Exhibit 10.39
ASSET PURCHASE AGREEMENT WITH MENTOR
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 Xxxxxxx X. Xxxxx BY Xxxxxx X. Xxxxxx
---------------- ----------------
CEO and President CEO and President
MENTOR MEDICAL INC.
BY Xxxxx XxXxxxxxx
---------------
Secretary/Treasurer
MENTOR OPHTHALMICS, INC.
BY 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 A
--------------------------------------------------------------------------------
PATENTS ISSUED OPHTHALMIC FOREIGN AND DOMESTIC ISSUED PHACO PATENTS
Sorted by Patent Name and Country
September 28, 1999
--------------------------------------------------------------------------------
OPHTHALMIC FOREIGN AND DOMESTIC ISSUED PATENTS
PATENT NO. LONG MATTER COUNTRY INVENTORS ISSUANCE
NAME DATE
APPLICATION INTERNAL INTERNAL OWNER
DATE REFERENCE 4 ORGANIZATION LEVEL 2
----------------------------------------------------------------------------------------------------------------
5,580,347 CONTROLLING OPERATION OF US Xxxxx Xxxxxxx 12/3/96
HANDPIECES DURING SURGERY
9/15/94 F&R 2888/16001 Mentor Ophthalmics, Inc. Mentor Ophthalmics, Inc.
----------------------------------------------------------------------------------------------------------------
5,910,110 CONTROLLING PRESSURE IN US Xxxxx Xxxxxxxx 6/8/99
THE EYE DURING SURGERY
6/7/95 F&R 02888/20001 Mentor Ophthalmics, Inc. Mentor Ophthalmics, Inc.
SCHEDULE B
--------------------------------------------------------------------------------
PATENTAPPS OPHTHALMIC FOREIGN AND DOMESTIC PHACO PATENT APPLICATIONS
Sorted by Patent Name and Country
September 29, 1999
--------------------------- ----------------------------------------------------
CONFIDENTIAL INFORMATION--TRADE SECRET
SCHEDULE C
--------------------------------------------------------------------------------
TRADEMARKREG OPHTHALMIC FOREIGN AND DOMESTIC PHACO TRADEMARK REGISTRATIONS
Sorted by Trademark Name and Country
September 28, 1999
--------------------------------------------------------------------------------
OPHTHALMIC FOREIGN AND DOMESTIC ISSUED PATENTS
LONG MATTER REGISTRATION COUNTRY OWNER REGISTRATION CLASS SECTION RENEWAL INTERNAL INTERNAL
NAME NUMBER DATE 8/15 ORGANIZATION LEVEL 2 REFERENCE 4
------------------------------------------------------------------------------------------------------------------------------------
INLAY 2,234,942 US Mentor 3/23/99 10 3/23/2009 Mentor Legal Dept.
Corporation Ophthalmics, Inc.
SURG-E-TROL 1,618,632 US Mentor 10/23/90 10 10/23/2000 Mentor Legal Dept.
Ophthalmics, Inc. Ophthalmics, Inc.
SCHEDULE D
TRADEMAPP OPHTHALMIC DOMESTIC AND FOREIGN PHACO TRADEMARK APPLICATIONS
AND UNREGISTERED TRADEMARKS
Sorted by Trademark Name and Country
September 28, 1999
--------------------------------------------------------------------------------
CONFIDENTIAL INFORMATION--TRADE SECRET
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.
EXHIBIT A
REGISTRATION RIGHTS STATEMENT
This Registration Rights Statement (this "Statement") sets forth the
registration rights granted by Paradigm Medical Industries, Inc. (The "Company")
to Mentor Corporation ("Mentor"), under the asset purchase agreement dated as of
october 15, 1999 by and among the Company, Mentor and Mentor's subsidiaries
(the "Purchase Agreement"). Capitalized terms defined in the Purchase Agreement
and used herein without definition have the same meanings herein as in the
Purchase Agreement.
