## Facts

- BioLife Solutions, Inc. (formerly Cryomedical Sciences, Inc.) sold substantially all assets of its cryosurgical business to Endocare, Inc. for cash and Endocare common stock.
- In a related Registration Rights Agreement, Endocare promised to file an SEC registration statement within a specified period to permit BioLife to resell the stock lawfully.
- BioLife expected to sell the stock promptly after registration to obtain cash.
- Endocare refused to file the registration statement by the contractual deadline, asserting BioLife materially breached the asset sale by failing to deliver a complete set of patent files within the specified time.
- Although Endocare characterized the breach as broader, the dispute largely centered on one patent file connected to potential infringement concerns.
- After Endocare’s refusal to register, Endocare experienced accounting and financial problems; its stock price fell sharply and the stock was later delisted.
- BioLife sued for breach of the Registration Rights Agreement, seeking specific performance and, alternatively, money damages.
- Following trial, the court issued a post-trial opinion addressing whether Endocare’s performance was excused and the proper measure of damages.

## Issues

1. Whether BioLife’s late or incomplete delivery of patent files was a material breach that excused Endocare’s duty to file the registration statement.
2. If Endocare breached, what measure of expectation damages properly values BioLife’s lost ability to sell the shares when registration should have occurred.

## Decision

- The court held BioLife’s failure to deliver all patent files within the contractual period was not a material breach.
- Because there was no excusing material breach, Endocare’s refusal to timely file the registration statement was a breach of the Registration Rights Agreement.
- The court awarded BioLife money damages measured by reference to the market price of Endocare shares over five consecutive trading days beginning when BioLife first could have sold the shares had registration been timely filed.

## Legal Principles

- A party is excused from performance only if the counterparty’s breach is material; a slight breach may support damages but does not discharge the other party’s duties.
- Materiality is a fact-intensive inquiry that considers, among other factors: deprivation of expected benefit, adequacy of compensation, risk of forfeiture, likelihood of cure, and good-faith conduct.
- Contract damages seek to place the injured party in the position it would have occupied had the contract been performed.
- For failure to register stock, a market-price-based measure may be used to approximate the value the plaintiff would have realized; a short multi-day trading window can reduce distortion from single-day volatility and avoid speculative optimal-timing assumptions.

## Conclusion

The court found Endocare’s registration obligation was not excused because BioLife’s patent-file shortfall was not material, and it awarded expectation damages based on a five-trading-day market-price period starting when timely registration would have first allowed lawful resale.


BioLife Solutions, Inc. v. Endocare, Inc., 838 A.2d 268 (Del. Ch. 2003)