STOCK PURCHASE AGREEMENT
dated as of June 9, 2000
by and among
PARADIGM MEDICAL INDUSTRIES, INC.,
OCULAR BLOOD FLOW, LTD.,
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
the sole shareholder of
Ocular Blood Flow, Ltd.
TABLE OF CONTENTS
Page
----
ARTICLE I - PURCHASE AND SALES OF SHARES........................................................................ 1
1.1 Sale and Purchase of the Shares ............................................................... 1
1.2 Purchase Consideration......................................................................... 1
1.3 Delivery of Shares............................................................................. 2
ARTICLE II - CLOSING............................................................................................. 2
2.1 Closing........................................................................................ 2
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF OBF
AND ▇▇▇▇▇▇............................................................................... 2
3.1 Organization, Good Standing and Power........................................................... 2
3.2 Capital Structure ............................................................................. 3
3.3 Authority ..................................................................................... 3
3.4 Dividends, Stock Purchases, Etc. .............................................................. 4
3.5 Financial Statements ........................................................................... 4
3.6 Compliance With Law ........................................................................... 4
3.7 No Defaults .................................................................................... 5
3.8 Litigation .................................................................................... 5
3.9 No Material Adverse Change ..................................................................... 5
3.10 Absence of Undisclosed Liabilities...............................................................7
3.11 Information Supplied.............................................................................7
3.12 Certain Agreements ..............................................................................7
3.13 Plans; Benefits; Employment Claims...............................................................7
3.14 Major Contracts .................................................................................8
3.15 Taxes ...........................................................................................9
3.16 Intellectual Property ..........................................................................10
3.17 Restrictions on Business Activities ............................................................11
3.18 Title to Properties; Absence of Liens and
Encumbrances; Conditions of Equipment...........................................................11
3.19 Governmental Authorization and Licenses.........................................................11
3.20 Environmental Matters ........................................................................ 12
3.21 Insurance .................................................................................... 12
3.22 Labor Matters ................................................................................ 13
3.23 Agents; Customers and Agent Complaints ....................................................... 13
3.24 Questionable Payments ........................................................................ 13
-i-
TABLE OF CONTENTS
(continued)
Page
----
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PARADIGM......................................................... 13
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PARADIGM ........................................................ 14
5.1 Organization, Good Standing and Power ......................................................... 14
5.2 Authority ..................................................................................... 14
5.3 Board Authorization............................................................................ 15
ARTICLE VI - CONDUCT AND TRANSACTIONS PRIOR TO
CLOSING DATE; ADDITIONAL AGREEMENT....................................................... 15
6.1 Conduct of Business of OBF..................................................................... 15
ARTICLE VII - CONDITIONS PRECEDENT ............................................................................. 19
7.1 Conditions to Each Party's Obligation to
Effect This Transaction ....................................................................... 19
7.2 Conditions to Obligations of Paradigm ........................................................ 19
7.3 Conditions to Obligations of ▇▇▇▇▇▇ and OBF ................................................... 21
ARTICLE VIII - TERMINATION ..................................................................................... 22
8.1 Termination ................................................................................... 22
ARTICLE IX - INDEMNIFICATION ................................................................................... 23
9.1 Obligation of ▇▇▇▇▇▇ to Indemnify ............................................................. 23
9.2 Notice and Opportunity to Defend .............................................................. 23
ARTICLE X - REPURCHASE OPTION ................................................................................. 24
10.1 Option to Repurchase Rights to Blood Flow Analyzer, Inc....................................... 24
ARTICLE XI - GENERAL PROVISIONS .................................................................................24
11.1 Survival of Representations, Warranties,
Covenants and Agreements....................................................................... 24
11.2 Amendment ..................................................................................... 25
11.3 Extension; Waiver ............................................................................. 25
11.4 Notices ....................................................................................... 25
11.5 Interpretation ................................................................................ 26
11.6 Counterparts .................................................................................. 26
11.7 Entire Agreement .............................................................................. 26
11.8 No Transfer ................................................................................... 26
-ii-
TABLE OF CONTENTS
(continued)
Page
----
11.9 Severability ...................................................................................26
11.10 Other Remedies .................................................................................27
11.11 Further Assurances .............................................................................27
11.12 No Third Party Beneficiary Rights ..............................................................27
11.13 Mutual Drafting ................................................................................27
11.14 Governing Law ..................................................................................27
11.15 Expenses .......................................................................................27
11.16 Brokers or Finders .............................................................................27
11.17 Public Announcements ...........................................................................27
11.18 Confidentiality ................................................................................28
11.19 Attorneys' Fees................................................................................ 29
EXHIBITS
Exhibit 3 OBF/▇▇▇▇▇▇ Disclosure Schedule
Exhibit 5 Paradigm Disclosure Schedule
ANNEXES
Annex I Royalty Rights Agreement
Annex II Registration Rights Agreement
-iii-
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated effective
as of June 9, 2000 and entered into by and among Paradigm Medical Industries,
Inc., a Delaware corporation ("Paradigm"), Ocular Blood Flow, Ltd., a United
Kingdom registered limited company ("OBF"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the sole
shareholder of OBF ("▇▇▇▇▇▇").
