ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
the date the last party signs as shown on the signature page hereto, by and
among Mentor Corporation, a Minnesota corporation, Mentor Ophthalmics, Inc., a
Massachusetts corporation, and Mentor Medical Inc., a Delaware corporation
(collectively "Seller") on the one hand, and Paradigm Medical Industries, Inc.,
a Delaware corporation ("Purchaser") on the other hand.
RECITALS
WHEREAS, Seller is engaged in the business of marketing and selling
ophthalmic products, including a cataract surgery system product line consisting
of the Mentor(TM) Phacoemulsification S.I.S.tem, the Odyssey(TM)
Phacoemulsification System, the Surg-E-Trol(R) System I and System II, and all
accessories thereto (collectively, the "Phaco" product line); and
WHEREAS, in accordance with the provisions of this Agreement, Purchaser
desires to purchase from Seller and Seller desires to sell to Purchaser certain
assets described herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties set forth in this Agreement, the parties hereto
agree as follows.
1. PURCHASE AND SALE.
1.1 Purchase and Sale of Assets. Subject to the terms and
conditions set forth in this Agreement, at the Closing (as defined in Section
1.4), Seller shall sell, transfer, assign, convey, delegate and deliver to
Purchaser, and Purchaser shall purchase and acquire from Seller, all of Seller's
right, title, obligation and interest in and to the assets (collectively, the
"Assets") which are used by Seller to develop, manufacture, market and sell the
Phaco product line and are owned by Seller or in which Seller has any right,
title or interest as of the Closing Date (as defined in Section 1.4). The Assets
include but are not limited to:
(a) Sales and Marketing. Copies (and originals if in
Seller's possession) of Seller's Phaco customer lists, advertising materials and
sales literature, sales booth graphics, ad slicks, artwork, un-filled purchase
orders and supporting documents, and other marketing information and records,
warranty and/or warranty policies and/or other records used exclusively for the
Phaco, which are in Seller's possession as of the Closing Date.
(b) Inventories. All inventories relating exclusively
to the Phaco product line, including finished goods and products, goods and
products in process and materials and supplies on hand and in transit, as of the
Closing Date.
(c) Intellectual Property. All patents, patent
applications, trade names, trademarks and copyrights used exclusively for the
Phaco product line. The list of Intellectual Property transferred hereunder is
set forth in Schedule 1.1(c) hereto.
(d) Registrations. All governmental registrations,
registration applications, temporary registrations, experimental use permits,
applications and emergency use exemptions used primarily for the Phaco product
line, including those listed on Schedule 1.1(d) hereto (the "Registrations").
(e) Material Contracts. All contracts, agreements and
licenses which are listed on Schedule 1.1(e), together with all consignment
contracts with customers, but excluding any such contracts that expire or are
terminated prior to Closing and such contracts where the Seller is unable to
obtain an assignment prior to the Closing (the "Contracts").
(f) Equipment. All machinery, tools, instruments and
personal property used exclusively in connection with the Phaco product line
(the "Equipment").
(g) Technical Information. All of the Seller's
technical information and data, including, but not limited to, know-how, trade
secrets, inventions, formulas, processes, designs, drawings, technology,
software (including source codes), databases, manufacturing and quality control
procedures and records, product composition data and specifications, packaging
specifications, material safety data sheets, customer specifications, product
standards, competitive samples and reports of analyses thereof, lab notebooks,
records of inventions, patent application drafts, and research and development
projects, materials, results and records, wherever located, used exclusively for
the Phaco product line ("Technical Information").
(h) Warranties. All manufacturers', vendors' and
suppliers' warranties, to the extent assignable, relating directly to the Assets
or the Phaco product line.
(i) Goodwill. The goodwill of Seller relating
directly to the Assets or the Phaco product line.
1.2 Excluded Assets. The Assets shall not include the
following (the "Excluded Assets"):
(a) Cash.
(b) Securities.
(c) Bank deposits.
(d) Accounts receivable.
(e) Assets, properties and rights of the Seller (i)
not currently used exclusively for the Phaco product line or (ii) currently used
exclusively for the Phaco product line but that are ancillary to the operation
of the Phaco product line, including, without limitation, any office equipment,
furniture and fixtures of the Seller.
(f) Any and all rights and assets, including without
limitation intellectual property rights, relating to product lines other than
the Phaco product line.
