Exhibit 10.1
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SETTLEMENT AGREEMENT
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This SETTLEMENT AGREEMENT is dated this 25th day of January, 2005,
between and among Paradigm Medical Industries, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇, and Mackey Price & ▇▇▇▇▇▇▇▇ (sometimes collectively referred to as
the "Paradigm Parties"), Innovative Optics, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Investments, L.P. (sometimes collectively referred to as "Innovative
Optics")(hereafter, the Paradigm Parties and Innovative Optics shall
collectively be referred to as the "Settling Parties."), and United States Fire
Insurance Company ("US Fire").
WITNESSETH
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WHEREAS, Innovative Optics filed, among other pleadings, an Amended
Complaint on September 19, 2003 in the United States District Court for the
District of Utah, Civil No. 03-CV-00582, asserting, among other things,
violations of the Federal Securities Laws by the Paradigm Parties (the
"Innovative Action");
WHEREAS, certain of the Paradigm Parties filed counterclaims in the
Innovative Action against Innovative Optics;
WHEREAS, Innovative Optics maintains that its claims against the
Paradigm Parties are valid and meritorious, and maintains that the counterclaims
asserted against it have no merit. The Paradigm Parties maintain that the
Innovative Optics claims have no merit, and that its counterclaims are valid. In
view of all of the circumstances, the Settling Parties desire to resolve the
various disputes between and among them without any admission or liability
whatsoever pursuant to the terms and conditions outlined in this Settlement
Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledge, the Settling Parties and US Fire
hereby stipulate and agree as follows:
1. PAYMENT IN CONNECTION WITH THE SETTLEMENT
In settlement of the Innovative Action between and among the Settling
Parties, and contingent upon the occurrence of the Effective Date set forth in
paragraph 4.2 of this Settlement Agreement, including final court approval of
the settlements in the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. Class action filed on October 13,
2003 in the Third District Court in and for the State of Utah, Civil No.
030922608, asserting violations of the Utah Securities Laws by some of the
Paradigm Parties (the "State Action") and the Savanyo Class action filed in the
United States District Court for the District of Utah, which was eventually
consolidated with other class actions filed in the same Court under Civil No.
03-CV-448, asserting violations of Federal Securities Laws by some of the
Paradigm Parties (the "Federal Class Action"), US Fire agrees to pay Innovative
Optics the total sum of three hundred and sixty seven thousand and five hundred
dollars ($367,500.00).
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2. PARADIGM RELEASE OF U.S. FIRE
As a condition of settlement, Paradigm Medical Industries, Inc., on
behalf of itself and all of its current and former directors and officers, and
▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall execute a policy release in favor of US Fire in
a form to be agreed to by the parties.
3. STIPULATION RELATING TO CERTIFICATION OF CLASS ACTIONS
The Paradigm parties and US Fire hereby stipulate that they will not
oppose class certification of a conditional settlement class in the State Action
and will not oppose class certification of a conditional settlement class in the
Federal Class Action. If for any reason final court approval of the settlements
in both the State Action and the Federal Class Action are not effectuated, the
parties shall jointly petition the courts for orders vacating the conditional
class certifications in the State Action and/or the Federal Class Action and the
State Action and Federal Class Action shall proceed as though no class had ever
been certified, without prejudice to any party's rights in those actions,
including, without limitation, the right to either request or oppose class
certification.
4. DEPOSIT OF THE SETTLEMENT AMOUNT
4.1 Within ten (10) business days after the entry of orders in both the
State Action and the Federal Class Action granting preliminary court approval of
class settlements, US Fire agrees to deposit in the client trust account at
▇▇▇▇▇ ▇▇▇▇▇ & Dodge the sum of three hundred and sixty seven thousand and five
hundred dollars ($367,500.00) (the "Escrowed Settlement Funds") to be held in
escrow by ▇▇▇▇▇ ▇▇▇▇▇ & Dodge until the Effective Date (as defined in paragraph
4.2 below). Within three (3) business days of the Effective Date, ▇▇▇▇▇ ▇▇▇▇▇ &
Dodge shall release the Escrowed Settlement Funds to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇.
The check shall be made payable to "▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇ for the benefit of
Innovative Optics, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Investments, L.P."
4.2 The "Effective Date" shall be defined to have occurred after each
and every one of the following events has taken place:
a) The full and complete execution of this Settlement Agreement by
all signatories;
b) The courts in the State Action and in the Federal Class Action
have entered orders granting final approval of the settlements
reached in those respective actions, and such orders have become
final and non-appealable; and
c) U.S. Fire has not exercised its right to terminate this Settlement
Agreement pursuant to paragraph 4 of this Settlement Agreement.
4.3 Within five (5) business days of the Effective Date, the Settling
Parties shall sign and deliver to each other a mutual release fully, finally and
forever releasing, relinquishing and discharging any and all claims,
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counterclaims, actions, allegations, causes of action, demands, debts, rights or
liabilities known or unknown, asserted or unasserted, liquidated or
unliquidated, fixed or contingent, accrued or unaccrued, of any nature
whatsoever that have been or could have been asserted against one another in the
Innovative Action. The mutual release will release all related parties for the
Settling Parties, including, without limitation, all agents, attorneys,
insurers, subsidiaries, parent corporations, officers, and directors of the
Settling Parties.
