TRANSITION SERVICES AGREEMENT
This Transition Services Agreement (the "Transition 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, concurrent with the execution and delivery of this Transition
Agreement, Seller is selling and Purchaser is purchasing 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)
pursuant to that certain Asset Purchase Agreement, of even date herewith,
between Seller and Purchaser (the "Asset Purchase Agreement"); and
WHEREAS, Purchaser has requested and Seller has agreed to provide
certain transition services after the Closing subject to the terms and
conditions of this Transition Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Definitions. All capitalized terms used in this Transition Agreement
which are not otherwise defined herein shall have the meaning set forth for such
term in the Asset Purchase Agreement.
2. Cooperation of the Parties. Purchaser has requested Seller to
perform the Services (defined below) to assist Purchaser in its efforts to
maintain the CE on the acquired products. To help Purchaser achieve this result
and to minimize any disruption to the ongoing operations of Seller, the parties
agree to cooperate in good faith and shall direct their respective employees to
work with the representatives of the other party and to provide such information
and other assistance as may be reasonably required in order to fulfill the terms
of this Transition Agreement.
3. Access to Facilities, Assets and Personnel. During the term of this
Transition Agreement, Seller shall:
(a) Allow Purchaser's employees, agents and contractors to
enter onto the premises of Seller as needed, following reasonable prior notice
and during normal business hours, or such other time or times as the parties may
mutually agree, for the purpose of identifying the Assets, utilizing the Assets
for the operation of the business, and arranging for the relocation of the
Assets (provided that Purchaser shall be solely responsible for the costs of
shipping any such Assets); and
(b) Allow Purchaser's employees, agents and contractors to
have reasonable access to employees who remain employed by Seller having
knowledge or information relevant to the Assets, provided that such access shall
not unreasonably interfere with the continued performance of such employees'
duties for Seller. Seller shall instruct such employees to cooperate fully with
Purchaser. Access to Seller employees shall include the opportunity to hold in
person meetings at the facilities of either Seller or Purchaser, provided that
Purchaser shall reimburse Seller employees for any expenses reasonably incurred
by such employees related to travel undertaken at Purchaser's request, and
Seller shall allow such employees the necessary and reasonable time off from
work for such travel.
4. Transition Services. During the term of this Transition Agreement, Seller
shall use commercially reasonable efforts to provide on behalf of Purchaser the
services set forth in Attachment "A" (the "Services"). The Services shall be
performed in a timely and professional manner consistent with service and
quality levels maintained by Seller prior to Closing. Purchaser acknowledges
that Seller's ability to manufacture products is dependent upon circumstances
that are outside of Seller's control, including the availability of materials
and components, timing of delivery of such items to Seller, and the willingness
of personnel to remain employed by Seller.
5. Key Employees. On or before October 18, 1999, Purchaser will provide
Seller with a list of Key Employees to be attached hereto as Exhibit "B." Seller
will use its best efforts to retain the Key Employees pursuant to the
termination schedule set forth therein. "Best efforts" shall mean (i) the
continuation of the retention packages which Seller previously offered to the
Key Employees through termination hereunder, and (ii) not terminating or
decreasing the compensation or benefits of any Key Employee except, in each
case, for good cause and, except in an emergency, with Purchaser's consent,
which consent will not be unreasonably withheld or delayed. In the event the
termination schedule changes, Purchaser will notify Seller as soon as practical,
and in any case, Purchaser will be responsible for paying the Key Employees for
their final two weeks of employment, regardless of whether they received two
weeks notice.
6. Compensation. Purchaser shall reimburse Seller for: (i) incremental,
out-of-pocket costs incurred by Seller in providing the Services and such other
cooperation and assistance provided by Seller pursuant to this Transition
Agreement; (ii) labor costs, which will be based on an hourly rate that reflects
the actual salary and benefits for those Key Employees providing Services; (iii)
retention benefits for Key Employees accruing between October 22, 1999 and each
Key Employee's termination date; and (iv) severance for Key Employees which
accrues after October 22, 1999. Purchaser shall not be responsible for: (i) any
retention benefits accrued before October 22, 1999, for any of Seller's
employees; (ii) any expenses relating to Seller's facilities for any
time-period; or (iii) severance for any Seller employee accrued before October
22, 1999. Seller shall submit a monthly invoice for Services rendered during the
previous calendar month. Each monthly invoice shall include a detailed
accounting of charges and expenses. Purchaser shall remit payment within thirty
days from receipt of each monthly invoice.