1.3 Purchase Price. The aggregate consideration for the
transfer to Purchaser of the Assets hereunder (the "Purchase Consideration")
shall consist of 485,751 shares of Purchaser's common stock, par value $.001 per
share (the "Common Shares"). Such number of Common Shares represents the result
of the following calculation: (a) the sum of $1,500,000, divided by (b)
$3.08800, which is the product of (i) 90%, times (ii) $3.43125, which is the
average closing price of Purchaser's common stock on the Nasdaq National Market
System (as reported in The Wall Street Journal) for the twenty trading days
ending on October 13, 1999. Certain agreements of the parties as to registration
of the Common Shares and related matters are set forth in the Registration
Rights Statements attached hereto as Exhibit A and by this reference made a part
hereof.
1.4 Closing. The consummation of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Seller
located at 000 Xxxxxx Xxxxx, Xxxxx Xxxxxxx, XX 00000 on October 22, 1999, at
11:59 p.m. local time or at such other time, date or place as Purchaser and
Seller may mutually agree upon (the "Closing Date").
1.5 Liabilities. Purchaser shall assume, pay, perform, defend
and discharge all liabilities and obligations relating to the Phaco product line
and the Assets which arise after the Closing Date and are based upon or arise
from any act, omission, transaction, circumstance, performance of services,
state of facts or other condition which occurred after the Closing Date.
Purchaser is not assuming or agreeing to pay or perform any liabilities or
obligations of Seller which existed on or before the Closing Date, including
without limitation any judgments, claims, actions or proceedings relating to the
Phaco product line or the Assets. Notwithstanding the foregoing, Purchaser
specifically assumes the following: (i) all of Seller's warranty obligations for
Phaco products previously sold; (ii) all of Seller's repair and maintenance
obligations for Phaco products previously sold; (iii) all liabilities and
obligations of the Seller under the Contracts and Registrations included in the
Assets; (iv) all accounts payable and accrued liabilities; (v) all liabilities
shown on the books and records of the business relating exclusively to the Phaco
product line as of the Closing Date; (vi) all liabilities or obligations to
third parties for personal injury, property damage, consequential damages,
punitive damages or incidental damages arising from any injury, event or damage
as a result of any product or good shipped, sold or manufactured by Purchaser or
by Seller pursuant to the Transition Services Agreement; (vii) all liabilities
or obligations to third parties with respect to the Intellectual Property; and
(viii) all obligations associated with open purchase orders on and as of the
Closing Date. All sales or transfer taxes, including but not limited to document
recording fees, transfer taxes, sales and excise taxes, arising out of or in
connection with the consummation of the transactions contemplated herein, shall
be paid by Purchaser. Purchaser acknowledges that Xomed, Inc. owns certain of
the accounts receivable for Phaco products previously sold by Mentor. In the
event of a customer dispute regarding a product for which Xomed, Inc. owns a
receivable, Purchaser will resolve the problem with Xomed, Inc.
1.6 Instruments of Conveyance and Transfer. Upon receipt of
the Purchase Consideration, Seller shall execute and deliver to Purchaser a Xxxx
of Sale with the appropriate schedules attached thereto that shall be reasonably
acceptable to Purchaser and necessary to effect the transfer to Purchaser of and
to vest in Purchaser a complete, valid and legal title and/or license to the
Assets.
1.7 Transitional Support Services. Concurrent with the
Closing, the parties will execute a Transition Services Agreement.
1.8 Limited License. Purchaser will acquire certain inventory
which displays the "Mentor" name and xxxx (the "Xxxx"). Seller grants to
Purchaser as of the Closing Date a limited license to use the Xxxx in an
informational sense only to identify the existing inventory transferred under
this Agreement and on any related advertising and promotional materials.
Purchaser agrees to comply with Seller's guidelines for use of the Xxxx, which
Seller will provide to Purchaser. Purchaser acknowledges that Seller is the
exclusive owner of the Xxxx. Purchaser agrees to refrain from any action which
is in any way inconsistent with Seller's ownership of the Xxxx, or which could
damage Seller's interest in the Xxxx or Seller's reputation, or to use the Xxxx
in connection with any other products. Seller retains the right to review and
pre-approve any written materials using the Xxxx.
2. REPRESENTATIONS AND WARRANTIES.
2.1 Mutual Representations and Warranties. Each party
represents and warrants as follows:
(a) Organization and Good Standing. It is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation. It is in good standing in each other state or
jurisdiction in which the ownership of its properties or where the conduct of
its business requires it to be qualified or registered.
(b) Authority and Status. It has full power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder, and to consummate the transactions contemplated hereby without the
necessity of any act or consent of any other entity. It has taken all necessary
and appropriate corporate action, including, if necessary, Board of Directors
consents with respect to the execution, delivery and performance by it of this
Agreement and each and every agreement, document and instrument provided for
herein. This Agreement and each and every agreement, document and instrument to
be executed, delivered and performed by each party in connection herewith,
constitute or will when executed and delivered constitute, the valid and legally
binding obligations of each party enforceable against it in accordance with
their respective terms, except as enforceability may be limited by applicable
equitable doctrines or by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect affecting the enforcement of creditors'
rights generally.
