Exhibit 10.4
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SUPPLEMENTAL AGREEMENT
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Pursuant to P. 7.2 of the Stipulation and Agreement of Settlement dated
February 22, 2005 (the "Stipulation") in Kinzinger v. Paradigm Medical
Industries, Inc. et al, Case No. 030922608 (the "Action"), this Supplemental
Agreement is made by and among the parties to the Stipulation.
1. All terms used in this Supplemental Agreement shall have the same
meanings as in the Stipulation.
2. Subject to the provisions of paragraph 3 of this Supplemental
Agreement, U.S. Fire Insurance Company ("U.S. Fire") has the option to terminate
the Settlement in the event that the aggregate "dollar value" of the claims held
by both (i) Class Members who would otherwise be entitled to participate as
members of the Class herein, but who timely and validly request exclusion,
except to the extent that they are and remain members of the class in the
Federal Class Action; and (ii) class members in the Federal Class Action who
would otherwise be entitled to participate as members of the class therein, but
who timely and validly request exclusion, except to the extent that they are and
remain members of the Class in this Action, equals or exceeds $250,000. The
"dollar value" of a claim shall be the difference between the price that the
individual or entity paid for the security or securities and the greater of (i)
the actual sales price of the security or securities or (ii) the average price
of the security or securities for the ninety (90) day period immediately
following the end of the respective class period. For purposes of matching
purchase and sales of securities, the securities purchased first during the
respective class period will be matched with the first sales of those securities
after the commencement of the respective class period.
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3. It is expressly understood and agreed that the only persons and
entities who may submit requests for exclusion at this time are those persons
and entities who are members of the Class, i.e., those persons who purchased or
acquired Series E convertible preferred stock directly from Paradigm Medical
Industries, Inc. ("Paradigm") in a private placement transaction that closed on
or about July 11, 2001, and who are not excluded by the definition of the Class
(i.e., the Defendants; any director, officer, parent, subsidiary, or affiliate
of Paradigm; members of the immediate families (parents, spouses, siblings, and
children) of each of the Individual Defendants; Innovative Optics, Inc; any
purchaser of the securities of Paradigm between April 17, 2000 and November 4,
2002, inclusive who is and remains a class member in the Federal Class Action,
to the extent such persons file a claim related to the Series E convertible
preferred stock in the Federal Class Action; any entity in which any excluded
person has a controlling interest; and their legal representatives, heirs,
successors, and assigns) and the terms of this Supplemental Agreement apply only
to requests for exclusion submitted by such members of the Class.
4. The parties shall request that the Order for Notice and Hearing
provide that requests for exclusion from the Class in this Action must be
postmarked at least fourteen (14) calendar days prior to the Settlement Fairness
Hearing date. Upon receiving any request(s) for exclusion pursuant to the
Notice, the Claims Administrator shall promptly notify Plaintiffs' Settlement
Counsel and counsel for Defendants and counsel for U.S. Fire of such request(s)
for exclusion.
5. If U.S. Fire elects to exercise the option set forth in paragraph 2
of this Supplemental Agreement, written notice of such election must be provided
to Plaintiffs' Settlement Counsel within seven (7) calendar days of the date
U.S. Fire is provided written notice of all requests for exclusion submitted in
both this Action and the Federal Class Action.
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6. In the event that U.S. Fire provides a written notice of its
termination of the Settlement pursuant to paragraph 5 hereof, U.S. Fire may
withdraw its termination by providing written notice of such withdrawal of its
termination to Plaintiffs' Settlement Counsel no later than 5:00 P.M. Eastern
Time on the day prior to the Settlement Hearing, or by such later date as shall
be agreed upon in writing as between Plaintiffs' Settlement Counsel and counsel
for U.S. Fire.
7. If U.S. Fire elects to terminate the Settlement pursuant to
paragraph 2 of this Supplemental Agreement, Plaintiffs' Settlement Counsel may,
within five (5) calendar days of receipt of such notice of termination (or such
longer period as shall be agreed upon in writing between Plaintiffs' Settlement
Counsel and Counsel for U.S. Fire), review the validity of any request for
exclusion and may attempt to cause retraction of any request for exclusion. If,
within the five (5) day period (or longer period agreed upon in writing),
Plaintiffs' Settlement Counsel succeed in causing the filing of retractions of a
sufficient number of requests for exclusion such that the number of shares
represented by the remaining requests for exclusion does not constitute grounds
for termination as specified in paragraph 2 above, then any termination of the
Settlement by U.S. Fire shall automatically be deemed to be a nullity. To
retract a request for exclusion, a Class Member must file a written notice with
the Court stating the person's or entity's desire to retract his, her or its
request for exclusion and that person's or entity's desire to be bound by any
judgment or settlement in this Action; provided, however, that the filing of
such written notice may be effected by Plaintiffs' Settlement Counsel.
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8. If U.S. Fire elects to terminate the Settlement in accordance with
paragraph 2 of this Supplemental Agreement and such termination is not nullified
in accordance with paragraph 7 of this Supplemental Agreement, the Stipulation
shall be terminated and the provisions of P. 7.6 of the Stipulation shall apply.
9. The parties hereto intend that this Supplemental Agreement shall not
be filed with the Court prior to the deadline for submitting exclusion requests,
unless a dispute arises as to its terms.
DATED: February 22, 2005
THE XXXXX LAW FIRM, P.A. P.C.
By: /s/Xxxxxxxx Xxxxx
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Xxxxxxxx Xxxxx, Esq.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Plaintiffs Settlement Counsel
XXXXX, XXXXX & DODGE, P.C.
By: /s/Xxxx X. Xxxxxxxx
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Xxxxx X. Xxxxx
Xxxx X. Xxxxxxxx
00 Xxxx Xxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Counsel for Defendants
XXXXXXX XXXXXXXX & XXXX LLP
By: /s/Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
00 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Counsel for U.S. Fire Insurance Company
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