 3.6), (a) no investigation by Purchaser shall affect the
representations and warranties of Seller under this Agreement or contained in any other
writing to be furnished to Purchaser in connection with the transactions contemplated
hereunder and (b) such representations and warranties shall not be affected or deemed waived
by reason of the fact that Purchaser knew or should have known that any of the same is or
might be inaccurate in any respect.

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF PURCHASER

     As a material inducement to Seller to enter into this Agreement, with the understanding that
Seller will be relying thereon in consummating the transactions contemplated hereunder, Purchaser hereby represents and warrants to Seller that the statements contained in this Article 3 are true
and correct.

	3.1	 	Corporate Existence and Power. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation and has all
requisite corporate power and authority, and all governmental licenses, governmental
authorizations, governmental consents and governmental approvals, required to carry on its
business as now conducted and to own, lease and operate the assets and properties of Purchaser
as now owned, leased and operated. Purchaser is duly qualified or licensed to do business as
a foreign corporation and is in good standing in every jurisdiction in which the character or
location of its properties and assets owned, leased or operated by Purchaser or the nature of
the business conducted by Purchaser requires such qualification or licensing, except where the
failure to be so qualified, licensed or in good standing in such other jurisdiction could not,
individually or in the aggregate, have a Material Adverse Effect.
	 
	3.2	 	Authorization. Purchaser has the requisite corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated hereunder. The Board of
Directors of Purchaser has taken all action required by law, its Certificate of Incorporation
and bylaws and otherwise to duly and validly authorize and approve the execution, delivery and
performance by Purchaser of this Agreement and the Ancillary Agreements and the consummation
by Purchaser of the transactions contemplated herein and therein and no other corporate
proceedings on the part of Purchaser are, or will be, necessary to authorize this Agreement or
the Ancillary Agreements or to consummate the transactions contemplated hereby and thereby.
This Agreement and the Ancillary Agreements have been duly and validly executed and delivered
by Purchaser and, assuming the due authorization, execution and delivery by Seller of this
Agreement and the Ancillary Agreement, constitute the legal, valid and binding obligations of Purchaser
enforceable against it in accordance with their respective terms, subject to laws of general
application relating to bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors’ rights generally and rules of law governing specific performance,
injunctive relief or other equitable remedies.
	 
	3.3	 	Consents and Approvals. No Consent by any individual or entity, including without
limitation any Governmental Authority or Person, is required in connection with the execution,
delivery or performance of this Agreement or the Ancillary Agreements by Purchaser or the
consummation by Purchaser of the transactions contemplated herein and therein, other than
where the failure to make any such filing, or to obtain such permit, authorization, Consent or
approval, would not prevent or delay consummation of the transactions contemplated hereby and
thereby or would not otherwise prevent Purchaser from performing its obligations under this
Agreement or the Ancillary Agreements.
	 
	3.4	 	Brokers. Neither Purchaser nor any of its directors, officers or employees has
employed any broker, finder, or financial advisor or incurred any liability for any brokerage
fee or commission, finder’s fee or financial advisory fee, in connection with the transactions
contemplated hereby.

20

 

	3.5	 	No Violation. Neither the execution and delivery of this Agreement by Purchaser, the
performance by Purchaser of its obligations hereunder nor the consummation by Purchaser of the
transactions contemplated hereby will (a) violate, conflict with or result in any breach of
any provision of the Certificate of Incorporation or Bylaws of Purchaser, (b) violate,
conflict with or result in a violation or breach of, or constitute a default (with or without
due notice or lapse of time or both) under the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease or agreement to which Purchaser is a
party or (c) violate any order, writ, judgment, injunction, decree, statute, rule or
regulation of any court or domestic or foreign Governmental Body applicable to Purchaser.
	 
	3.6	 	Purchaser Diligence. Subject to Section 2.26, Purchaser hereby acknowledges that it
(i) has had ample time and opportunity to consult with its advisors concerning the potential
benefits and risks of entering into this Agreement, and (ii) has conducted such due diligence
and investigation as it desired, based upon the information provided by Seller.

ARTICLE 4

COVENANTS

	4.1	 	Confidentiality.

	 	(a)	 	Mutual Covenant. From and after the Closing Date, except as otherwise
consented to by the Disclosing Party in writing, (i) Recipient will not, directly or
indirectly disclose or use in a manner adverse to the Disclosing Party, any
Confidential Information (as defined below) of the Disclosing Party except to the
limited extent necessary for Recipient’s performance under the Transition Services
Agreement or as required by the terms of a valid and effective subpoena
or order issued by a court of competent jurisdiction or by a governmental body, (ii)
the Confidential Information will be the exclusive property of the Disclosing Party
and, any time on or after the Closing Date, if requested by the Disclosing Party,
Recipient will promptly deliver to the Disclosing Party all Confidential
Information, including all copies thereof, which are in the possession, or under the
control of Seller or its agents or representatives, without making or retaining any
copies or extracts thereof (except to the limited extent necessary for Seller’s
performance under the Transition Services Agreement), and (iii) if Recipient or its
agents or representatives receives a request to disclose all or any part of the
Confidential Information in connection with a legal proceeding, Recipient will (A)
immediately notify the Disclosing Party of the existence, terms and circumstances
surrounding such request, (B) consult with the Disclosing Party on the advisability
of taking legally available steps to resist or narrow such request, and (C) if
disclosure of such information is required, and at the Disclosing Party cost and
expense, exercise its best efforts to obtain an order or other reliable assurance
that confidential treatment will be accorded such portion of the disclosed
information which the Disclosing Party so designates.

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	 	(b)	 	Definitions. For purposes of this Article 4:

	 	(i)	 	“Confidential Information” means any and all
information of the Disclosing Party relating to the management, operations,
finances, products, trade secrets, technology, financial data, employee
information, computer programs and systems, computer based information, plans,
projections, existing and proposed and contemplated projects or investments,
formulae, processes, methods, products, manuals, drawings, supplier lists,
customer lists, purchase and sales records, marketing information, commitments,
correspondence and other information, whether written, oral or computer
generated.
	 
	 	(ii)	 	“Recipient” means a party hereto that receives
Confidential Information of the other party, regardless of the means of
disclosure.
	 
	 	(iii)	 	“Disclosing Party” means a party hereto whose
Confidential Information is received by the other party hereto;

	 	(c)	 	Exceptions. The obligations in Section 4.1(a) will not apply to the
extent a Disclosing Party’s Confidential Information: (i) is in the public domain
prior to its disclosure to, or receipt by, the Recipient; (ii) is lawfully in the
Recipient’s possession prior to disclosure to or receipt by the Recipient; (iii)
becomes part of the public domain by publication or otherwise through no unauthorized
act or omission on the part of the Recipient or its employees or agents; or (iv) is
independently developed by an employee(s) of the Recipient with no access to the
disclosed information.
	 
	 	(d)	 	Remedy. The covenants and undertakings contained in this Section 4.1
relate to matters which may be of a special, unique and extraordinary character and a
violation of any of the terms of this Section 4.1 may cause irreparable injury to
the Disclosing Party, the amount of which may be impossible to estimate or determine
and for which adequate compensation may not be available. Therefore, the Disclosing
Party shall be entitled to an injunction, restraining order or other equitable
relief from a court of competent jurisdiction, restraining any violation or
threatened violation of any such terms by Recipient and such other persons as the
court orders.

	4.2	 	Further Assurances. Each party hereto shall, before, at and after Closing, execute
and deliver such instruments and take such other actions as the other party or parties, as the
case may be, may reasonably require in order to carry out the intent of this Agreement.
	 
	4.3	 	Public Announcements. None of the parties hereto shall make any public announcement
with respect to the transactions contemplated herein without the prior written consent of the
other parties, which consent shall not be unreasonably withheld or delayed. The parties shall
maintain this Agreement and the terms hereof in strict confidence, and neither party shall
disclose this Agreement or any of its terms to any third party unless specifically ordered to
do so by a court of competent jurisdiction after consulting with the other party or unless

22

 

	 	 	required by Applicable Law or regulation including, but not limited to, the rules and
regulation of the Securities and Exchange Commission, the Israeli Securities Authorities, Tel
Aviv stock market and the Nasdaq Stock Market. Notwithstanding the foregoing, the parties
may, on a confidential basis, advise and release information regarding the existence and
content of this Agreement or the transactions contemplated hereby to their respective
Affiliates or any of their agents, accountants, attorneys and prospective lenders or investors
in connection with or related to the transactions contemplated by this Agreement.
	 
	4.4	 	Preparation of Tax Returns: Tax Matters.

	 	(a)	 	Pre-Closing Tax Returns. Seller shall timely file at its expense all
Tax Returns required to be filed by Cytrix Israel relating to the Urology Business on
or before the Closing Date; provided, however, that, after the date
hereof, Seller shall not file any such Tax Returns, or other returns, elections, claims
for refund or information statements with respect to any liabilities for Taxes (other
than federal, state or local sales, use, property, withholding or employment tax
returns or statements) for any Tax period without providing a copy of such Tax Return
to Purchaser at least three (3) days prior to the Closing.
	 
	 	(b)	 	Post-Closing Tax Returns. Purchaser will file (or cause to be filed)
all Tax Returns of Cytrix Israel required to be filed relating to the Urology Business
after the Closing Date, including Tax Returns for Tax periods (or portions thereof)
ending on or prior to the Closing Date. All Taxes owing with any such Tax Returns that
are considered Retained Liabilities shall be paid by Seller or reimbursed to Purchaser
upon Purchaser’s request.
	 
	 	(c)	 	Taxes on Transaction. In addition to and without limiting those
representations and warranties set forth in Section 2.18 of this Agreement or the
definition of Retained Liabilities pursuant to Section 1.3, Seller will pay all Taxes arising from
or relating to the transactions contemplated by this Agreement.
	 