7. Compliance with Policies and Procedures. While on the premises of
Seller, Purchaser's employees, agents and contractors shall observe all rules,
policies and procedures applicable to the employees of Seller working at such
site.
8. Continuation of Facilities and Compliance with Law. Seller shall
maintain in effect, at its own expense, all leases relating to the facilities,
offices and equipment required to provide the Services, and shall, as available
resources permit, maintain the same in a reasonable state of repair and
operation consistent with past practices and in compliance with all laws, rules
and regulations, including, but not limited to, the Occupational Safety and
Health Act of 1970, as amended, and all Environmental Laws.
9. Confidentiality. The parties acknowledge that confidential
information belonging to a party may be disclosed to the other parties'
employees, agents and contractors as a result of the activities contemplated by
this Transition Agreement. Each party agrees that the terms of the
Confidentiality Agreement, dated August 30, 1999 by and between Seller and
Purchaser (the "Confidentiality Agreement") shall apply to any confidential
information disclosed pursuant to this Transition Agreement and each party shall
cause its employees or contractors to comply with the terms thereof.
10. Status. Seller shall provide the Services as an independent
contractor and Seller's employees shall not for any purpose act as employees or
agents of Purchaser.
11. Indemnification. Purchaser shall indemnify and hold harmless
Seller, and the officers, directors, employees, agents, successors and assigns
of Seller, from and against any liabilities, losses, damages, costs and expenses
(including reasonable attorney's fees) ("Damages") incurred by Seller arising
out of or related to (i) the use or occupation of the premises or any facilities
or equipment of Seller by any employees, agents or contractors of Purchaser, and
(ii) any acts or omissions by any employee, agent or contractor of Purchaser,
except and to the extent such Damages are attributable to the negligence or
misconduct of Seller.
12. Term and Termination. This Transition Agreement shall commence on
the Closing Date and terminate on November 30, 1999. Purchaser may earlier
terminate this agreement upon written notice to Seller subject only to
completion of its obligations in this Transition Agreement. Purchaser shall have
no responsibility for costs incurred after termination in connection with the
Services. Seller's sole responsibility is to perform the Services specified
herein, in the manner described herein, up to the termination date; Seller shall
have no responsibility for maintaining the CE xxxx on the products during the
term of this Transition Agreement or thereafter.
13. Independent Sales Representatives and Distributors. The parties
acknowledge and agree that the agreements between Seller and its Independent
Sales Representatives ("ISRs") and International Distributors ("Distributors")
have not been assigned to, and no obligations arising under those agreements
will be assumed by Purchaser. In order to facilitate Seller's exit from the
business, Purchaser will continue to sell Phaco products to those Distributors
identified by Seller through and including December 31, 1999.
14. General Provisions. Except for the Asset Purchase Agreement and any
documents reference therein and the Confidentiality Agreement, this Transition
Agreement is the entire agreement between the parties relating to the subject
matter hereof, superceding any and all prior agreements between the parties.
This Transition Agreement may not be amended except by a written agreement
signed by an authorized representative of each party, and is for the benefit of
the parties and their permitted assigns. It is not intended to create a benefit
for any third parties.
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
ATTACHMENT A
Transition Services
I. Customer Service Functions:
Receive and process customer orders, provide technical customer
support, including complaint handling and Medical Device Reporting as
requested by Purchaser.
II. Logistics, Distribution and Inventory Control:
In response to customer orders, ship products to such customers and
also process returns, maintain consignment inventory records, maintain
customer master and item master files, as directed by Purchaser. Upon
request from Purchaser, pack and ship to Purchaser the remaining
product inventory located at Seller's Norwell and Rockland facilities.
III. Systems Maintenance and Support:
Consistent with available resources, maintain and operate all systems,
equipment and facilities required to perform the Services, including
but not limited to voice and data networks, and desktop applications;
provided that Seller shall not be required to purchase additional
hardware or software nor shall it be required to employ additional
personnel to maintain or support the systems, equipment or facilities.
IV. Manufacturing and Repair Operations:
Utilizing materials and components provided by Purchaser, Seller will
use commercially reasonable efforts to manufacture up to 20
phacoemulsification SIStems (subject to the available resources and
access to available materials and components) and repair products to
the same standards, specifications and quality as previously maintained
by Seller.
V. Notifications:
Notify all current Phaco-related vendors of the acquisition and further
notify vendors in writing that ownership to any Phaco inventory in
their possession has been transferred to Purchaser under this
Agreement.