(c) No Finder or Brokers. Neither it, nor any party
acting on its behalf, has paid or has become obligated to pay any fee or
commission to any broker, finder or intermediary for, or on account of, the
transactions contemplated by this Agreement.
(d) No Conflict or Default. Neither the execution and
deliver of this Agreement nor compliance with the terms and provisions hereof,
including, without limitation, the consummation of the transactions contemplated
hereby, will violate any statute, regulation or ordinance of any governmental
authority or conflict with or result in the breach of any term, condition or
provision of its Articles of Incorporation or By-Laws, or of any material
agreement, deed, contract, mortgage, indenture, writ, order, decree, legal
obligation or instrument to which it is or may be bound, or constitute a default
(or an event which, with the lapse of time or the giving of notice, or both,
would constitute a default) thereunder.
(e) Litigation. There is no claim, litigation, suit
or proceeding, administrative or judicial, pending, or to its knowledge,
threatened, against it relating to this Agreement or the transactions
contemplated hereunder, at law or in equity, before any federal, state, local or
foreign court or regulatory agency or other governmental authority which could
result in the institution of legal proceedings to prohibit or restrain the
consummation or performance of this Agreement or the transactions contemplated
hereby or claim damages as a result of this Agreement or the transactions
contemplated hereby.
2.2 Representations and Warranties of Purchaser.
(a) Review of Documents. Purchaser has had the
opportunity to, and has reviewed to its satisfaction, all of the documents it
has requested prior to the Closing Date.
(b) Issuance of Common Shares. The common shares of
Purchaser to be issued to Mentor Corporation at the Closing (the "Common
Shares") are duly authorized and, upon issuance, will be validly issued, fully
paid and non-assessable, free and clear of any and all liens, claims and
encumbrances. The issuance of the Common Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") by reason of compliance with the provisions of Securities Act
Regulation D. The Common Shares, when registered under an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act") or
upon compliance with Securities Act Rule 144, and when authorized for trading
under the rules of the Nasdaq (as defined below), will be entitled to be traded
on the National Association of Securities Dealers Automated Quotation system
("Nasdaq"), and the holders of the Common Shares shall be entitled to all rights
and preferences accorded to a holder of Purchaser's common stock. The
outstanding common stock of Purchaser is currently quoted on the Nasdaq.
(c) No Conflicts. The execution, delivery and
performance of this Agreement by Purchaser and the consummation by Purchaser of
the transactions contemplated hereby and the issuance of the Common Shares to
Mentor Corporation do not and will not (i) result in a violation of Purchaser's
Articles or By-Laws, or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture, patent, patent license or instrument
to which Purchaser or any of its subsidiaries is a party, or result in a
violation of any federal, state, local or foreign law, rule, regulation, order,
judgment or decree (including Federal and state securities laws and regulations)
applicable to Purchaser or any of its subsidiaries or by which any property or
asset of Purchaser or any of its subsidiaries is bound or affected (except for
such conflicts, defaults, terminations, amendments, accelerations, cancellations
and violations as would not, individually or in the aggregate, have a material
adverse effect). Except for such filings as Purchaser has made or will make
prior to the Closing, Purchaser is not required under Federal, state, local or
foreign law, rule or regulation to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement, or issue and sell the Common Shares in accordance with the terms
hereof.
(d) SEC Documents; Financial Statements. The
outstanding common stock of Purchaser is registered pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
Purchaser has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Securities and Exchange Commission
("SEC") pursuant to the reporting requirements of the Exchange Act (all of the
foregoing, including filings incorporated by reference therein, being referred
to herein as the "SEC Documents"). Purchaser has delivered or made available to
Mentor Corporation true and complete copies of all SEC Documents (including,
without limitation, proxy information and solicitation materials) filed with the
SEC since December 31, 1996. Purchaser has not provided to Mentor Corporation
any material non-public information or any information which, according to
applicable law, rule or regulation, should have been disclosed publicly by
Purchaser but which has not been so disclosed. As of their respective dates,
Purchaser's Form 10-K for the year ended December 31, 1998, and all documents
subsequently filed with the SEC (the "Current Filings"), together with
Purchaser's second quarter 1999 earnings press release, dated September 1, 1999,
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder and other federal,
state and local laws, rules and regulations applicable to such Current Filings,
and none of the Current Filings contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Current Filings contain all
material information concerning Purchaser, and no event or circumstance has
occurred which would require Purchaser to disclose such event or circumstance in
order to make the statements in the Current Filings, taken as a whole, not
misleading on the date hereof or on the Closing Date but which has not been so
disclosed. The financial statements of Purchaser included in the Current Filings
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto at the time of filing.