	 	(d)	 	Termination of Tax Allocation Agreements. Any and all tax allocation
or sharing agreements or arrangements (other than this Agreement), whether or not
written, that may have been entered into by and between Cytrix Israel and any other
person, shall be terminated as to Cytrix Israel immediately prior to the Closing, and
no payments which are owed by or to Seller pursuant thereto shall be made thereunder.
	 
	 	(e)	 	Assistance and Cooperation. Each of Purchaser and Seller will provide
the other with such assistance as may reasonably be requested by each of them in
connection with the preparation of any Tax Return, any audit or other examination by
any Governmental Authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each will provide the other with any records or information
which may be relevant to such Tax Return, audit or examination, proceedings or
determination. Such assistance shall include making employees available on a mutually
convenient basis to provide additional information and explanation of any material
provided hereunder and shall include providing copies of any relevant Tax Return and
supporting work schedules.

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	 	(f)	 	Tax Withholding. Prior to the Closing, Seller shall deliver to
Purchaser a certificate issued by the Israeli tax authorities with respect to Seller’s
Tax withholding obligations. Purchaser or its payment agent shall be entitled to
deduct and withhold from the Purchase Price or other payments otherwise payable
pursuant to this Agreement, the amounts required to be deducted and withheld under the
Code, or any provision of state, local or foreign tax law, with respect to the making
of such payments. To the extent that amounts are so withheld, such withheld amounts
shall be promptly remitted by Purchaser or its payment agents to the applicable
Governmental Authority requiring such withholding and shall be treated for all purposes
of this Agreement as having been paid to the person for whom such deduction and
withholding was made.

	4.5	 	Assignments to Cytrix Israel. At, or prior to the Closing, Seller shall transfer to
Cytrix Israel all of Sellers’ rights in the existing Managers Insurance, Disability Insurance
(Ovdan Kosher Avoda), Pension Funds, Educational Funds and any other funds related to social
benefits of the Designated Employees (collectively the “Funds”) maintained by Seller
on behalf of the Designated Employees during their employment by Seller. Seller will sign all
necessary documents and comply with all necessary procedures to accomplish the aforesaid.
	 
	4.6	 	Non-Competition; Enforcement of Employee Agreements.

	 	(a)	 	From and after the Closing Date until the date Purchaser is no longer required
to make royalty payments pursuant to the License Agreement:

	 	(i)	 	Seller will not engage, directly or indirectly, through an
Affiliate or otherwise, either for its own benefit or for the benefit of any
other person, in any business which competes anywhere in the world in the Field
of Use provided, however, that the foregoing will not: (A) restrict or prohibit
the Seller or any of its Affiliates from maintaining and/or undertaking all
other activities of the Seller whether existing at Closing or not, excluding
activities in the Field of Use; (B) restrict or prohibit the Seller or any of
its Affiliates from making passive investments in persons primarily engaged in
any competitive business whose shares of stock are regularly traded on a
national securities exchange or on any over-the-counter market, provided the
aggregate interest represented by such investments does not exceed five percent
(5%) of any class of the outstanding equity or debt securities of any such
person; or (C) restrict or prohibit any venture capital firm that may be an
Affiliate of Seller from investing in a competitive business; or (D) restrict
or prohibit any Person who becomes an Affiliate of Seller as the result of a
Change in Control from engaging in a competitive business, other than through
the use of Seller’s or its other Affiliates’ assets or properties (tangible or
intangible) or with the assistance, directly or indirectly, of Seller or its other Affiliates or their respective officers,
directors and employees.

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	 	(ii)	 	Seller will not, and will prevent its Affiliates from taking
action to, waive, amend or terminate its rights in the existing non-compete
agreements as disclosed in Schedule 4.6(b) hereto; and Seller will, and
will cause its Affiliates to, use commercially reasonable efforts to enforce
such agreements for the benefit of Purchaser.

	 	(b)	 	The Seller acknowledges that the period of restriction, the geographical areas
of restriction and the restraints imposed by the provisions of Section 4.6(a) are fair
and reasonably required for the protection of Purchaser. Notwithstanding the
foregoing, if the final judgment of a court of competent jurisdiction declares that any
term or provision of Section 4.6(a) is invalid or unenforceable, the parties agree that
the court making the determination of invalidity or unenforceability will have the
power to reduce the scope, duration or area of the term or provision, to delete
specific words or phrases or to replace any invalid or unenforceable term or provision
with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision and this
Agreement will be enforceable against the parties as so modified.
	 
	 	(c)	 	All of the covenants in this Section 4.6 shall be construed as an agreement
independent of any other provision in this Agreement, and the existence of any claim or
cause of action of the Seller against the Purchaser, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Purchaser of such covenants. The covenants contained in Section 4.6(a) shall not be
affected by any breach of any other provision hereof by any party hereto.
	 
	 	(d)	 	Upon any Change in Control of Seller, Seller will cause the party(ies)
acquiring control to execute and deliver an agreement, in the form attached as
Exhibit 4.6(d), acknowledging the provisions of this Section 4.6.

	4.7	 	Conduct of Urology Business after Closing Date. From and after the Closing Date,
Purchaser shall, and to the extent applicable, shall cause its Affiliates to, use commercially
reasonable efforts to complete the Milestones, which shall include the following: (i) pursuing
the steps set forth in Exhibit 1.5(a); (ii) taking appropriate steps to complete
development and manufacture of devices necessary under Section 1.5(b)(i) and establishing
manufacturing of the thirty (30) devices called for by such Section 1.5(b)(i) in accordance
with CE Mark regulations and FDA requirements and to obtain a CE Mark in Purchaser’s own
right; (iii) pursuit of the marketing approval called for under Section 1.5(c), including
engaging in such negotiations as are reasonably appropriate with the FDA; and (iv) in good
faith not undertaking any action the primary purpose of which is to negatively impact the
achievement of the Milestones. Seller acknowledges and agrees that factors beyond Purchaser’s
control (including Seller’s performance under this Agreement and the Transition Services
Agreement, as well as the outcomes of clinical trials) may affect Purchaser’s ability to
complete the Milestones, and that nothing in this

25

 

	 	 	Agreement or any Ancillary Agreement will be
construed as a guarantee by Purchaser that the Milestones will be achieved.

ARTICLE 5

SURVIVAL AND INDEMNIFICATION

	5.1	 	Survival. The representations and warranties of each party contained in this
Agreement, and the indemnification obligations of Seller with respect thereto, will survive
the Closing and shall expire twelve (12) months after the Closing Date. Notwithstanding the
preceding sentence, (i) the representations and warranties contained in Section 2.11 (“Urology
Business Intellectual Property”), and the indemnification obligations of Seller with respect
thereto, shall survive the Closing through the end of the period during which Purchaser is
required to make royalty payments to Seller pursuant to the terms of the License Agreement;
(ii) the representations and warranties set forth in Sections 2.3 (“Authorization”), 2.7
(“Purchased Assets”), 2.23 (“Brokers”), 3.2 (“Authorization”) and 3.4 (“Brokers”), and the
respective indemnification obligations of the parties with respect thereto shall survive
indefinitely; and (iii) claims involving fraud, criminal activity, intentional
misrepresentation or intentional misconduct (collectively, “Fraud Claims”) and the
indemnification obligations of the parties with respect thereto shall survive indefinitely.
Any representation or warranty that would otherwise terminate in accordance with this Section
5.1 shall continue to survive if a notice of claim pursuant to this Article 5 shall have been
timely given under Section 5.4 on or prior to such termination date, until the claim has been
satisfied or otherwise resolved as provided herein. The covenants set forth in this Agreement
shall survive the Closing indefinitely. The right to indemnification or any other remedy
based on representations, warranties, covenants and obligations in this Agreement will not be
affected by any investigation conducted with respect to, or any knowledge acquired (or capable
of being acquired) at any time, whether before or after the Closing Date, with respect to the
accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or
obligation. The waiver of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification or any other remedy based on such representations,
warranties, covenants and obligations.
	 
	5.2	 	Indemnification by Seller. Subject to Sections 5.5 and 5.6, Seller agrees to
indemnify, defend and hold harmless Purchaser, its Affiliates and their respective directors,
officers, employees and agents, from and against any and all Damages asserted against,
relating to, imposed upon, suffered or incurred by Purchaser, its officers, directors,
employees, agents and Affiliates, in connection with enforcing their indemnification rights
pursuant to this Section 5.2 by reason of or resulting from (a) any untrue representation of,
or breach of warranty by Seller in any part of this Agreement, (b) any non-fulfillment of any
covenant, agreement or undertaking of Seller in any part of this Agreement or in any Ancillary
Agreement, (c) any Retained Liability, and (d) any and all costs and expenses including
reasonable legal fees and expenses, incurred in connection with enforcing the indemnification
rights of Purchaser pursuant to this Section.

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	5.3	 	Indemnification by Purchaser. Subject to Sections 5.5 and 5.6, Purchaser agrees to
indemnify, defend and hold harmless Seller, its Affiliates and their respective directors,
officers, employees and agents, from and against any and all Damages asserted against,
relating to, imposed upon, suffered or incurred by Seller in connection with enforcing its
indemnification rights pursuant to this Section 5.3 by reason of or resulting from (a) any
untrue representation of, or breach of warranty by Purchaser in any part of this Agreement,
(b) any non-fulfillment of any covenant, agreement or undertaking of Purchaser in any part of
this Agreement or in any Ancillary Agreement, (c) any Assumed Liability, (d) the use,
ownership or operation of the Purchased Assets after the Closing Date; unless such Losses or
Loss is subject to indemnification by Seller pursuant to Section 5.2 hereof, and (e) any and
all costs and expenses including reasonable legal fees and expenses, incurred in connection
with enforcing the indemnification rights of Seller pursuant to this Section.
	 
