Exhibit 10.2
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ACQUISITION EXHIBIT 2.1
ESCROW AGREEMENT
This Acquisition Escrow Agreement (this "Escrow Agreement") dated as of
January 31, 2002, entered into by and among PARADIGM MEDICAL INDUSTRIES, INC., a
Delaware corporation ("Purchaser"), INNOVATIVE OPTICS, INC., a Georgia
corporation ("Seller"), XXXXXX XXXXXXXX INVESTMENTS, L.P., the majority
shareholder of Seller ("Shareholder"), and MACKEY PRICE & XXXXXXXX, a Utah
professional corporation (the "Disbursing Agent") (Purchaser, Seller,
Shareholder and Disbursing Agent, collectively, the "Parties").
W I T N E S S E T H :
WHEREAS, prior to the execution of this Escrow Agreement, Paradigm,
Seller and Shareholder have entered into an Asset Purchase Agreement of even
date herewith (the "Asset Purchase Agreement"); and
WHEREAS, the Asset Purchase Agreement contemplates the execution of
this Escrow Agreement for the purposes stated herein and therein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Terms Defined. The terms defined in the Asset Purchase Agreement
shall for all purposes of this Escrow Agreement have the meanings specified in
the Asset Purchase Agreement, unless the context expressly or by necessary
implication otherwise requires.
ARTICLE 2
ESTABLISHMENT AND DISTRIBUTION OF ESCROW
2.1 Escrow Account. Pursuant to the provisions of Section 2.1(a)(ii) of the
Asset Purchase Agreement
(a) Purchaser shall deliver to the Disbursing Agent no later than 10:00
a.m. (Mountain Standard Time) on the Closing Date, one-half of 1,272,825 shares
of Paradigm Common Stock (the "Escrowed Stock"), or 636,412 shares, that
Purchaser is to issue to Seller at Closing pursuant to Section 2.1(a). During
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the period of time that the Escrowed Stock remains in escrow, the board of
directors of Purchaser shall have the right to vote the same, and any dividends
in respect thereto (the "Escrowed Dividends") shall be paid into escrow.
2.2 Distribution of Escrow Account. The Escrow Account shall be distributed as
follows:
(a) Purchaser shall make best efforts to implement, within ninety (90)
days after Closing, Phase I of the Blade Price Reduction Program as prepared by
Xxxx Xxxxxx and as described in Attachment 1 to Exhibit 2.1 of the Agreement.
Immediately after such ninety (90) day period, the Disbursing Agent shall
disburse three-fourths of the shares in escrow, or 477,309 shares, to Seller
unless Purchaser has certified that Purchaser has implemented Phase I of the
Blade Price Reduction Program and, despite best efforts, is unable to
manufacture microkeratome blades at a materials cost of $29.25 or less per
blade. If Purchaser certifies that implementation of Phase I of the Blade Price
Reduction Program has resulted in a materials cost that exceeds $29.25 per
blade, and such certification is not disputed by Seller, the number of escrowed
shares disbursed to Seller shall be reduced by three hundred (300) shares for
every cent ($0.01) the materials cost per blade exceeds $29.25. If Seller
disputes Purchaser's certification, the dispute shall be resolved in accordance
with Section 2.3 of the Escrow Agreement.
(b) Purchaser shall make best efforts to implement, within six (6)
months after Closing, Phase II of the Blade Price Reduction Program as prepared
by Xxxx Xxxxxx and as described in Attachment 1 to Exhibit 2.1 of the Agreement.
Immediately after such six (6) month period, the Disbursing Agent shall disburse
the remaining shares in escrow to Seller unless Purchaser has certified that
Purchaser has implemented Phase II of the Blade Price Reduction Program and,
despite best efforts, is unable to manufacture microkeratome blades at a
materials cost of $17.25 or less per blade. If Purchaser certifies that
implementation of Phase I of the Blade Price Reduction Program has resulted in a
materials cost that exceeds $17.25 per blade, and such certification is not
disputed by Seller, the number of escrowed shares disbursed to Seller shall be
reduced by three hundred (300) shares for every cent ($0.01) the materials cost
per blade exceeds $17.25. If Seller disputes Purchaser's certification, the
dispute shall be resolved by arbitration in accordance with Section 2.3 of this
Escrow Agreement.
2.3 Arbitration of Dispute Concerning Purchaser's Certification. Seller may
dispute Purchaser's certification by giving a written notice to the Purchaser
and to the Disbursing Agent. Seller shall state its reasons for such dispute in
said notice. If the Seller and Purchaser are unable to resolve the dispute
within 30 days after such dispute notice is given to Purchaser, such dispute
shall be submitted for resolution to an independent accounting firm jointly
selected by Seller and Purchaser. If the Seller and Purchaser are unable to
agree upon such accounting firm within fifteen days after the end of the 30-day
period referred to in the preceding sentence, then such matter shall be
submitted for resolution to the accounting firm of KPMG LLP. KPMG LLP or the
independent accounting firm to whom the dispute is submitted for resolution is
hereinafter referred to as the "Arbiter." The Arbiter shall gather information
in such manner as it determines, in its sole discretion and judgment, is fair
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and appropriate and the Arbiter shall not be governed by the rules of the
American Arbitration Association or any other published rules generally
governing arbitration. The determinations of the Arbiter shall be final and
binding for all purposes under this Agreement. The Arbiter shall allocate
responsibility for paying its fees and expenses between the parties in a manner
that reflects the Arbiter's resolution of the matters in dispute.