Such financial statements were prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of Purchaser as
of the dates thereof and the results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(e) No Material Adverse Change. Since December 31,
1998, the date through which the most recent report of Purchaser on Form 10-K
has been prepared and filed with the SEC, a copy of which is included in the SEC
Documents, no material adverse effect has occurred or exists with respect to
Purchaser or its subsidiaries, except as otherwise disclosed or reflected in
other SEC Documents filed or press releases issued as of a date subsequent to
December 31, 1998.
(f) No Undisclosed Liabilities. Purchaser and its
direct and indirect subsidiaries have no liabilities or obligations not
disclosed in the SEC Documents, other than those liabilities incurred in the
ordinary course of Purchaser's or its subsidiaries' respective businesses since
December 31, 1998, which liabilities, individually or in the aggregate, do not
or would not have a material adverse effect on Purchaser or its direct or
indirect subsidiaries.
(g) No Undisclosed Events or Circumstances. No event
or circumstance has occurred or exists with respect to Purchaser or its direct
or indirect subsidiaries or their respective businesses, properties, prospects,
operations or financial condition, which, under applicable law, rule or
regulation, requires public disclosure or announcement by Purchaser but which
has not been so publicly announced or disclosed.
(h) No General Solicitation. Neither Purchaser, nor
any of its affiliates, or, to its knowledge, any person acting on its or their
behalf has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act of 1933, as amended
(the "Act")) in connection with the offer or sale of the Common Shares.
(i) No Integrated Offering. Neither Purchaser, nor
any of its affiliates, nor to its knowledge any person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would require
registration of the Common Shares under the Act.
2.3 Representations and Warranties of Seller.
(a) Title to the Assets. Except for permitted
encumbrances, Seller has good and marketable title and/or license to the Assets
free and clear of any pledges, liens, encumbrances, security interests,
equities, charges and restrictions of any nature whatsoever. The term "permitted
encumbrances" shall mean liens for taxes not due and payable.
(b) Litigation. There is no claim, litigation,
action, suit or proceeding, administrative or judicial, pending or to Seller's
knowledge threatened against Seller relating to the Phaco product line or the
Assets, at law or in equity, before any federal, state, local or foreign court,
or regulatory agency or other governmental authority.
(c) Limitation. EXCEPT FOR THE EXPRESS
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS SECTION 2.3: (i) NO
REPRESENTATION OR WARRANTY WHATSOEVER IS MADE BY SELLER, AND SELLER HEREBY
DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES IMPLIED AS TO THE CONDITION, VALUE
OR QUALITY OF THE ASSETS AND SPECIFICALLY DISCLAIMS WITH RESPECT TO THE ASSETS
ANY REPRESENTATIONS AND WARRANTIES OF VALUE, MERCHANTABILITY, USAGE OR FITNESS
FOR ANY PARTICULAR PURPOSE AND NON-INFRINGEMENT; AND (ii) THE ASSETS BEING
TRANSFERRED TO THE PURCHASER ARE CONVEYED ON AN "AS IS" AND "WHERE IS" BASIS,
AND PURCHASER SHALL RELY UPON ITS OWN EXAMINATION THEREOF.
(d) ADDITIONAL LIMITATIONS. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING:
(i) NONINFRINGEMENT. SELLER DOES NOT WARRANT
AND MAKES NO REPRESENTATION THAT PURCHASER'S EXERCISE OF THE RIGHTS ASSIGNED
UNDER THIS AGREEMENT IS OR WILL BE FREE FROM CLAIMS OF INFRINGEMENT OR
MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS, AND SELLER WILL
HAVE NO OBLIGATION WHATSOEVER TO INDEMNIFY PURCHASER AGAINST ANY SUCH CLAIM.
(ii) VALIDITY OR SCOPE. SELLER DOES NOT
WARRANT AND MAKES NO REPRESENTATION AS TO THE VALIDITY, ENFORCEABILITY, OR SCOPE
OF ANY OF THE INTELLECTUAL PROPERTY RIGHTS LICENSED TO PURCHASER PURSUANT TO THE
ASSIGNMENT MADE UNDER SECTION 1.1.