	5.4	 	Claims for Indemnification.

	 	(a)	 	Subject to Section 5.1, whenever any claim arises for indemnification hereunder
or an event which may result in a claim for such indemnification has occurred, the
party seeking indemnification (the “Indemnified Party”), will promptly notify
the party from whom indemnification is sought (the “Indemnifying Party”) of the
claim and, when known, the facts constituting the basis for such claim. In the case of
any such claim for indemnification hereunder resulting from or in connection with any
claim or legal proceedings of a third party (a “Third Party Claim”), the notice
to the Indemnifying Party will specify with reasonable specificity, if known, the basis
under which the right to indemnification is being asserted and the amount or an
estimate of the amount of the liability arising therefrom. The Indemnifying Party
shall have the right to dispute and defend all Third Party Claims and thereafter so
defend and pay any adverse final judgment or award or settlement amount in regard
thereto. Such defense shall be controlled by the
Indemnifying Party, and the cost of such defense shall be borne by the Indemnifying
Party, except that the Indemnified Party shall have the right to participate in such
defense at its own expense; provided, however, that the Indemnifying
Party must first acknowledge that the claim is a bona fide indemnification claim
under this Agreement. The Indemnified Party shall cooperate in all reasonable
respects in the investigation, trial and defense of any such claim, including making
personnel, books, and records relevant to the claim available to the Indemnifying
Party, without charge, except for reasonable out-of-pocket expenses. If the
Indemnifying Party fails to take action within thirty (30) days as set forth above,
then the Indemnified Party shall have the right to pay, compromise or defend any
Third Party Claim and to assert the amount of any payment on the Third Party Claim
plus the reasonable expenses of defense or settlement as the claim. The Indemnified
Party shall also have the right and upon delivery of 10 days advance written notice
to such effect to the Indemnifying Party, exercisable in good faith, to take such
action as may be reasonably necessary to avoid a default prior to the assumption of
the defense of the Third Party Claim by the Indemnifying Party, and any reasonable
expenses incurred by Indemnified

27

 

	 	 	 	Party so acting shall be paid by the Indemnifying
Party. Except as otherwise provided herein, the Indemnified Party will not, except
at its own cost and expense, settle or compromise any Third Party Claim for which it
is entitled to indemnification hereunder without the prior written consent of the
Indemnifying Party, which will not be unreasonably withheld. The parties intend
that all indemnification claims be made as promptly as practicable.
	 
	 	(b)	 	If the Indemnifying Party is of the opinion that the Indemnified Party is not
entitled to indemnification, or is not entitled to indemnification in the amount
claimed in such notice, the Indemnifying Party will deliver, within ten (10) business
days after the receipt of such notice, a written objection to such claim and written
specifications in reasonable detail of the aspects or details objected to, and the
grounds for such objection. If the Indemnifying Party filed timely written notice of
objection to any claim for indemnification, the validity and amount of such claim will
be determined pursuant to Article 6. If timely notice of objection is not delivered or
if a claim by an Indemnified Party is admitted in writing by an Indemnifying Party or
if a judgment award is made in favor of an Indemnified Party and no appeal was filed,
the Indemnified Party, as a exclusive remedy, will have the right to set-off the amount
of such judgment against any amount yet owed, whether due or to become due, by the
Indemnified Party or any subsidiary thereof to any Indemnifying Party by reason of this
Agreement or any agreement or arrangement or contract to be entered into at the
Closing.
	 
	 	(c)	 	Except for any Fraud Claims or any claim for equitable relief specifically
provided for in this Agreement, the indemnification remedies provided in this Article 5
will be the parties’ exclusive remedies for claims arising out of or resulting from any
misrepresentation, breach of warranty, breach of covenant, or non-performance of any
obligation to be performed on the part of either party under this Agreement or any of
the Ancillary Agreements.

	5.5	 	Indemnification Limits. In the event of any claim for indemnity solely under
Sections 5.2(a) or 5.3(a) with respect to representations and warranties (a “Rep
Loss”):

	 	(i)	 	subject to Section 5.6, the Indemnified Party under such
representation and warranty claim shall not be entitled to indemnification
therefor or withholding of the distribution of escrow funds therefor under the
Escrow Agreement, unless such Indemnified Party and all related Indemnified
Parties, in the aggregate, have sustained Damages in excess of US$225,000 (the
“Basket Amount”) in the aggregate, following which event such
Indemnified Party and all related Indemnified Parties shall be entitled to
indemnification to the extent of all Damages suffered or incurred in excess of
the Basket Amount; and
	 
	 	(ii)	 	the maximum amount of indemnification payable to an Indemnified
Party and all related Indemnified Parties, in the aggregate, shall be equal to
fifty percent (50%) of the total consideration paid (as of a given date, and to
the extent increased by amounts subsequently paid) by Purchaser to Seller
pursuant to this Agreement and the Ancillary Agreements, including royalty payments, if any, paid pursuant to the License Agreement
(the “Maximum
Amount”)

28

 

	 	 	 	provided, however, that such limitations shall not apply to any breach of
(i) the representations and warranties contained in Sections 2.3 (“Authorization”), 2.5(b)
(“Consents and Approvals”), 2.7 (“Purchased Assets”), and 2.23 (“Brokers”). Additionally,
and notwithstanding anything herein to the contrary, (i) the Basket Amount and Maximum
Amount shall not apply with respect to any Fraud Claims; and (ii) the fact that Purchaser
shall also have a Rep Loss claim, in addition to another indemnifiable claim, such as for
Retained Liabilities, shall not subject, cause or permit such other indemnifiable claim to
count against the Basket Amount or the Maximum Amount. For the purposes of determining
whether the Basket Amount and Maximum Amount have been reached, the amount of any Damages
related to a breach of a representation or warranty shall be considered without regard to
materiality, Material Adverse Effect or similar qualification or exception set forth
therein. The parties do not intend that the Basket Amount or the Maximum Amount be deemed
to be a definition of what is “material” for any purpose under this Agreement.
	 
	 	5.6	 	Special Intellectual Property Indemnification. Notwithstanding Sections 5.2 and 5.3,
in the event that any Licensed Product (as defined in the License Agreement) that is offered
and sold by Purchaser or its Affiliates from and after the Closing Date becomes the subject of
any Third Party Claim alleging infringement of such third party’s intellectual property
rights, then, regardless of whether such claim constitutes a breach of Section 2.16 by Seller,
control of the defense of such claim will be governed by Section 6(c) of the License Agreement
and Seller will indemnify Purchaser for seventy-five percent (75%) of all Damages in
connection therewith, provided, however, that (i) Seller’s portion of such Damages shall be
payable only out of: (A) any Milestone Payments, up to
a maximum of $7 million, that are owed during any period in which Purchaser is claiming
indemnification under this Section, and, (B) if no Milestone Payments are owed, or if such
$7 million amount has been paid therefrom, out of royalty payments under the License
Agreement are owed during any period in which Purchaser is claiming indemnification under
this Section; (ii) payments in respect of such Damages shall be counted towards, and be
subject to, the Maximum Amount stated in Section 5.5(ii); and (iii) none of the limitations
on Damages set forth in this Section shall apply to any Fraud Claim.
	 
	 	5.7	 	Right of Set-Off. Except as expressly limited by Section 5.6 above, Purchaser shall
be entitled to set-off against any amounts otherwise payable by Purchaser to Seller under this
Agreement or the Ancillary Agreements (including without limitation the Holdback, the
Contingent Purchase Price and the royalty payments under the License Agreement) any amounts to
which Purchaser is entitled based on a claim for indemnification by Purchaser under this
Article 5 (collectively, the “Set-Off Amounts”); provided, however, that except for
any Set-Off Amount owed under Section 5.6, Purchaser shall be required to deposit any such
Set-Off Amounts in an escrow account to be held by the Escrow Agent pending resolution of any
such claim. Neither the exercise of, nor the failure to exercise, such right of set-off will
constitute an election of remedies or limit Purchaser in any manner in the enforcement of

29

 

	     	 	 	any
other remedies that may be available to it. The Set-Off amounts shall be deducted from the total indemnification to which the Indemnified Party is entitled.

ARTICLE 6

DISPUTE RESOLUTION

	6.1	 	Injunctive Relief. It is expressly agreed among the parties hereto that monetary
damages would be inadequate to compensate a party hereto for any breach by Seller of the
covenants and agreements in Article 4 hereof. Accordingly, the parties agree and acknowledge
that any such violation or threatened violation will cause irreparable injury to Purchaser and
that, in addition to any other remedies which may be available, Purchaser shall be entitled to
injunctive relief against the threatened breach of Article 4 hereof or the continuation of any
such breach without the necessity of proving actual damages and may seek to specifically
enforce the terms thereof.
	 
	6.2	 	Dispute. Except as set forth in Section 6.1, any controversy, claim or dispute of
whatever nature arising between the parties under this Agreement or any Ancillary Agreement,
or in connection with the transactions contemplated hereunder or thereunder, including those
arising out of or relating to the breach, termination, enforceability, scope or validity
hereof, whether such claim existed prior to or arises on or after the Effective Time (a
“Dispute”), shall be resolved by binding arbitration. The agreement to arbitrate
contained in this Article 6 shall continue in full force and effect despite the expiration,
rescission or termination of this Agreement.
	 
	6.3	 	Notice. No party shall commence an arbitration proceeding pursuant to the provisions
set forth below unless such party shall first give a written notice (a “Dispute
Notice”) to the other parties setting forth the nature of the Dispute.
	 