In consideration of the agreements contained in the Purchase Agreement,
the Company hereby grants to Mentor the rights set forth herein:
1. DEFINITIONS. For purposes of this Statement, "Registrable
Securities" means (i) the Common Shares issued to Mentor pursuant to the
Purchase AGREEMENT, OR (II) SHARES OF COMMON STOCK OR OTHER SECURITIES OF THE
COMPANY ISSUED AS A DIVIDEND OR OTHER DISTRIBUTION ON OR IN EXCHANGE FOR ANY OF
THE SHARES OF COMMON STOCK SPECIFIED IN CLAUSE (I).
2. COMPANY REGISTRATION.
(A) NOTICE OF REGISTRATION. If at any time or from time to
time, the Company shall determine to register any of its Common Stock,
whether or not for its own account, other than a registration relating
to employee benefit plans or a registration effected on Form S-4, the
Company shall:
(i) provide to Mentor written notice thereof at least
twenty (20) days prior to the filing of the registration
statement by the Company in connection with such registration;
and
(ii) include in such registration, and in any
underwriting involved therein, all those Registrable
Securities specified in a written request by Mentor received
by the Company within fifteen (15) days after the Company
mails the written notice referred to above, subject to the
provisions of Section 2(b) below.
(B) UNDERWRITING. The right of Mentor to registration pursuant
to this Section 2 shall be conditioned upon the participation by Mentor
in the underwriting arrangements specified by the Company in connection
with such registration and the inclusion of the Registrable Securities
in such underwriting to the extent provided herein. If Mentor proposes
to distribute its Registrable Securities through such underwriting, it
shall (together with the Company) enter into an underwriting agreement
in customary form with the managing underwriter selected for such
underwriting by the Company and take all other actions, and deliver
such opinions and certifications, as may be reasonably requested by
such managing underwriter. Notwithstanding any other provision of this
Section 2, if the managing underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the number of
Registrable Securities to be included in such registration. The Company
shall so advise Mentor, and there shall be excluded from such
registration and underwriting, to the extent necessary to satisfy such
limitation, shares held by Mentor, but only after there has been
excluded from such registration and underwriting shares for the account
of any person other than Company or Mentor.
(C) RIGHT TO TERMINATE REGISTRATION. The Company shall have
the right to terminate or withdraw any registration initiated by it
under this Section 2 prior to the effectiveness of such registration
whether or not Mentor has elected to include Registrable Securities in
such registration.
(D) EXPENSES. The Company shall bear all expenses in
connection with the Company's performance of or compliance with its
obligations under this Statement, including, without limitation, all
(i) registration, qualification and filing fees; (ii) fees, costs and
expenses of compliance with securities or blue sky laws (including
reasonable fees, expenses and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the
Registrable Securities under the laws of such jurisdictions as the
managing underwriter or underwriters in a registration may designate,
subject to the limitation as set forth in subsection (h) of Section 3
hereof); (iii) printing expenses; (iv) fees, expenses and disbursements
of counsel for the Company and Mentor and of all independent certified
public accountants retained by the Company; and (v) fees, costs and
expenses incurred in connection with the listing of the Registrable
Securities on each national securities exchange or automated quotation
system on which the Company has made application for the listing of its
common stock; but excluding selling commissions, discounts or other
compensation paid to underwriters or other agents or brokers to effect
the sale of Registrable Securities, or any other expenses incurred by
Mentor in connection with any registration that are not specified in
the immediately preceding sentence.
3. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of this Statement to effect the registration of Registrable
Securities, the Company shall:
(a) promptly prepare and file with the SEC a registration
statement with respect to such Registrable Securities on any form that
may be utilized by the Company and that shall permit the disposition of
the Registrable Securities in accordance with the intended method or
methods of disposition thereof, and use its reasonable diligent efforts
to cause such registration statement to become effective as promptly as
practicable and remain effective thereafter as provided herein,
provided that prior to filing a registration statement or prospectus or
any amendments or supplements thereto, including documents incorporated
by reference after the initial filing of any registration statement,
the Company will furnish to Mentor, its counsel and the underwriters
copies of all such documents proposed to be filed sufficiently in
advance of filing to provide them with a reasonable opportunity to
review such documents and comment thereon;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and current and
to comply with the provisions of the Securities Act with respect to the
sale or other disposition of all Registrable Securities covered by such
registration statement, including such amendments (including
post-effective amendments) and supplements as may be necessary to
reflect the intended method of disposition by the prospective seller or
sellers of such Registrable Securities, but (except for a shelf
registration) for no longer than 120 days subsequent to the effective
date of such registration statement;
(c) provide customary indemnity and contribution arrangements
to any underwriters;
(d) subject to receiving reasonable assurances of
confidentiality, for a reasonable period after the filing of such
registration statement, and throughout each period during which the
Company is required to keep a registration effective, make available
for inspection by Mentor, and any underwriters, and their respective
counsel, such financial and other information and books and records of
the Company, and cause the officers, directors, employees, counsel and
independent certified public accountants of the Company to respond to
such inquiries as shall be reasonably necessary, in the judgment of
such counsel, to conduct a reasonable investigation within the meaning
of Section 11 of the Securities Act;
(e) promptly notify Mentor and any underwriters and confirm
such advice in writing, (i) when such registration statement or the
prospectus included therein or any prospectus amendment or supplement
or post-effective amendment has been filed, and, with respect to such
registration statement or any post-effective amendment, when the same
has become effective, (ii) of any comments by the SEC, by the National
Association of Securities Dealers Inc. ("NASD"), and by the blue sky or
securities commissioner or regulator of any state with respect thereto
or any request by any such entity for amendments or supplements to such
registration statement or prospectus or for additional information,
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of such registration statement or the initiation or
threatening of any proceedings for that purpose, (iv) if at any time
the representations and warranties of the Company cease to be true and
correct in all material respects, (v) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, or (vi)
at any time when a prospectus is required to be delivered under the
Securities Act, that such registration statement, prospectus,
prospectus amendment or supplement or post-effective amendment, or any
document incorporated by reference in any of the foregoing, contains an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading;
(f) furnish to Mentor, and any underwriters, prospectuses or
amendments or supplements thereto, in such quantities as they may
reasonably request and as soon as practicable, that update previous
prospectuses or amendments or supplements thereto;
(g) permit Mentor to rely on any representations and
warranties made to any underwriter of the Company or any opinion of
counsel or "cold comfort" letter delivered to any such underwriter, and
indemnify Mentor to the same extent that it indemnifies any such
underwriter;
(h) use reasonable diligent efforts to (i) register or qualify
the Registrable Securities to be included in a registration statement
hereunder under such other securities laws or blue sky laws of such
jurisdictions within the United States of America as Mentor or any
underwriter of the securities being sold shall reasonably request, (ii)
keep such registrations or qualifications in effect for so long as the
registration statement remains in effect and (iii) take any and all
such actions as may be reasonably necessary or advisable to enable
Mentor or underwriter to consummate the disposition in such
jurisdictions of such Registrable Securities owned by such holder;
PROVIDED, HOWEVER, that the Company shall not be required for any such
purpose to (x) qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section 5(h), (y)
subject itself to taxation in any such jurisdiction, or (z) consent to
general service of process in any such jurisdiction;
(i) cause all such Registrable Securities to be listed or
accepted for quotation on each securities exchange or automated
quotation system on which the Company's Common Stock then trades; and
(j) otherwise use reasonable diligent efforts to comply with
all applicable provisions of the Securities Act, and rules and
regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering a period
of at least twelve months which shall satisfy the provisions of Section
11(a) of the Securities Act.