(iii) ENFORCEMENT. SELLER DOES NOT WARRANT
AND MAKES NO REPRESENTATION THAT ANY OF THE INTELLECTUAL PROPERTY RIGHTS
ASSIGNED TO PURCHASER PURSUANT TO SECTION 1.1 WILL BE FREE OF INFRINGEMENT OR
MISAPPROPRIATION, AS APPLICABLE, BY THIRD PARTIES, AND WILL HAVE NO OBLIGATION
TO COOPERATE IN ENFORCEMENT OF ANY SUCH INTELLECTUAL PROPERTY RIGHTS OR
OTHERWISE TAKE ACTION AGAINST THIRD PARTIES ALLEGED TO HAVE COMMITTED
INFRINGEMENT OR MISAPPROPRIATION.
(iv) PROSECUTION. SELLER WILL HAVE NO
OBLIGATION TO PROSECUTE, MAINTAIN, OR OTHERWISE SECURE INTELLECTUAL PROPERTY
RIGHTS, INCLUDING WITHOUT LIMITATION ANY PATENTS, PATENT APPLICATIONS, INVENTION
REGISTRATIONS, OR COPYRIGHT REGISTRATIONS, WITH RESPECT TO THE ASSETS ASSIGNED
TO PURCHASER PURSUANT TO SECTION 1.1.
(v) NO OTHER ASSIGNMENT OR LICENSES.
PURCHASER OBTAINS NO ASSIGNMENTS OR LICENSES UNDER ANY SELLER INTELLECTUAL
PROPERTY RIGHTS NOT SPECIFIED IN THIS AGREEMENT.
3. PURCHASER'S COVENANTS. So long as Seller holds any of the
Common Shares, Purchaser agrees to:
(a) Make and keep available at all times adequate current
public information, as those terms are understood and defined in Securities Act
Rule 144;
(b) File with the SEC in a timely manner all reports and other
documents required of Purchaser under the Securities Act and the Exchange Act;
(c) Furnish to Seller promptly upon its written request (i) a
written statement by Purchaser that it has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
and has been subject to these filing requirements for the past 90 days, (b) a
copy of Purchaser's most recent annual or quarterly report filed with the SEC,
and (c) any other reports and documents filed with the SEC by Purchaser that
Seller may reasonably request in order to sell the Common Shares without
registration under the Securities Act.
4. INDEMNIFICATION
4.1 Indemnification of Seller. Purchaser hereby agrees to
indemnify and hold Seller harmless from, against and in respect of (and shall on
demand reimburse Seller for):
(a) any and all loss, liability or damage resulting
from any untrue representation, breach of warranty or non-fulfillment of any
covenant or agreement by Purchaser contained herein or in any certificate,
document or instrument delivered to Seller hereunder;
(b) any and all debts, liabilities or obligations
relating to the Phaco product line or the Assets, accrued, absolute, contingent,
unliquidated or otherwise which arise after the Closing Date which are based
upon or arise from any act, omission, transaction, circumstance, performance of
services, state of facts or other condition which occurred after the Closing
Date, whether or not then known, due or payable;
(c) any and all debts, liabilities or obligations
arising from the Assumed Liabilities; and
(d) any and all actions, suits, proceedings, claims,
demands assessments, judgments, costs and expenses (including, without
limitation, legal fees and expenses) incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof or in enforcing this Agreement.
4.2 Indemnification of Purchaser. Seller hereby agrees to
indemnify and hold Purchaser harmless from, against and in respect of (and shall
on demand reimburse Purchaser for):
(a) any and all loss, liability or damage resulting
from any untrue representation, breach of warranty or non-fulfillment of any
covenant or agreement by Seller contained herein or in any certificate, document
or instrument delivered to Purchaser hereunder;
(b) any and all debts, liabilities or obligations
relating to the Phaco product line or the Assets accrued, absolute, contingent,
unliquidated or otherwise which arise on or before the Closing Date and are
based upon or arise from any act, omission, transaction, circumstance,
performance of services, state of facts or other condition which occurred or
existed on or before the Closing Date, whether or not then known, due or
payable, except for any such debts, liabilities or obligations arising from the
Assumed Liabilities; and
(c) any and all actions, suits, proceedings, claims,
demands assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof or in enforcing this Agreement.
4.3 Procedure for Indemnification. In the event any damages or
expenses are incurred by the indemnified party for which the indemnified party
would be entitled to indemnification hereunder, the indemnified party shall
promptly notify the indemnifying party in writing of such damages and expenses.
The indemnifying party agrees that it will promptly reimburse and pay the
indemnified party for such damages and expenses. If any claim for
indemnification hereunder is based upon an action or claim filed or made against
the indemnified party by a third party, then the indemnifying party shall have
the sole right to negotiate a settlement or compromise of any such action or
claim subject to the indemnified party's approval, which approval shall not be
unreasonably withheld or delayed, or to defend any such action or claim at the
sole expense or cost of the indemnifying party with counsel selected by the
indemnified party. Provided, however, that the indemnified party at its expense
shall have the right to have its counsel participate in such proceedings and any
compromise or settlement of any claim other than for money damages shall be
subject to the prior written consent of the indemnified party.