	6.4	 	Arbitration.

	 	(a)	 	If the Dispute has not been resolved within thirty (30) days after receipt of
the Dispute Notice or such greater period as the parties may agree upon in writing,
then the Dispute shall be determined by binding arbitration in New York, New York,
U.S.A. The arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (“AAA”) in effect on
the date on which the Dispute Notice is sent, subject to any modifications contained in
this Agreement. The Dispute shall be determined by one (1) arbitrator, except that if
the Dispute involves an amount in excess of One Million Dollars (US$1,000,000),
exclusive of interest and costs, three (3) arbitrators shall be appointed. Persons
eligible to serve as arbitrators shall be members of the AAA Large, Complex Case Panel
or a CPR Institute for Dispute Resolution (“CPR”) Panel of Distinguished
Neutrals, or persons who have professional credentials similar to those persons listed
on such AAA or CPR panels. The award shall be in writing and shall set forth the
reasons for the decision of the arbitrator(s). The award shall be final and binding on
the parties.

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	 	(b)	 	The arbitration shall be governed by the substantive laws of the State of New
York without regard to conflicts-of-law rules, and by the arbitration law of the United
States Federal Arbitration Act (Title 9, U.S. Code). Judgment upon the award rendered
may be entered in any court having jurisdiction.
	 
	 	(c)	 	Except as otherwise required by law, the parties and the arbitrator(s) agree to
keep confidential and not disclose to third parties any information or documents
obtained in connection with the arbitration process, including the resolution of the
Dispute. If a party fails to proceed with arbitration as provided in this Agreement,
or unsuccessfully seeks to stay the arbitration, or fails to comply with the
arbitration award, or is unsuccessful in vacating or modifying the award pursuant to a
petition or application for judicial review, the other party or parties, as applicable,
shall be entitled to be awarded costs, including reasonable attorneys’ fees, paid or
incurred in successfully compelling such arbitration or defending against the attempt
to stay, vacate or modify such arbitration award and/or successfully defending or
enforcing the award.

ARTICLE 7

DEFINITIONS

	7.1	 	Definitions. The following terms, as used herein, have the following meanings:

	 	(a)	 	“Affiliate” means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under direct or indirect common control with
such other Person, through the ownership of all or part of any Person.
	 
	 	(b)	 	“Applicable Law” means, with respect to any Person, any domestic or foreign,
federal, state or local common law or duty, case law or ruling, statute, law,
ordinance, policy, guidance, rule, administrative interpretation, regulation, code,
order, writ, injunction, directive, judgment, decree or other requirement of any
Governmental Authority (including any Environmental, Safety and Health Laws)
applicable to such Person or any of its Affiliates or Plan Affiliates or any of
their respective properties, assets, officers, directors, employees, consultants or
agents (in connection with such officer’s, director’s, employee’s, consultant’s or
agent’s activities on behalf of such Person or any of its Affiliates or Plan
Affiliates).
	 
	 	(c)	 	“Change in Control” means, with respect to a party: (a) the sale or transfer of
all or substantially all of such party’s assets to any Person or group of Persons
(other than a subsidiary) by means of any transaction or series of transactions; (b)
the acquisition of such party by another Person by means of any transaction or series
of transactions (including, without limitation, any reorganization, merger or
consolidation, whether of such party with, or into, any other Person or Persons, or
otherwise, but excluding (x) any merger effected exclusively for changing the domicile
of such party or (y) any consolidation or merger following which holders of equity
securities outstanding immediately prior to the merger or consolidation hold more than
fifty percent (50%) of the equity securities of the entity surviving the consolidation
or merger or an entity controlling the surviving entity after the consolidation or
merger); or (c) a transaction or series of transactions in which a Person or group of
Persons acquires beneficial ownership of more than fifty percent (50%) of the voting
power of the party.

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	 	(d)	 	“Code” means the Internal Revenue Code of 1986, as amended, and the regulations
or other binding pronouncements promulgated thereunder.
	 
	 	(e)	 	“Contract” means any contract, lease, license, commitment, permit, sales order,
purchase order, invoice, warranty and or other agreements or understanding.
	 
	 	(f)	 	“Damages” means all demands, claims, actions or causes of action, assessments,
losses, damages, costs, expenses, liabilities, judgments, awards, fines, sanctions,
penalties, charges and amounts paid in settlement, without giving effect to any
qualifications as to materiality of Material Adverse Effect contained in any
representation or warranty contained herein, including, but not limited to, reasonable
costs, fees and expenses of attorneys, accountants, bankers and other agents of the
Person incurring such expenses.
	 
	 	(g)	 	“Designated Employees” shall be Nir Betser, Sharona Segal- Leibovich and Shai
Vaingast.
	 
	 	(h)	 	“Environmental, Safety and Health Laws” means all Applicable Laws in any way
relating to Environmentally Regulated Materials, toxic torts, occupational health and
safety, or the environment.
	 
	 	(i)	 	“Environmentally Regulated Material” means any element, compound, waste,
pollutant, contaminant, substance, material or any mixture thereof: (i) the presence of
which requires investigation or remediation under any Applicable
Law; (ii) that is defined as a “hazardous waste” or “hazardous substance,” or
chemicals known to cause cancer or reproductive toxicity under any Applicable Law;
(iii) that is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic or mutagenic or otherwise hazardous and is regulated by any
Governmental Authority having or asserting jurisdiction over Seller; (iv) the
presence of which causes a nuisance, trespass or other tortious condition; (v) the
presence of which poses a hazard to the health or safety of Persons; (vi) without
limitation, that contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenols (PCBs), or asbestos, (vii) that gives rise to any exposure
prohibition or warning requirement under any Environmental, Safety and Health Law;
or (viii) that is otherwise regulated in any way under any Environmental, Safety and
Health Law.
	 
	 	(j)	 	“Governmental Authority” means any foreign, domestic, federal, territorial,
state or local governmental authority, quasi-governmental authority, instrumentality,
court, government or self-regulatory organization, commission, tribunal or organization
or any regulatory, administrative or other agency, or any political or other
subdivision, department or branch of any of the foregoing.

32

 

	 	(k)	 	“Intellectual Property” shall mean all rights in patents, patent applications,
trademarks (whether registered or not), trademark applications, service mark
registrations and service mark applications, trade names, trade dress, logos, slogans,
tag lines, uniform resource locators, Internet domain names, Internet domain name
applications, corporate names, copyright applications, registered copyrighted works and
commercially significant unregistered copyrightable works (including proprietary
software, books, written materials, prerecorded video or audio tapes, and other
copyrightable works), technology, software, trade secrets, know-how, technical
documentation, specifications, data, designs and other intellectual property and
proprietary rights, other than off-the-shelf computer programs, owned by or licensed to
Seller.
	 
	 	(l)	 	“Knowledge” relating to Seller, “Knowledge of Seller” or “Seller’s Knowledge”
means the knowledge actually possessed, or which, upon the exercise of reasonable due
diligence could be possessed, by any director or officer of Seller or its Affiliates.
	 
	 	(m)	 	“Liability” or “Liabilities” means any liabilities, obligations or claims of
any kind whatsoever whether absolute, accrued or un-accrued, fixed or contingent,
matured or un-matured, asserted or unasserted, known or unknown, direct or indirect,
contingent or otherwise and whether due or to become due, including without limitation
any foreign or domestic tax liabilities or deferred tax liabilities incurred in respect
of or measured by Seller’s income, or any other debts, liabilities or obligations
relating to or arising out of any act, omission, transaction, circumstance, sale of
goods or services, state of facts or other condition which occurred or existed on or
before the date hereof, whether or not known, due or payable, whether or not the same
is required to be accrued on the financial statements or is disclosed on the Disclosure
Schedule.
	 
	 	(n)	 	“Lien” means, with respect to any asset, any mortgage, title defect or
objection, lien, pledge, charge, security interest, hypothecation, restriction,
encumbrance, adverse claim or charge of any kind in respect of such asset.
	 
	 	(o)	 	“Material Adverse Effect” means any change, effect, fact, event, or
circumstance which has had or may reasonably be expected to have a material adverse
effect on, or a material adverse change in, as the case may be, without regard to any
potential insurance coverage or potential tax benefits, the assets, liabilities,
financial condition, results of operations, pricing or operating margins, operations,
properties, business, customer, employee or supplier relations or business condition of
the Urology Business, taken as a whole; provided, however, that none of
the following shall be taken into account in determining whether there has been a
Material Adverse Effect: (i) any change, effect, fact, event or circumstance
exclusively relating to any acts of terrorism, sabotage, military action or war; (ii)
business or economic conditions primarily related to the medical device industry; or
(iii) the taking of any action contemplated by this Agreement and the other agreements
contemplated hereby.

33

 

	 	(p)	 	“Person” means an individual, corporation, partnership, limited liability
company, association, trust, estate or other entity or organization, including a
Governmental Authority.
	 
	 	(q)	 	“Tax” or “Taxes” means all taxes imposed of any nature including federal,
state, local or foreign net income tax, alternative or add-on minimum tax, profits or
excess profits tax, franchise tax, gross income, adjusted gross income or gross
receipts tax, employment related tax (including employee withholding or employer
payroll tax, FICA or FUTA), real or personal property tax or ad valorem tax, sales or
use tax, excise tax, stamp tax or duty, any withholding or back up withholding tax,
value added tax, including in accordance with the Israeli Law of Value Added Tax —
1975, severance tax, prohibited transaction tax, premiums tax, environmental tax,
intangibles tax or occupation tax, together with any interest or any penalty, addition
to tax or additional amount imposed by any Governmental Authority (domestic or foreign)
responsible for the imposition of any such tax, including, without limitation, any
penalties for failing to report any “reportable transactions” required by Section 6011
of the Code. The term Tax shall also include any Liability of Seller or the
Subsidiaries for the Taxes of any other Person under U.S. Treasury Regulations Section
1.1502-6 (or similar provisions of state, local or foreign law), as a transferee or
successor by contract or otherwise.
	 