The parties agree that the determination of the Arbiter and award, if any, may
be entered with any court having jurisdiction and the determination and award,
if any, may then be enforced among the parties, without further evidentiary
proceedings, as if entered by a court at the conclusion of a judicial proceeding
in which no appeal was taken.
By agreeing to arbitrate the dispute, the Parties are giving up any rights they
might possess to have the dispute litigated in a court or jury trial and
judicial rights to discovery and appeal. If a Party refuses to submit to
arbitration by the Arbiter after agreeing to this provision, such Party may be
compelled to arbitrate under the authority of Utah law.
ARTICLE 3
MISCELLANEOUS
3.1 Termination. This Escrow Agreement shall terminate in the event of and upon
termination of the Asset Purchase Agreement.
3.2 Prior Agreements; Modifications. This Escrow Agreement and the Asset
Purchase Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof, and shall supersede all prior agreements,
documents, or other instruments with respect to the matters covered hereby. This
Escrow Agreement may be amended by an instrument in writing signed by each of
the Parties.
3.3 Captions and Table of Contents. The captions and table of contents in this
Escrow Agreement are for convenience only and shall not be considered a part of
or affect the construction or interpretation of any provision of this Escrow
Agreement.
3.4 Governing Law. The terms of this Escrow Agreement shall be governed by, and
interpreted and construed in accordance with the provisions of, the laws of the
State of Delaware without regard to its conflicts of law principles.
3.5 Counterparts. This Escrow Agreement may be executed in any number of
counterparts, each of which, when so executed, shall constitute an original copy
hereof.
3.6 Severability. If any clause, provision, or section of this Escrow Agreement
is ruled illegal, invalid, or unenforceable by any court of competent
jurisdiction, the invalidity or unenforceability of such clause, provision, or
section shall not affect any of the remaining provisions hereof.
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3.7 Notices. Any notice, request, instruction, or other document to be given
hereunder shall be in writing and shall be transmitted by certified or
registered mail, postage prepaid, by reputable express courier, or by facsimile
transmission. The addresses or facsimile telephone numbers to which such
communications shall be sent are as follows:
If to Seller or Shareholder:
Innovative Optics, Inc.
00000 Xxxxx 00xx Xxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Chief Executive Officer
With a copy to:
Wright, Robinson, Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxx, III, Esq.
If to Purchaser:
Paradigm Medical Industries, Inc.
0000 Xxxxx 0000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Chairman and
Chief Executive Officer
Facsimile Number: (000) 000-0000
With a copy to:
Xxxxxx, Price & Xxxxxxxx
000 Xxxxxxxx Xxxxx II
00 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
If to the Disbursing Agent:
Xxxxxx, Price & Xxxxxxxx
000 Xxxxxxxx Xxxxx II
00 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
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or to such other address or facsimile telephone number as any party may from
time to time designate to the others in writing.
3.8 Waiver. The performance of any covenant or agreement or the fulfillment of
any condition of this Escrow Agreement by the Parties may be expressly waived
only in writing by the other parties. Any waiver hereunder shall be effective
only in the specific instance and for the purpose for which given. No failure or
delay on the part of the Parties in exercising any right, power, or privilege
under this Escrow Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power, or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power,
or privilege.
3.9 Rights of Disbursing Agent in the Event of Disputes. If Purchaser, Seller,
Disbursing Agent or any other person or entity disagrees on any matter connected
with this Escrow Agreement, the Disbursing Agent: (i) will not have to settle
the matter, (ii) may wait for a settlement by appropriate agreement, arbitration
decision, legal proceedings or other means the Disbursing Agent may require, and
in such event the Disbursing Agent will not be liable for damages caused as a
result thereof, (iii) will be entitled to such reasonable compensation for
services, costs and attorney's fees as the Arbiter under Section 2.3 above or a
court of competent jurisdiction may award if the Disbursing Agent intervenes in
or is made a party to any legal proceedings, (iv) shall be entitled to file an
interpleader action and deposit the Escrowed Stock (or any portion thereof) or
any other item held by the Disbursing Agent pursuant to this Escrow Agreement
with an appropriate state or Federal court in Salt Lake City, Utah.
[THE SPACE FROM HERE TO THE END OF THE PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties hereto, intending to be legally
bound hereby, has duly executed this Escrow Agreement as of the date first
written above.
PURCHASER:
PARADIGM MEDICAL INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Chairman
and Chief Executive Officer
SELLER:
INNOVATIVE OPTICS, INC.
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Chief Executive
Officer
SHAREHOLDER:
XXXXXX XXXXXXXX INVESTMENTS, L.P.
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Managing Partner
DISBURSING AGENT:
MACKEY PRICE & XXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxx, President
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Xxxxxxx X. Xxxxxx, President
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