4.4 Time to Assert Claims. All claims for indemnification must
be asserted no later than one year after the Closing Date, provided, however,
that Mentor Corporation may assert claims for indemnification related to
Purchaser's representations and warranties set forth in Sections 2.2(b) through
2.2(i) and Purchaser's covenants set forth in Article 3, up to the applicable
statute of limitations.
4.5 Deductible. The Purchaser may make no claim against the
Seller for indemnification unless and until the aggregate amount of such claims
exceeds $20,000.00 (the "Deductible"), in which event the Purchaser may claim
indemnification for the amount of such claims in excess of the Deductible.
4.6 Limitation. The Seller's obligation for indemnity shall
only be up to a maximum aggregate liability of $225,000.00. In calculating any
amount of damages to be paid by the indemnifying party pursuant to this
Agreement, the amount of such damages will be reduced by all reimbursements
credited to or received by the indemnified party, relating to such damages, and
will be net of any tax benefits and insurance proceeds (after giving effect to
any premium increases or deductibles) received by the indemnified party with
respect to the matter for which indemnification is claimed.
4.7 Exclusive Remedy; Release.
(a) The indemnification provided pursuant to this
Agreement shall be the sole and exclusive remedy hereto for any losses as a
result of, with respect to or arising out of breach of this Agreement, or any of
the transactions or other agreements or instruments contemplated or entered into
in connection herewith (including, but not limited to, all Schedules attached or
referenced herein); provided, however, that such indemnification shall not be
the sole and exclusive remedy and shall in no way limit the rights of the
parties for fraud, willful breach, Purchaser's breach of the representations and
warranties set forth in Sections 2.2(b) through Section 2.2(i), or Purchaser's
failure to fulfill the covenants set forth in Article 3.
(b) Except as specifically provided in this Article
4, neither party nor its affiliates or representatives shall be liable to the
other party for, and (except as so provided) each party hereby releases and
discharges the other party and its affiliates and representatives from, any and
all losses incurred as a result of, with respect to or arising out of the
ownership or operation of the Assets.
5. CONFIDENTIALITY.
5.1 Confidential Information. The Confidentiality Agreement
between the parties dated August 30, 1999 shall remain in full force and effect
and shall be incorporated herein by this reference.
5.2 Public Announcements. For the period beginning with the
Closing Date and ending thirty (30) days thereafter, no public announcement may
be made by either party with regard to the transactions contemplated by this
Agreement without the prior written consent of both the Seller and the
Purchaser; provided that either party may make such disclosure to the extent
required by applicable law or regulation of any governmental agency or stock
exchange upon which the securities of such party are registered. For the one
month period following the Closing Date, the Seller and the Purchaser will
discuss any public announcements or disclosures concerning the transactions
contemplated by this Agreement with the other party prior to making such
announcements or disclosures.
6. CONDITIONS PRECEDENT TO OBLIGATIONS.
6.1 Conditions to Obligations of Purchaser. Each and every
obligation of Purchaser to be performed at the Closing shall be subject to the
satisfaction as of or before the Closing Date of the following conditions
(unless waived in writing by Purchaser):
(a) Representations and Warranties. The
representations and warranties of Seller set forth in Section 2 of this
Agreement shall have been true and correct when made and shall be true and
correct at and as of the Closing Date as if such representations and warranties
were made as of such date and time.
(b) Performance of Agreement. All covenants,
conditions and other obligations under this Agreement which are to be performed
or complied with by Seller shall have been fully performed and complied with at
or prior to the Closing Date, including the delivery of instruments and
documents as required herein.
(c) Absence of Governmental or Other Objection. There
shall be no pending or threatened lawsuit or any other legal or regulatory
proceeding challenging the transaction by any body or agency of the federal,
state or local government or by any third party and the consummation of the
transaction shall not have been enjoined, or threatened to be enjoined, by a
court of competent jurisdiction as of the Closing Date.
6.2 Conditions to Obligations of Seller. Each and every
obligation of Seller to be performed at the Closing shall be subject to the
satisfaction as of or before the Closing Date of the following conditions
(unless waived in writing by Seller):
(a) Representations and Warranties. The
representations and warranties of Purchaser set forth in Section 2 of this
Agreement shall have been true and correct when made and shall be true and
correct at and as of the Closing Date as if such representations and warranties
were made as of such date and time.