	 	(r)	 	“Tax Return” means all returns, declarations, reports, estimates, forms,
information returns, schedules, notices and statements or other document or information
required to be filed with or submitted to any Governmental Authority in connection with
the determination, assessment, collection or payment of any Tax or in connection with
the administration, implementation, or enforcement of or compliance with any legal
requirement relating to any Tax.
	 
	 	(s)	 	“Urology Business Intellectual Property” shall refer collectively to all
Intellectual Property that is owned by, licensed to or otherwise controlled by Seller
in connection with its operation of the Urology Business, including the Transferred
Intellectual Property and such items of Intellectual Property licensed under the
License Agreement and are currently used in the Field of Use.

     The following additional terms are defined elsewhere in this Agreement, as indicated below
(whether in singular or plural form):

List of Defined Terms

	 	 	 	 	 
	AAA
	 	 	30	 
	Agreement
	 	 	1	 
	Ancillary Agreements
	 	 	5	 
	Assumed Liabilities
	 	 	2	 
	Basket Amount
	 	 	28	 
	Bio Control Devices
	 	 	1	 
	Closing
	 	 	1	 

34

 

	 	 	 	 	 
	Closing Date
	 	 	1	 
	Closing Date Payment
	 	 	3	 
	Confidential Information
	 	 	21	 
	Consent
	 	 	10	 
	Consents
	 	 	10	 
	Consulting Agreement
	 	 	5	 
	Contingent Purchase Price
	 	 	4	 
	Contracts
	 	 	2	 
	CPR
	 	 	30	 
	Cytrix Israel
	 	 	2	 
	Disclosure Schedule
	 	 	8	 
	Dispute
	 	 	30	 
	Dispute Notice
	 	 	30	 
	Effective Time
	 	 	5	 
	Escrow Agent
	 	 	3	 
	Escrow Agreement
	 	 	3	 
	Excluded Assets
	 	 	2	 
	FDA
	 	 	4	 
	Field of Use
	 	 	1	 
	First Milestone
	 	 	4	 
	First Milestone Payment
	 	 	4	 
	Fraud Claims
	 	 	26	 
	Funds
	 	 	24	 
	Holdback
	 	 	3	 
	Indemnified Party
	 	 	27	 
	Indemnifying Party
	 	 	27	 
	Initial Purchase Price
	 	 	3	 
	License Agreement
	 	 	5	 
	Licensed Intellectual Property
	 	 	1	 
	Liens
	 	 	2	 
	Maximum Amount
	 	 	28	 
	Milestone Payments
	 	 	4	 
	Milestones
	 	 	4	 
	Permits
	 	 	12	 
	Proceedings
	 	 	12	 
	Product Liability Claim
	 	 	18	 
	Purchase Price
	 	 	4	 
	Purchased Assets
	 	 	2	 
	Purchaser
	 	 	1	 
	Rep Basket
	 	 	28	 
	Rep Loss
	 	 	28	 
	Retained Liabilities
	 	 	3	 
	Scheduled Contracts
	 	 	13	 
	Second Milestone
	 	 	4	 
	Second Milestone Payment
	 	 	4	 
	Seller
	 	 	1	 

35

 

	 	 	 	 	 
	Seller Licenses
	 	 	11	 
	Set-Off Amounts
	 	 	29	 
	Third Milestone
	 	 	4	 
	Third Milestone Payment
	 	 	4	 
	Third Party Claim
	 	 	27	 
	Transferred Intellectual Property
	 	 	2	 
	Urology Business
	 	 	1	 

36

 

ARTICLE 8

MISCELLANEOUS

	8.1	 	Notices. All notices, requests, demands, claims and other communications hereunder
shall be in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given (a) if personally delivered, when so delivered, (b) if given by
facsimile, once such notice or other communication is transmitted to the facsimile number
specified below and electronic confirmation is received; or (c) if sent through an overnight
delivery service in circumstances to which such service guarantees second day international
delivery, the second day following being so sent:
	 
	 	 	If to Seller:

	 	To:	 	Bio Control Medical (B.C.M.) Ltd.

3 Gron Street

Yahud 56100

Israel

Attention: Chief Executive Officer

Facsimile: +972-3-6322125

With a copy to:

Shiboleth, Yisraeli, Roberts, Zisman & Co.

and Moshe H. Ne’eman, Ben-Artzi & Co.

Top Tower

50 Dizengoff St.

Tel Aviv 64332

Israel

Attn: Revital Ben-Artzi, Esq.

Fax: + 972-3-5253818

	     	 	If to Purchaser:

	 	To:	 	American Medical Systems, Inc.

10700 Bren Road West

Minnetonka, Minnesota 55343

Attn: Chief Executive Officer

Fax: (612) 930-6695

With a copy to:

Oppenheimer Wolff & Donnelly LLP

3300 Plaza VII

45 South Seventh Street

Minneapolis, Minnesota 55402

Attn: Thomas A. Letscher, Esq.

Fax: (612) 607-7100

 

 

     Any party may give any notice, request, demand, claim or other communication hereunder using
any other means (including ordinary mail or electronic mail), but no such notice, request, demand,
claim or other communication shall be deemed to have been duly given unless and until it actually
is received by the individual for whom it is intended. Any party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be delivered by giving
the other parties notice in the manner herein set forth.

	8.2	 	Amendments; No Waivers.

	 	(a)	 	Subject to Applicable Law, any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by all parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.
	 
	 	(b)	 	No waiver by a party of any default, misrepresentation or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any prior
or subsequent default, misrepresentation or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent occurrence.
No failure or delay by a party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.

	8.3	 	Expenses. Except as otherwise provided herein, all costs, fees and expenses incurred
in connection with the negotiation, preparation, execution, delivery and performance of this
Agreement and in closing and carrying out the transactions contemplated hereby shall be paid
by the party incurring such cost or expense. This Section 8.3 shall survive the termination
of this Agreement.
	 
	8.4	 	Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns. No party
hereto may assign either this Agreement or any of its rights, interests or obligations
hereunder, by operation of law or otherwise, without the prior written approval of the other
party.
	 
	8.5	 	Governing Law; Jurisdiction. This Agreement shall be governed by, construed and
enforced in accordance with the internal laws of the State of New York (regardless of the laws
that might otherwise govern under applicable principles of conflicts of law).
	 
	8.6	 	Counterparts; Effectiveness. This Agreement may be signed in any number of
counterparts and the signatures delivered by facsimile, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received a counterpart
hereof signed by the other parties hereto.

2

 

	8.7	 	Entire Agreement. This Agreement (including the Disclosure Schedule, all Exhibits
and Schedules and all other agreements referred to herein or therein which are hereby
incorporated by reference and the other agreements executed simultaneously herewith)
constitutes the entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Agreement, including, without
limitation, the Confidential Term Sheet dated January 10, 2006. Neither this Agreement nor
any provision hereof is intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
	 
	8.8	 	Captions. The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof. All references to an Article
or Section include all subparts thereof.
	 
	8.9	 	Severability. If any provision of this Agreement, or the application thereof to any
Person, place or circumstance, shall be held by a court of competent jurisdiction to be
invalid, unenforceable or void, the remainder of this Agreement and such provisions as applied
to other Persons, places and circumstances shall remain in full force and effect only if,
after excluding the portion deemed to be unenforceable, the remaining terms shall provide for
the consummation of the transactions contemplated hereby in substantially the same manner as
originally set forth at the later of the date this Agreement was executed or last amended.
	 
	8.10	 	Construction. The parties hereto intend that each representation, warranty and
covenant contained herein shall have independent significance. If any party has breached any
representation, warranty or covenant contained herein in any respect, the fact that there
exists another representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the party has not breached shall not
detract from or mitigate the fact that the party is in breach of the first representation,
warranty or covenant.
	 
	8.11	 	Cumulative Remedies. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
	 
	8.12	 	Third Party Beneficiaries. No provision of this Agreement shall create any third
party beneficiary rights in any Person, including any employee of Purchaser or employee of
Seller or any Affiliate thereof (including any beneficiary or dependent thereof).

[Remainder of Page Intentionally Left Blank]

3

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.

	 	 	 	 	 
	PURCHASER: 	AMERICAN MEDICAL SYSTEMS, INC.

	 
	 	By:  	/s/ John F. Nealon	 
	 	Name:  	John F. Nealon 	 
	 	Title:  	Senior Vice President, Business
Development 	 
	 
	 
	 
	SELLER: 	BIO CONTROL MEDICAL (B.C.M), LTD.

	 
	 	By:  	/s/ Ruth Alon	 
	 	Name:  	Ruth Alon 	 
	 	Title:  	Director 	 
	 
	 	By:  	/s/ Yosef Gross	 
	 	Name:  	Yosef Gross 	 
	 	Title:  	Director 	 
	 

4exv10w2

 

EXHIBIT 10.2

LICENSE AGREEMENT

     THIS LICENSE AGREEMENT (this “Agreement”) is made and entered into effective as of
April 26, 2006 (the “Effective Date”), by and between Bio Control Medical (B.C.M), Ltd., an
Israeli company (“Licensor”), and American Medical Systems, Inc., a Delaware corporation
(“Licensee”).

Recitals

     A. Licensor and Licensee are parties to that certain Asset Purchase Agreement of even date
herewith (the “Asset Purchase Agreement”), pursuant to the terms of which Licensee will
purchase certain assets of Licensor’s Urology Business, as defined therein, excluding the Licensed
Intellectual Property Rights that are subject to the terms of this Agreement.

     B. Licensor wishes to grant to Licensee and Licensee wishes to obtain from Licensor, an
exclusive, worldwide license under the Licensed Intellectual Property Rights on the terms and
conditions of this Agreement.

     C. As a condition to the closing of the Asset Purchase Agreement, Licensor and Licensee are
required to enter into this Agreement as of the date hereof.