4. INFORMATION BY MENTOR. Mentor shall furnish to the Company such
information regarding itself and the distribution proposed by it as the Company
may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Statement.
5. INDEMNIFICATION. In the event any of the Registrable Securities are
included in a registration statement under this Statement:
(a) the Company will indemnify Mentor, each of its officers
and directors and Mentor's separate legal counsel and independent
accountants, and each person controlling Mentor within the meaning of
Section 15 of the Securities Act, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section
15 of the Securities Act, against all expenses, claims, losses, damages
or liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation
by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will
reimburse Mentor, each of its officers and directors and Mentor's
separate legal counsel and independent accountants and each person
controlling Mentor, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by
Mentor or such underwriter and stated to be specially for use therein.
(b) Mentor will, indemnify the Company, each of its directors
and officers and its legal counsel and independent accountants, each
underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statement therein not misleading, and will reimburse the Company, such
directors, officers, persons, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with
written information furnished to the Company by an instrument duly
executed by Mentor and stated to be specifically for use therein.
(c) Each party entitled to indemnification under this Section
5 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought provided that failure to give such prompt
notice shall not relieve the Indemnifying Party of its obligations
hereunder unless it is materially prejudiced thereby, and shall permit
the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld). Such Indemnified Party shall have
the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be that of such Indemnified Party unless (i) the
Indemnifying Party has agreed to pay such fees and expenses or (ii) the
Indemnifying Party shall have failed to assume the defense of such
action or proceeding and employ counsel reasonably satisfactory to such
Indemnified Party in any such action or proceeding or (iii) the named
parties to any such action or proceeding (including any impleaded
parties) include both such Indemnified Party and the Indemnifying Party
and such Indemnified Party shall have been advised by counsel that
there may be one or more legal defenses available to such Indemnified
Party which are different from or additional to those available to the
Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing of an election to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense of such action or
proceeding on behalf of such Indemnified Party, it being understood,
however, that the Indemnifying Party then shall have the right to
employ separate counsel at its own expense and to participate in the
defense thereof, and shall not, in connection with any one such action
or proceeding or separate but substantially similar or related actions
or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for
all Indemnified Parties, which firm shall be designated in writing by a
majority of the Indemnified Parties who are eligible to select such
counsel). No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. No Indemnified Party
may consent to entry of any judgment or enter into any settlement
without the prior written consent of the Indemnifying Party.
(d) If the indemnification provided for in this Section 5 is
held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to herein, then the Indemnifying Party, in lieu of
indemnifying the Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party with respect to such loss,
liability, claim, damage or expenses in the proportion that is
appropriate to reflect the relative fault of the Indemnifying Party and
the Indemnified Party in connection with the statements or omissions
that resulted in such loss, liability, claim, damage, or expense, as
well as any other relevant equitable considerations. The relative fault
of the Indemnifying Party and the Indemnified Party shall be determined
by reference to, among other things, whether the untrue or alleged
untrue statement of material fact or the omission to state a material
fact relates to information supplied by the Indemnifying Party or by
the Indemnified Party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission.
6. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the SEC which may permit the sale of the
Registrable Securities to the public without registration, the Company shall use
reasonably diligent efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act;
(c) Furnish to Mentor promptly upon request a written
statement as to its compliance with the reporting requirements of Rule
144, and of the Securities Act and the Exchange Act, a copy of the most
recent annual or quarterly report of the Company, and such other
reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as Mentor may
reasonably request in availing itself of any rule or regulation of the
SEC allowing Mentor to sell Registrable Securities without
registration.
7. TERMINATION OF REGISTRATION RIGHTS. Mentor shall not be entitled to
exercise any right provided for in this Statement after two years following the
Closing Date.
8. MISCELLANEOUS.
(A) PART OF PURCHASE AGREEMENT. This Statement constitutes a
part of the Purchase Agreement and is subject to all provisions
thereof.
(B) SEVERABILITY. Any provision of this Statement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