(b) Performance of Agreement. All covenants,
conditions and other obligations under this Agreement which are to be performed
or complied with by Purchaser shall have been fully performed and complied with
at or prior to the Closing Date, including the delivery of instruments and
documents as required herein.
(c) Absence of Governmental or Other Objection. There
shall be no pending or threatened lawsuit challenging the transaction by any
body or agency of the federal, state or local government or by any third party
and the consummation of the transaction shall not have been enjoined by a court
of competent jurisdiction as of the Closing Date.
7. DELIVERIES AT CLOSING. All transactions at the Closing shall be
deemed to take place simultaneously and no transaction at the Closing shall be
deemed to have been completed until all documents set forth herein have been
delivered by the parties hereto except as waived by the party to who such
document is to be delivered.
7.1 Obligations of Seller. At the Closing, Seller shall
deliver to Purchaser:
(a) such good and sufficient bills of sale,
assignments, deeds and other good and sufficient instruments of sale,
conveyance, transfer and assignment as shall be required or as may be
appropriate in order to effectively vest in Purchaser good and marketable title
to the Assets;
(b) Mentor Corporation's irrevocable proxy to
Purchaser's Board of Directors to vote the Common Shares for a period of one
year following the Closing Date; provided, however, that if during such one year
period Mentor Corporation sells any of such Common Shares, following such sale
the proxy shall terminate and be of no force and effect with respect to the
Common Shares which are sold; and
(c) such other instruments or documents as may be
reasonably requested by Purchaser or Purchaser's counsel to fully and
effectively convey the Assets to Purchaser in accordance with the provisions of
this Agreement.
7.2 Obligations of Purchaser. At the Closing, Purchaser
shall deliver to Seller:
(a) original share certificates (with the number of
and denomination of such certificates as reasonably requested by Seller),
representing the Common Shares registered in the name of Mentor Corporation.
(b) an opinion of Purchaser's counsel, dated the
Closing Date, reasonably satisfactory in form and substance to Seller.
(c) such other instruments or documents as may be
reasonably requested by Seller or Seller's counsel to fully and effectively
evidence Purchaser's compliance with the provisions of this Agreement.
8. MISCELLANEOUS.
8.1 Expenses. Each party to this Agreement shall bear its own
costs and expenses incurred in connection with the preparation, execution and
delivery of this Agreement and the transactions contemplated by this Agreement.
8.2 Notices. All notices, claims, certificates, requests,
demands and other communications under this Agreement shall be made in writing
and shall be delivered by hand or sent, postage prepaid by registered, certified
or express mail, or reputable overnight courier service, and shall be deemed
given when so delivered by hand or if mailed, three days after mailing, one
business day in the case of express mail or overnight courier service, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to Seller:
Mentor Corporation
Attention: Xxxxx XxXxxxxxx
000 Xxxxxx Xxxxx
Xxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Chief Counsel
Mentor Corporation
000 Xxxxxx Xxxxx
Xxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Purchaser:
Paradigm Medical Industries, Inc.
Attention: Xxxx Xxxxxxx
0000 Xxxx 0000 Xxxxx, Xxxxx X
Xxxx Xxxx Xxxx, XX 00000
8.3 Agreements and Waivers. This Agreement may be amended or
modified only by a written instrument executed by the parties to this Agreement.
No failure or delay on the part of any party in exercising any of its respective
rights hereunder upon any failure by any other party to perform or observe any
condition, covenant or provision herein contained shall operate as waiver
thereof, nor shall any single or partial exercise of any such rights preclude
any other or further exercise thereof or the exercises of any other right
hereunder.
8.4 No Assignment. The rights and obligations or each party
under this Agreement shall not be assigned prior to, on or after the Closing
without the written consent of the other party hereto. The obligations of Seller
and Purchaser hereunder shall be binding upon their respective successors and
permitted assigns.
8.5 Benefits. Nothing expressed or referred to in this
Agreement is intended or shall be construed to give any person or entity other
than the parties to this Agreement or their respective successors and permitted
assigns any legal or equitable right, remedy or claim under or in respect
thereof or any provision contained herein, it being the intention of the parties
that this Agreement is for the sole and exclusive benefit of such parties, and
such successors and permitted assigns of this Agreement, and for the benefit of
no other person or entity.
8.6 Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning of interpretation of this Agreement.
8.7 Entire Agreement. This Agreement, the Exhibits hereto, the
documents referred to herein, and the documents executed contemporaneously
hereto on the Closing Date constitute the entire Agreement of the parties with
respect to the subject matter of this Agreement and supercede all prior oral or
written agreements, understandings or representations relating to the subject
matter of this Agreement (except the August 30, 1999 Confidentiality Agreement
entered into between the parties).