Agreement

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual representations,
warranties, covenants and agreements contained herein, the parties hereto agree as follows:

     1. Definitions.

     (a) “Affiliate” means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under direct or indirect common control with such
other Person.

     (b) “Confidential Information” means any information that is disclosed in any
tangible form and is clearly labeled or marked as confidential, proprietary or its
equivalent, and any information that is disclosed orally or visually, is designated
confidential, proprietary or its equivalent at the time of its disclosure and is reduced to
writing and clearly marked or labeled as confidential, proprietary or its equivalent within
thirty (30) days of disclosure, including, without limitation, any non-public information of
Licensee or Licensor, and any scientific or technical data, know-how or expertise of
Licensee or Licensor that relates to a Licensed Product (whether existing at or after the
Effective Date); provided, however, that “Confidential Information” shall
not include information that (i) was in the receiving party’s possession or was known to it
prior to its receipt from the disclosing party; (ii) is or becomes public knowledge without
the fault of

 

 

the receiving party; (iii) is or becomes rightfully available on an unrestricted basis
to the receiving party from a source other than a party owing an obligation of
confidentiality to the disclosing party; or (iv) becomes available on an unrestricted basis
to a third party from the disclosing party or from someone acting under its control.

     (c) “Field of Use” means the field of urology, gynecology, colorectal
disorders, sexual dysfunction and related pelvic disorders.

     (d) “Governmental Authority” means any foreign, domestic, federal, territorial,
state or local governmental authority, quasi-governmental authority, instrumentality, court,
government or self-regulatory organization, commission, tribunal or organization or any
regulatory, administrative or other agency, or any political or other subdivision,
department or branch of any of the foregoing.

     (e) “Licensed Intellectual Property Rights” means the following: (i) the Patent
Rights; (ii) the Urology Business Information; and (iii) all copyrights, trade secrets,
know-how and other proprietary rights related thereto (other than the “minaturoTM” trademark,
which has been sold to Licensee under the Asset Purchase Agreement).

     (f) “Licensed Product” means any product or device that is developed, designed,
modified, improved, manufactured, used, imported, sold or offered for sale by Licensee in
the Field of Use that (x) in the absence of this Agreement, would infringe one or more Valid
and Enforceable Claims of the Patent Rights or (y) would infringe one or more Valid and
Enforceable Claims of the patent rights included in the Transferred Intellectual Property
(as defined in the Asset Purchase Agreement).

     (g) “Net Sales” means Licensee’s, or, in the case of any sublicensee, the
sublicensee’s properly recognized consolidated aggregate net sales of the Licensed Products
during the royalty period, calculated in accordance with generally accepted accounting
principles in the U.S.A. consistently applied by Licensee in accordance with its audited
revenue recognition policies, reduced by the allowance for bad debts recorded related to the
revenue. Whenever a Licensed Product is sold as part of a bundled product, the “Net Sales”
for the Licensed Product resulting from such sale of such bundled product shall be the
product of (X) the net revenues reported by Licensee or its Affiliate or a sublicensee,
whichever is applicable, for such bundled product multiplied by (Y) a fraction, the
numerator of which is the per unit average selling price of such Licensed Product and the
denominator of which is the sum of the aggregate per unit average selling prices of all
products, including the Licensed Product, included in such bundled product.

     (h) “Patents” means all of Licensor’s patents and patent applications as in
existence on the date hereof, including, but not limited to, those listed on Exhibit
A hereto.

     (i) “Patent Rights” as used in this Agreement means each and all of the
following: (i) all right, title and interest of Licensor and its Affiliates in the Patents
and any patents issuing on any patent applications, including any reissues, re-examinations,
provisionals, divisionals, continuations and continuations-in-part, and extensions thereof;

2

 

and (ii) any corresponding foreign patents or patent applications related or claiming
priority thereto, in each case to the extent not already included in the Patents or in the
Transferred Intellectual Property.

     (j) “Person” means an individual, corporation, partnership, limited liability
company, association, trust, estate or other entity or organization, including a
Governmental Authority.

     (k) “Software” means all the series of instructions and algorithms which
operate the miniaturoTM Bio Control Device and physician programmer.

     (l) “Source Code” means the series of statements written in human-readable
computer programming language which, when complied into machine-readable format, constitute
the Software.

     (m) “Urology Business Information” means the following business information and
related records as in existence on the date hereof to the extent used in or applicable to
the Urology Business:

     (i) documentation related to the design, validation, and production of the
miniaturoTM current model of Bio Control Device, physician programmer, stimulation
lead, system accessories, test fixtures and manufacturing fixtures;

     (ii) documentation related to the assembly of Bio Control Devices, including:
(A) process flow charts, process standard operating procedures (SOPs), (B) copies of
all equipment drawings and manuals, (C) calibration records for all equipment and
other fixed assets; (D) sterilization cycle validation reports, (E) drawing of molds
needed to manufacture parts for the miniaturoTM, (F) floor plan and equipment list
for a facility capable of performing the manufacturing steps of the miniaturoTM
currently performed by Licensor, and (G) floor plan, equipment list and software
list for a facility capable of performing the development process currently
performed by Licensor;

     (iii) lists of vendors and suppliers, including addresses and telephone
numbers, if possible, and a breakdown of purchases by vendor or supplier;

     (iv) details of expected cost of goods sold and other manufacturing costs for
Licensor’s current model of Bio Control Device;

     (v) draft marketing material (posters, procedure video, etc.);

     (vi) lists of third party software used by Licensor;

     (vii) all of Licensor’s preclinical and clinical data, including animal
studies, and human clinical data, descriptions of protocols, adverse event reports,
study reports and database copies (in printed or electronic format), as well as a
list of investigational sites and principal investigators;

3

 

     (viii) all regulatory documents, including submissions, registrations and
licenses;

     (ix) all Software, including Source Code; and

     (x) all invention records created by internal and external personnel not
otherwise included in the Purchased Assets, as defined in the Asset Purchase
Agreement.

     (n) “Valid and Enforceable Claim” with respect to any patent claim means an
issued claim that has not expired or been rendered invalid or unenforceable by a court of
competent jurisdiction or other Governmental Authority from which no appeal can be taken.

     2. License; Information Access.

     (a) Grant. Licensor hereby grants to Licensee and its Affiliates an exclusive,
worldwide, irrevocable (except as provided in Section 4, below) fully transferable and
assignable, right and license (including the right to grant sublicenses), under the Licensed
Intellectual Property Rights, solely within the Field of Use, to develop, design, modify,
improve, make, have made, use, import, offer to sell and sell the Licensed Products.
Licensee hereby acknowledges that Licensor is the sole and exclusive owner of all right,
title and interest in and to the Licensed Intellectual Property Rights. Except as set forth
in this Agreement, Licensee shall not have any right, title or interest in or to the
Licensed Intellectual Property Rights. Licensee’s license to the Source Code and Software
includes the right to use, modify, sublicense, and create derivative works of the Source
Code and Software.

     (b) Sublicenses and Cross-licenses. Licensee may grant sublicenses and
cross-licenses under the Licensed Intellectual Property Rights and under Licensee’s name
without the prior written consent of, or payment of any consideration to, Licensor. In
addition, Licensee may grant sublicenses and cross-licenses under the Licensed Intellectual
Property Rights to develop, design, modify, improve, make, have made, use, import, offer to
sell and sell the Licensed Products without the prior written consent of Licensor.

     (c) Copying and Access; Destruction. Commencing upon execution and delivery of
this Agreement and as requested from time to time thereafter, Licensor will provide Licensee
with lists and other reasonable details of the data comprising the Urology Business
Information, and will provide Licensee with access to and, if requested, true and correct
copies (at Licensor’s expense) of such Urology Business Information in such format(s) as
License may request. Licensor will provide Licensee with at least ninety (90) days prior
notice of its intention to destroy or otherwise dispose of any Urology Business Information,
during which time Licensee may request and Licensor will provide Licensee with access to,
copies of, or possession of original versions of, any such information.

4

 

     3. Royalties; Audits; Expenses.

     (a) Percentage Royalty. Commencing upon the Effective Date, and for a period
of ten (10) years thereafter or, if earlier, upon the expiration or termination of this
Agreement, Licensee shall pay to Licensor, or its designee, a royalty equal to the
percentage of Net Sales set forth below during each of Licensee’s fiscal periods set forth
below (subject to appropriate adjustment for any subsequent change in Licensee’s fiscal
year):

	 	 	 	 	 
	Fiscal Period	 	Royalty Rate	 
	2006 through 2009
	 	 	6	%
	2010 through 2012
	 	 	5	%
	2013 through 2016
	 	 	4	%

     (b) Sublicense Royalty. In addition to the percentage royalty set forth in
Section 3(a) above, Licensee shall pay or cause its Affiliate to pay royalties to Licensor
based upon Net Sales of the Licensed Products by sublicensees at the same rate set forth in
Section 3(a) above; provided, however, no royalties shall be paid in
connection with any sublicense granted by Licensee pursuant to any exercise of its authority
under Section 6(c) in a case of infringement of a patent or other intellectual property
right owned by a third party by reason of the use of the Patent Rights in the manufacture,
use or sale of the Licensed Products.

     (c) Payments. During the royalty period, Licensee shall deliver to Licensor,
no later than forty-five (45) days following the end of each fiscal quarter of Licensee,
royalty payment for the preceding fiscal quarter, accompanied by a reasonably detailed
report, setting forth the royalty calculations for the quarter to which the payment relates.

     (d) Books and Records. Licensee agrees to keep substantially complete and
accurate books of account and records covering all transactions relating to this Agreement.
All such books of account and records shall be kept available for at least two (2) years
after the termination or expiration of this Agreement.