4.4 Within ten (10) business days of the Effective Date, and contingent
upon Innovative Optics prior receipt of all of the settlement sum of three
hundred and sixty seven thousand and five hundred dollars ($367,500.00), the
Settling Parties shall file a stipulation of dismissal, with prejudice, of the
entire Innovative Action, including, without limitation, all counterclaims, with
all parties to bear their own respective costs and attorneys' fees.
4.5 If the settlement set forth in this agreement does not occur for
failure of a condition precedent that is set forth in this agreement, all
parties will be restored to the status quo, and this agreement shall be null and
void, and of no legal effect. The Escrowed Settlement Funds referenced in
paragraph 4.1 shall be promptly returned to U.S. Fire.
5. OPTION OF US FIRE TO TERMINATE THIS SETTLEMENT AGREEMENT
5.1 As more particularly set forth in the Settlement Agreements
executed in the State Action and in the Federal Class Action, US Fire shall have
the option to terminate this Settlement Agreement if the cumulative dollar value
of the claims held by individuals or entities who "opt-out" of the State Action
and the Federal Class Action exceeds Two Hundred and Fifty Thousand Dollars
($250,000). Provided, however, that the plaintiffs in the State Action and in
the Federal Class Action shall first have five (5) business days in which to
cure from the date that US Fire and Paradigm provide written notice to counsel
for plaintiffs in the State Action and the Federal Class Action of their intent
to exercise this option. If the plaintiffs in the State Action and in the
Federal Class Action are not able to cure and reduce the amount of "opt-outs" to
Two Hundred and Fifty Thousand Dollars ($250,000) or less within five (5)
business days, US Fire can then, at its option, terminate this Settlement
Agreement. If US Fire exercises its option to terminate this Settlement
Agreement, then (a) all parties hereto shall be restored to their respective
positions in the various actions as of the date hereof; (b) the terms and
provisions of the Settlement Agreement shall have no further force and effect
and shall be deemed null and void in its entirety; (c) neither the Settlement
Agreement, nor the negotiations related thereto, nor any documents submitted to
any court in connection with this Settlement Agreement shall be used in the
State Action, the Federal Class Action, the Innovative Action, or any other
proceeding for any purpose; and (d) the Escrowed Settlement Funds referenced in
paragraph 4.1 shall be promptly returned to U.S. Fire.
5.2 For purposes of determining the dollar amount of a claim held by an
individual or entity who "opts-out" of the State Action or the Federal Class
Action, the value of the claim shall be determined by the terms set forth in the
settlement agreements executed in those two respective actions.
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6. MISCELLANEOUS
6.1 The Settling Parties each deny all wrongdoing and liability alleged
in the Innovative Action. Neither this Settlement Agreement nor any action taken
in furtherance of this settlement may be construed as an admission by or against
anyone of any fault, wrongdoing, or liability whatsoever. This Settlement
Agreement shall not be offered or received in evidence in any action or
proceeding in any court or other tribunal as an admission or concession of
liability, wrongdoing, or responsibility of any nature on the part of any party
hereto.
6.2 Each of the Settling Parties shall bear their own costs, attorneys'
fees and expenses in the Innovative Action.
6.3 This Settlement Agreement may not be altered, amended, or modified,
in any respect, except by writing duly executed by each of the Settling Parties,
except that any due dates set forth herein may be extended if stipulated to in
writing by the attorneys for all of the Settling Parties and US Fire, as
appropriate.
6.4 The waiver by one party of any breach of this Settlement Agreement
by any other party shall not be deemed a waiver of any other prior or subsequent
breach of this Settlement Agreement and shall not constitute a continuing
waiver.
6.5 This Settlement Agreement may be executed in one or more
counterparts, each of which shall be deemed to be one and the same instrument.
Counsel for the Settling Parties shall exchange among themselves original signed
counterparts. Facsimile signatures are acceptable.
6.6 This Settlement Agreement is an integrated agreement between the
Settling Parties. All prior or contemporaneous conversations, negotiations,
possible or alleged agreements, representations, covenants or warranties
concerning the subject matter of this Settlement Agreement and the resolution of
the respective actions are incorporated herein or superseded.
6.7 All Settling Parties and US Fire shall use their best reasonable
efforts and shall cooperate to the extent necessary to effectuate all terms and
conditions of this Settlement Agreement.
6.8 This Settlement Agreement is the product of good faith arms length
negotiations among all of the Settling Parties and US Fire, during which each of
the Settling Parties and US Fire was represented by counsel. This Settlement
Agreement has been drafted, reviewed, and commented upon by counsel for the
Settling Parties and US Fire. Accordingly, the contract rule of strict
interpretation against the drafter of a document shall not apply to any of the
Settling Parties to this Settlement Agreement or US Fire.
6.9 If one or more of the provisions of this Settlement Agreement are
determined to be illegal or otherwise unenforceable, in whole or in part, they
shall be deemed severable from the remainder of this Settlement Agreement and
shall in no way effect, impair, or invalidate any other provision of this
Settlement Agreement. If such provision is deemed invalid because of its scope
or breadth, the provision shall be deemed valid to the extent of the scope or
breadth permitted by law.
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Dated as of the date first written above.
Paradigm Medical Industries, Inc. /s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
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Its: President and Chief Innovative Optics, Inc.
Executive Officer
Mackey Price & ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Its: President and Chief Executive
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Officer
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Its: President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Investments, L.P.
/s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------- By: /s/ Bario Barton
▇▇▇▇ ▇▇▇▇▇▇ ----------------
Its: General Partner
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------- United States Fire Insurance Co.
▇▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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Its: Authorized Representative
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