8.8 Governing Law. This Agreement shall be construed in
accordance with, and governed by, the internal laws of the State of California,
without regard to its conflict of law provisions.
8.9 Choice of Forum. Any suit, action or proceeding against
any party hereto with respect to the subject matter of this Agreement must be
brought in the United States District Court for the Central District of
California, and each party hereby irrevocably submits to the exclusive
jurisdiction of such court for the purpose of any such suit, action, proceeding
or judgment. Each party hereto irrevocably waives any objection which either of
them may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement, brought as provided in
this Section, and hereby further irrevocably waives any claim that any such
suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. The parties hereto agree that exclusive jurisdiction of all
disputes, suits, actions or proceedings between the parties hereto with respect
to the subject matter of this Agreement lies in the court as hereinabove
mentioned. Service of process by mailing (by certified mail, return receipt
requested) or delivering a copy of such process to a party in accordance with
Section 8.2 hereof will be deemed good and sufficient service thereof.
8.10 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same Agreement.
8.11 Severability. If any provision of this Agreement or any
covenant, obligation or agreement contained herein is determined by a court of
competent jurisdiction to be invalid or unenforceable, such determination shall
not affect any other provision, covenant, obligation or agreement, each of which
shall be construed and enforced as if such valid or unenforceable provision were
not contained herein. Such invalidity or unenforceability shall not affect any
valid and enforceable application thereof, and each such provision, covenant,
obligation or agreement shall be deemed to be effective, operative, made,
entered into or taken in the manner to the full extent permitted by law.
8.12 Termination. This Agreement may be terminated and the
transactions herein contemplated may be abandoned at any time without liability,
but not later than the Closing Date:
(a) by mutual written consent of the parties; or
(b) by Seller or Purchaser if the Closing has not
occurred by November 15, 1999, through no fault of the party who initiates
termination.
8.13 Obligations After Termination. Termination of this
Agreement pursuant to section 8.12 will terminate all obligations of the parties
hereto, except for the obligations under Section 2.1(c) (Brokerage), Section 4
(Indemnity), and Section 5 (Confidentiality).
IN WITNESS WHEREOF, Seller and Purchaser have caused their respective,
duly authorized officers to execute this Agreement as of the day and year first
above written.
MENTOR CORPORATION PARADIGM MEDICAL INDUSTRIES, INC.
By /s/ Xxxxxxx X. Xxxxx By /s/ Xxxxxx X. Xxxxxx
-------------------- --------------------
Xxxxxxx X. Xxxxx, CEO and President Xxxxxx X. Xxxxxx, CEO and President
MENTOR MEDICAL INC.
By /s/ Xxxxx XxXxxxxxx
-------------------
Xxxxx XxXxxxxxx, Secretary/Treasurer
MENTOR OPHTHALMICS, INC.
By /s/ Xxxxx XxXxxxxxx
-------------------
Xxxxx XxXxxxxxx, Secretary/Treasurer
SCHEDULE 1.1(c)
Intellectual Property
See attached schedules of patents, patent applications, trademarks and trademark
applications.
Copyrights
All unregistered copyrights to written materials transferred hereunder.
SCHEDULE 1.1(d)
Registrations
o TUV Product Service Gmbh ISO 9001 and EN 46001 Certificate No. Q1 97 04
28718 006 (Norwell) (as it relates to the Phaco product line but not as
it relates to other products)
o EC Certificate No. G1 98 10 28718 005 (as it relates to the Phaco
product line but not as it relates to other products)
o FDA 510(k) No. K912904 (Odyssey Phacoemulsification System)
o FDA 510(k) No. K955245 (Meridian Phacoemulsification System)
o FDA 510(k) No. K974469 (Phacoemulsification SIStem Remote Control)
o FDA 510(k) No. K890622 (Surg-E-Trol System I and System II)
o International permits and approvals:
o Mentor SIStem: Argentina, Austria, Belgium, Brazil, Bulgaria, Canada,
Chile, Colombia, Denmark, Egypt, Finland, France, Germany, Greece,
Iceland, India, Ireland, Israel, Italy, Korea, Liechtenstein,
Luxembourg, Malaysia, Netherlands, Norway, Pakistan, Peru, Portugal,
Puerto Rico, Singapore, Spain, South Africa, Sweden, Switzerland,
Taiwan, Thailand, Turkey, United Kingdom, Venezuela. Pending: China
o Odyssey System: Russia.
o Surg-E-Trol System I and System II: Australia.
SCHEDULE 1.1(e)
Material Contracts
o October 4, 1999 License Agreement with Xomed, Inc.
o July 4, 1997 Software License Agreement with Dialogue Technology, Inc.