     (e) Audit Rights. Licensor may cause an audit to be made of those books and
records of Licensee as necessary to review and audit any statements delivered pursuant to
Section 3(c) hereof. Any such audit shall be conducted only by an independent certified
accountant selected by Licensor and reasonably acceptable to Licensee, after prior written
notice to Licensee and shall be conducted during regular business hours at Licensee’s
offices and in such a manner so as not to interfere with Licensee’s normal business
activities. Licensee shall permit such accountant, during normal business hours, to have
reasonable access to, and to examine and make copies of, those books and records of Licensee
as are necessary to review and audit the calculation in question. Neither Licensor nor such
accountant will have the right to review or audit any other books and records of Licensee.
In no event shall more than one audit be conducted, nor shall the records supporting any
statements be audited more than once for the same purpose. In the event any such audit reveals any discrepancy less
than

5

 

five percent (5%) of the
applicable Net Sales for any consecutive twelve (12) months, Licensor shall pay for the
reasonable third party costs and expenses of such audit. In the event any such audit
reveals any discrepancy greater than or equal to five percent (5%) of the applicable Net
Sales for any consecutive twelve (12) months, Licensee shall pay for the reasonable third
party costs and expenses of such audit.

     (f) Expenses. Unless otherwise specifically set forth herein, all fees, costs
and expenses incurred by Licensee in developing, manufacturing, promoting, marketing and
selling the Licensed Products or otherwise incurred under this Agreement shall be borne
solely by Licensee.

     4. Term and Termination.

     (a) Term. The term of this Agreement shall commence on the Effective Date and
shall remain in force, unless terminated earlier in accordance with Section 4(b), until the
last to expire of the Patent Rights.

     (b) Termination. Notwithstanding the provisions of Section 4(a), this
Agreement may be terminated in accordance with the following provisions:

     (i) Upon mutual agreement of Licensor and Licensee.

     (ii) Licensee may terminate this Agreement (A) at any time by giving notice in
writing to Licensor, which notice shall be effective upon dispatch, should Licensor
file a petition for a liquidation in bankruptcy, be declared bankrupt, become
insolvent, make an assignment for the benefit of creditors, go into liquidation or
receivership, or otherwise lose legal control of its business; or (B) immediately if
any of the Licensed Intellectual Property Rights, including, without limitation,
the Patent Rights, have been rendered invalid or unenforceable by a court of
competent jurisdiction or other Governmental Authority from which no appeal can be
taken.

     (iii) Either party may terminate this Agreement upon an arbitration award
(pursuant to the dispute resolution procedure referenced in Section 9(c)) below,
finding that the other party is in material breach of this Agreement and the
breaching party’s failure to comply with the terms of such order (including payment
of damages) within ninety (90) days after entry of the award.

     (c) Rights and Obligation on Termination. In the event of termination or
expiration of this Agreement for any reason, the parties shall have the following rights and
obligations:

     (i) Licensee shall remain responsible for any payment due to Licensor that has
accrued prior to the effective date of such termination or expiration, except if any
of the Patent Rights have been held to be invalid, in which case no payments shall
be owed.

6

 

     (ii) The license granted to Licensee under Section 2(a) above shall immediately
terminate and be of no further force and effect; provided, however,
that if this Agreement expires by its terms in accordance with Section 4(a), the
license granted to Licensee under Section 2(a) shall continue indefinitely with
respect to all Licensed Intellectual Property Rights except the Patent Rights.

     (iii) Sections 4(c), 6, 7, 8 and 9 shall survive any termination or expiration
of this Agreement. In addition, Section 3(e) shall survive for a period of two (2)
years from the date of termination or expiration of this Agreement.

     (iv) Licensee, its Affiliates and any sublicensees shall be permitted to sell
any inventory of the Licensed Products on hand at the effective date of such
termination or expiration, provided that no provision of this Agreement shall
prevent Licensee, its Affiliates or sublicensees from selling the Licensed Products
after termination or expiration of this Agreement if the relevant Patent Rights have
expired.

     5. Option to Acquire. Licensor hereby grants to Licensee an irrevocable, paid-up
option (the “Option”) to acquire, for the consideration of US$1.00, the ownership of
any (i) issued patents within the Patents, or (ii) other patents issued in respect of any of
the Patent Rights, following issuance, in each case whose claims fall solely within the
Field of Use during the term of this Agreement, which are not the subject of a broadening
reissue application and which can no longer be the subject of an application for a
broadening reissue application. Licensee may exercise the Option at any time by written
notice to Licensor, which notice shall state Licensee’s reason and belief that the
applicable patent(s) are solely within the Field of Use. Following the receipt of
Licensee’s notice of exercise, Licensor shall promptly execute all documents and do all
things necessary to transfer all rights relating to such patent(s) to and vest all such
interests in Licensee free and clear of all liens, without requiring additional
consideration from Licensee, except for the reimbursement by Licensee of Licensor’s
reasonable out-of-pocket expenses and legal fees incurred in connection with obtaining and
maintaining such patent(s).

     6. Patent Prosecution and Infringement.

     (a) Licensed Rights. With respect to the Patent Rights only, Licensor shall
(i) pay when due all maintenance and annuity fees for the Patent Rights; (ii) be responsible
for the prosecution of the Patent Rights before the applicable examining authority; (iii)
consult with Licensee regarding in which foreign countries Licensee desires patent
protection; and (iv) keep Licensee apprised of all proceedings concerning prosecution of the
Patent Rights before the applicable examining authority by electronic access or by providing
copies of correspondence and official actions within ten (10) days of receipt thereof from
any such examining authority; by providing Licensee copies of all correspondence, filings
and responses to official actions at least thirty (30) days in advance of the deadline for
any such filing with such authorities; and by providing Licensee with an opportunity to
comment. If Licensee’s comments are related to arguments made

7

 

to advance prosecution of any
claim related to the Field of Use, Licensor shall not unreasonably refuse to include such input in its response to the official
action. If Licensor (i) elects not to prosecute; (ii) desires to abandon any of patent
applications included in the definition of the Licensed Intellectual Property Rights; (iii)
desires not to maintain any patent or patent application included in the definition of
Patent Rights; or (iv) does not desire to file a patent application in any foreign country
in which Licensee has expressed an interest, it shall so notify Licensee in writing allowing
sufficient time for Licensee to (w) assume the prosecution of any such patent application
prior to any abandonment thereof; (x) prevent any actual abandonment of any patent or patent
application; (y) make maintenance and annuity fee payments in advance of any abandonment
thereof; and (z) file patent applications in foreign countries of Licensee’s choice. In any
such case, unless prevented by a terminal disclaimer, Licensor shall assign its rights in
such patent or patent application to Licensee, and Licensee shall have the right to
prosecute and maintain such patent or patent application in its own name at its own expense.
If a terminal disclaimer prevents the assignment of the rights to Licensee with respect to
any patent or patent application falling within the circumstances set forth in (i), (ii),
(iii) or (iv) above without the loss of desired rights to one party or the other party, the
patent or patent application shall remain assigned to Licensor, who will cooperate at
Licensee’s expense and at Licensee’s complete discretion with the prosecution and
maintenance of such patent or patent application and Licensee will have an exclusive,
irrevocable, fully paid up, license to exploit such patent or patent application in the
country in which the application or patent was filed in the Field of Use with the full right
to sublicense. Licensee and Licensor shall cooperate fully with each other to execute all
necessary documentation to enable each party to perform its duties and exercise its rights
under the terms of this Section 6(a). All out of pocket costs to Licensor arising out of
fulfillment of a specific, written request of Licensee pursuant to this subsection shall be
borne by Licensee, so long as Licensee has approved such expenses in advance.

     (b) Infringement.

     (i) With respect to the Patent Rights only, when information comes to the
attention of Licensor or Licensee to the effect that any of the Patent Rights have
been or are threatened to be infringed by a third party, Licensor or Licensee, as
the case may be, shall notify the other party in writing of any such infringement or
threatened infringement of which it becomes aware. If such infringement or
threatened infringement relates to any Patent Rights within the Field of Use,
Licensee shall have the initial right but not the obligation to take any action to
stop such infringement or otherwise enforce Licensee’s rights. In the event
Licensee takes no action to stop such infringement within ninety (90) days of
receipt of any notice from Licensor or within ninety (90) days of it otherwise
becoming aware of such infringement, Licensor shall have the right to commence an
action against such infringement, at its own expense and in its own name. The party
controlling any such action is referred to below as the “Controlling Party” and the
other party, with respect to such action, as the “Cooperating Party.”

8

 

     (ii) The Cooperating Party shall cooperate with the Controlling Party in any
action, suit or proceeding brought under Section 6(b)(i). If a Controlling
Party determines that it is necessary or desirable for a Cooperating Party to
join any such suit, action or proceeding, the Cooperating Party shall, at the
Controlling Party’s expense, execute all documents and perform such other acts as
may be reasonably required. If the Controlling Party initiates suit hereunder it
shall have the exclusive right to employ counsel of its own selection and to direct
and control the litigation or any settlement thereof (subject to the penultimate
sentence hereof), shall pay all of the Cooperating Party’s reasonable, out of pocket
costs, if any, promptly upon the Controlling Party’s receipt of a request for
reimbursement (accompanied by sufficient supporting documentation). Subject to such
reimbursement of the Cooperating Party’s reasonable, out-of-pocket expenses, the
Controlling Party shall be entitled to reimburse itself out of any sums recovered in
such suit or in settlement thereof for all costs and expenses, including reasonable
attorneys’ fees, necessarily involved in the prosecution of such suit, and any funds
that shall remain from said recovery shall be used to reimburse the Cooperating
Party for all of its other reasonable costs and expenses, in addition to the
out-of-pocket costs already reimbursed, necessarily involved in its participation in
such suit, and any balance remaining thereafter shall be distributed to the
Controlling Party subject, in the case of Licensee as Controlling Party, to the
royalty obligations herein. In any such action, the Cooperating Party shall, at it
own expense, have the right to non-controlling participation through counsel of its
own selection. If the Controlling Party desires to settle such claim or suit, it
shall first give the Cooperating Party written notice of the terms of the proposed
settlement and the Cooperating Party shall have the right to approve or reject such
proposal. The failure of the Cooperating Party to respond to a notice of settlement
within fifteen (15) business days following the giving of such notice by the
Controlling Party shall automatically constitute an approval of the terms of the
proposed settlement contained therein.

