Collateral Assignment of Partnership and LLC Interests between U.S. Medical Development, Inc. and Endocare, Inc.

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Summary

U.S. Medical Development, Inc. assigns its partnership and limited liability company interests to Endocare, Inc. as collateral for a $6.8 million loan. The assignment secures repayment of a promissory note and is governed by a related pledge agreement. If U.S. Medical Development defaults, Endocare may claim the interests. Both parties agree to cooperate in executing further documents as needed. The agreement is governed by California law.

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EX-10.3 6 f83946exv10w3.txt EXHIBIT 10.3 EXHIBIT 10.3 COLLATERAL ASSIGNMENT OF PARTNERSHIP INTERESTS AND LIMITED LIABILITY COMPANY INTERESTS This COLLATERAL ASSIGNMENT OF PARTNERSHIP INTERESTS AND LIMITED LIABILITY COMPANY INTERESTS (this "ASSIGNMENT") is made and entered into to be effective as of the 15th day of July, 2002 (the "EFFECTIVE DATE"), by and between U.S. Medical Development, Inc. a Nevada corporation (the "ASSIGNOR"), and Endocare, Inc., a Delaware corporation (the "ASSIGNEE"). RECITALS: WHEREAS, Assignor is the record and beneficial owner of general partnership interests, limited partnership interests, limited liability partnership interests and limited liability company membership interests set forth on Exhibit A hereto and incorporated in whole by this reference (collectively the "INTERESTS") in all of the entities which own medical devices which provide cryosurgical therapy for prostate cancer and microwave therapy for benign prostate hyperplasia in which Assignor has an ownership interest; and WHEREAS, Assignee has loaned Assignor $6,800,000 in order to purchase the a general and limited partnership interest in U.S. Lithotripsy, L.P. pursuant to the terms of that certain Partnership Interest Purchase Agreement dated June 28, 2002, by and among Assignor, HealthTronics Surgical Services, Inc. and Litho Management, Inc. (the "Purchase Agreement"). WHEREAS, the obligation of Assignor to Assignee is evidenced by that certain non-recourse Promissory Note dated July 15, 2002 payable to the order of Assignee in the principal amount of $6,800,000 (the "NOTE"). WHEREAS, the Assignor has pledged all of its right, title and interest in and to the Interests to Assignee to secure payment of all amounts due under the Note and certain other amounts pursuant to the terms of that certain Pledge Agreement of even date herewith by and between Assignor and Assignee (the "Pledge Agreement"). NOW, THEREFORE, the parties to this Assignment hereby agree as follows: 1. Collateral Assignment of Interests. In consideration of the execution and delivery by Assignee of a non-recourse promissory note in the amount of $6,800,000 payable to Assignee, the receipt of which is hereby acknowledged, Assignor hereby sells, transfers, assigns and conveys to Assignee as of the Effective Date all of Assignor's right, title and interest in and to the Interests and its capital accounts attributable to such Interests, free and clear of all liens, encumbrances, security interests, claims or options. Assignee hereby accepts this Interest as of the Effective Date. This Assignment shall be held by Assignee as collateral security for Assignor's obligations under the Note pursuant to the terms of the Pledge Agreement. 2. Future Cooperation. Assignor and Assignee mutually agree to cooperate at all times from and after the date hereof with respect to any of the matters described herein, and to execute any further deeds, bills of sale, assignments, releases, assumptions, notifications, or other documents as may be reasonably requested by the other party for the purpose of giving effect to, evidencing or giving notice of the transaction evidenced by this Assignment and the Pledge Agreement. 3. Indemnity. Assignor agrees to defend, indemnify and hold harmless Assignee of and from any and all claims, liabilities and causes of action arising out of the ownership of the Interests prior to Assignee foreclosing on the Interest pursuant to the terms of the Pledge Agreement. 4. Fax Signatures. Any counterpart of this Assignment may be executed via facsimile transmission. 5. Governing Law. This Assignment has been prepared, is being executed and delivered, and is intended to be performed, in the State of California, and the substantive laws of the State of California and the applicable federal laws of the United States of America shall govern the validity, construction, enforcement, and interpretation of this Agreement. IN WITNESS WHEREOF, the undersigned have executed this Assignment effective as of the Effective Date. ASSIGNOR: U.S. MEDICAL DEVELOPMENT. INC. By: /s/ John M. House -------------------------------- Name: John M. House Title: President ASSIGNEE: ENDOCARE, INC. By: /s/ Paul W. Mikus -------------------------------- Name: Paul W. Mikus Title: Chairman and Chief Executive Officer 2 EXHIBIT A INTERESTS 1. PLEDGED LLC INTERESTS. Interests in each limited liability company as follows: ENTITY PERCENTAGE OWNERSHIP DATE OF ISSUANCE OF INTEREST U.S. Microwave, LLC 22.7586% January 12, 2000 2. PLEDGED PARTNERSHIP INTERESTS. Interests in each general partnership, limited partnership, limited liability partnership or other partnership as follows:
TYPE OF PARTNERSHIP INTEREST PERCENTAGE DATE OF ISSUANCE ENTITY (E.G. GENERAL, LIMITED) OWNERSHIP OR FORMATION - ------ ----------------------- ---------- ---------------- North Texas PVP, LLP 1% * Atlantic Cryotherapy General 20% April 1, 2001 Atlantic Cryotherapy Limited 14.36% April 1, 2001 Central States Cryotherapy General 20% May 24, 2001 Central States Cryotherapy Limited 45% May 24, 2001 East Coast Cryotherapy General 20% September 1, 2001 East Coast Cryotherapy Limited 60% September 1, 2001 East Michigan Cryotherapy General 20% September 1, 2001 East Michigan Cryotherapy Limited 80% September 1, 2001 Georgia Cryotherapy General 20% June 1, 2001 Georgia Cryotherapy Limited 70% June 1, 2001 Kansas City Cryotherapy General * * Kansas City Cryotherapy Limited * * Mid-America Cryotherapy General 20% April 4, 2001 Mid-America Cryotherapy Limited - April 4, 2001 Rocky Mountain Cryotherapy General 20% November 1, 2001 Rocky Mountain Cryotherapy Limited 59% November 1, 2001 Sabin Cryotherapy General 20% February 27, 2002 Sabin Cryotherapy Limited 80% February 27, 2002 South Coast Cryotherapy General 20% April 17, 2002 South Coast Cryotherapy Limited 80% April 17, 2002
*To be provided as soon as possible A-1