     (c) Action Against Licensee. Licensor will cooperate with Licensee in the
defense of any suit, action or proceeding against Licensee, or any Affiliate or sublicensee
of Licensee, alleging the infringement of a patent or other intellectual property right
owned by a third party by reason of the use of the Patent Rights in the manufacture, use or
sale of the Licensed Products. Licensee shall give Licensor prompt notice of the
commencement of any such suit, action or proceeding or claim of infringement and shall
furnish to Licensor a copy of each communication relating to the alleged infringement.
Licensor hereby grants to Licensee the right to exclusive control of the defense of any such
suit, action or proceeding and the exclusive right to compromise, litigate, settle or
otherwise dispose of any such suit, action or proceeding and shall provide all information
and assistance necessary to defend or settle any such suit, action or proceeding. Licensee
shall have the right to join Licensor as a defendant, if necessary or desirable, and
Licensor shall join in any such action and shall execute all documents and take all other
actions, including giving testimony, which may reasonably be required in connection with the
defense of such suit, action or proceeding. Each party shall have the right to be
represented by counsel of its own selection, at its own expense, in the defense of any suit
under this Section 6(b)(iii). Notwithstanding the foregoing, Licensor’s sole and exclusive
financial obligations arising out of any claim for infringement of any third party Intellectual Property rights are set forth in the
Indemnification provisions of Section
5.6 of the Asset Purchase Agreement.

9

 

     7. Confidentiality. The Parties agree that Section 4.1 (“Confidentiality”) of the
Asset Purchase Agreement is incorporated by reference herein and shall apply to all information
disclosed in the performance of this Agreement, provided that, in addition to the respective rights
to use, and restrictions on each party’s use of, the Urology Business Information pursuant to the
exclusive license granted in Section 2, above:

     (a) Licensee will treat the Urology Business Information as the Confidential
Information of Licensor outside of the Field of Use, and, subject to the exceptions and
exclusions in Section 4.1(c) of the Asset Purchase Agreement, will not disclose the Urology
Business Information for any purpose outside of the Field of Use or to any Person for the
use, or intended use, by such Person outside of the Field of Use;

     (b) Licensor will treat the Urology Business Information as the Confidential
Information of Licensee within of the Field of Use, and, subject to the exceptions and
exclusions in Section 4.1(c) of the Asset Purchase Agreement, will not disclose the Urology
Business Information for any purpose within the Field of Use or to any Person for the use,
or intended use, by such Person within of the Field of Use; and

     (c) Each party will treat the Urology Business Information as confidential and
proprietary, and will protect the Urology Business Information from disclosure using same
degree of care that it uses to protect its other, similar confidential and proprietary
information (but in any event no less than commercially reasonable care, including requiring
execution and delivery of appropriate confidentiality and non-disclosure agreements prior to
any permitted disclosure).

     8. Additional Grant. Licensor and Licensee hereby agree to disclose to each other,
the filing of any and all patent applications (including all patents issuing on such applications)
covering electrical stimulation technology during a period of three (3) years following the Closing
Date (as defined in the Asset Purchase Agreement), subject to renewal for successive two (2) year
terms thereafter, to the extent mutually agreed in writing by the parties prior to the end of the
initial term or any renewal term, as the case may be. Licensor and Licensee agree that each will
use good faith and commercially reasonable efforts (including after such period) to negotiate and
enter into one or more non-exclusive license agreements with one another for all patent
applications disclosed during the period, (i) granting Licensee rights to any such patent
applications filed by Licensor during such period within the Field of Use; and (ii) granting
Licensor rights to any such patent applications filed by Licensee during such period outside of the
Field of Use. In all cases, such license agreements will provide for royalty payments at a rate
that is commercially reasonable, commensurate with the value accorded by the parties, but not to
exceed six percent (6%). Either party may terminate the parties’ obligations to disclose patent
applications and to negotiate or to continue any ongoing negotiations under this Section 8 by
notice to the other party following a Change in Control (as defined in the Asset Purchase
Agreement) of either party, provided that such notice is given within thirty (30) days following
the effective date of: (i) the Change in Control, if the termination notice is given by the party
undergoing the

10

 

Change in Control; or (ii) notice of the Change in Control given
pursuant to the following sentence, if the termination notice is given by the party not undergoing the Change
in Control. Each party covenants and agrees to provide the other with notice of any Change in
Control no later than two (2) business days following the effective date of the Change in Control.

     9. Miscellaneous.

     (a) Assignment; Change in Control. Neither party may assign or otherwise
transfer its rights and obligations under this Agreement without the prior written consent
of the other party, except to an Affiliate or any successor in interest of all or
substantially all of the business of such party, whether by merger, operation of law,
assignment, purchase or otherwise, and except that Licensee may grant any sublicenses in
accordance with Section 2(d). Any prohibited assignment shall be null and void. All terms
and conditions of this Agreement shall be binding on and inure to the benefit of the
successors and permitted assigns of the parties. Notwithstanding the foregoing, this
Agreement shall not be assignable upon a Change in Control of Licensor (by operation of law
or otherwise) unless the party(ies) acquiring control execute and deliver, and upon any
Change in Control the Licensor shall cause such parties to execute and deliver, an
agreement, in the form attached as Exhibit B, acknowledging the Licensee’s exclusive
license hereunder, including Licensee’s rights in the Urology Business Information.

     (b) Relationship. This Agreement shall not constitute either party as the
legal representative, partner, joint venturer or agent of the other party hereto, nor shall
either party have the right or authority to assume, create, or incur any liability or any
obligation of any kind, express or implied, against or in the name of or on behalf of the
other party hereto.

     (c) Dispute Resolution. The parties agree that all disputes, of whatever
nature, arising hereunder shall be finally settled pursuant to Article 6 of the Asset
Purchase Agreement.

     (d) Entire Agreement; Waiver and Release. This Agreement constitutes the
entire agreement between the parties hereto relative to the subject matter hereof, and
supersedes any and all prior agreements, written or oral, between the parties relating to
such subject matter.

     (e) Amendments. No modifications or amendments of any of the terms hereof
shall be valid or binding unless made in writing and signed by Licensor and Licensee.

     (f) Waiver. No waiver of any breach of any provision of this Agreement shall
constitute a waiver of any prior, concurrent or subsequent breach of the same or any other
provision hereof, and no waiver shall be effective unless made in writing.

     (g) Notices. All notices, requests, demands, claims and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given (a) if personally delivered, when so delivered, (b) if
given by facsimile, once such notice or other communication is transmitted to the facsimile
number specified below and electronic confirmation

11

 

is received; or (c) if sent through an overnight delivery
service in circumstances to which such service guarantees second day international delivery,
the second day following being so sent:

     If to Licensor:

To:  Bio Control Medical (B.C.M), Ltd.

3 Geron St.

Yehud 56100

Israel

Attn: Chief Executive Officer

Fax: +972-3-6322125

With a copy to:

Sanford T. Colb & Co.

P.O.B. 2273,

Rehovot, Israel

Attn: Sanford T. Colb, Esq.

Fax: +972 8 9 454556

     If to Licensee:

To:  American Medical Systems, Inc.

10700 Bren Road West

Minnetonka, Minnesota 55343

Attn: Chief Executive Officer

Fax: (612) 930-6695

With a copy to:

Oppenheimer Wolff & Donnelly LLP

3300 Plaza VII

45 South Seventh Street

Minneapolis, Minnesota 55402

Attn: Thomas A. Letscher, Esq.

Fax: (612) 607-7100

Any party may give any notice, request, demand, claim or other communication hereunder using
any other means (including ordinary mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given unless and
until it actually is received by the individual for whom it is intended. Any party may
change the address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other parties notice in the manner herein set
forth.

12

 

     (h) Severability. If any provision of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, the remaining provisions of this
Agreement shall remain in full force and effect. Further, should any provision of this
Agreement be deemed unenforceable by virtue of its scope, such provision shall be deemed
limited to the extent necessary to render the same enforceable.

     (i) Governing Law. This Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of New York (regardless of the laws that might
otherwise govern under applicable principles of conflicts of law).

     (j) Headings. The headings of sections and subsections of this Agreement have
been inserted for the convenience of reference only and shall in no way restrict or
otherwise modify the terms of this Agreement.

     (k) Counterparts. This Agreement may be signed in any number of counterparts
and the signatures delivered by facsimile, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each Party hereto shall have received a counterpart
hereof signed by the other Parties hereto.

[Remainder of Page Intentionally Left Blank]

13

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the
Effective Date.

	 	 	 	 	 
	 	BIO CONTROL MEDICAL (B.C.M), LTD.

 	 
	 	By:  	/s/ Ruth Alon
 	 
	 	 	Name:  	Ruth Alon 	 
	 	 	Title:  	Director 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	/s/ Yosef Gross
 	 
	 	 	Name:  	Yosef Gross 	 
	 	 	Title:  	Director 	 
	 

	 	 	 	 	 
	 	AMERICAN MEDICAL SYSTEMS, INC.

 	 
	 	By:  	/s/ John F. Nealon
 	 
	 	 	Name:  	John F. Nealon 	 
	 	 	Title:  	Senior Vice President, Business Development 	 
	 

B-1

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