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, Paradigm, OBF and ▇▇▇▇▇▇ hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Sale and Purchase of the Shares. At the Closing, as hereinafter
defined, upon and subject to the terms and conditions set forth in this
Agreement, ▇▇▇▇▇▇ shall sell, transfer, assign and deliver to Paradigm, and
Paradigm shall purchase from ▇▇▇▇▇▇, 10,000 ordinary shares of stock of OBF (the
"OBF Shares") which represent all of the issued and outstanding stock and all
other equity and debt interests or securities of OBF and all of which are owned
by ▇▇▇▇▇▇, free and clear of all liens, claims, options, proxies, voting
agreements, charges and encumbrances.
1.2 Purchase Consideration. Subject to the terms and conditions of
this Agreement, in reliance upon ▇▇▇▇▇▇'▇ representations, warranties,
agreements and covenants contained herein, and in consideration of the sale,
transfer, assignment and delivery of the OBF Shares as herein provided, Paradigm
shall provide the following purchase consideration (the "Purchase
Consideration") to ▇▇▇▇▇▇:
(i) 100,000 shares of Paradigm Common Stock (the "Paradigm
Shares");
(ii) Fifty Thousand Dollars (U.S. $50,000) in cash payable
on Closing;
(iii) Fifty Thousand Dollars (U.S. $50,000) in cash
payable at Closing in full payment and satisfaction of all amounts owed by OBF
to Consultant as of the Closing Date including, but not limited to, all amounts
owed as a result of Consultant having made loans and other cash advances to OBF
from time to time for operations of OBF's business;
(iv) the execution and delivery of the Royalty Agreement
in the form attached hereto as Annex I, granting to ▇▇▇▇▇▇ a ten percent (10%)
royalty on all sales of OBF's tonometer or Blood Flow Analyzer (the "Blood Flow
Analyzer") by Paradigm, including work station units.
Paradigm shall register the Paradigm Shares described in
Section 1.2(i) by preparing and filing a Registration Statement with the United
States Securities and Exchange Commission pursuant to the terms of the
Registration Rights Agreement in the form attached hereto as Annex II. Such
filing shall take place on or before December 9, 2000 and shall be confirmed in
writing by Paradigm.
-1-
1.3 Delivery of Shares and Other Consideration. At the Closing Date,
▇▇▇▇▇▇ shall deliver to Paradigm a certificate(s) with stock power executed in
blank representing the outstanding shares of OBF Shares required by Section 1.1
hereof. Paradigm shall deliver to ▇▇▇▇▇▇, at the Closing, valid certificate(s)
issued in the name of ▇▇▇▇▇▇ representing the Paradigm Shares required by
Section 1.2 hereof and the Royalty Agreement specified in Section 1.2(iv) and
shall pay to ▇▇▇▇▇▇ the sums specified in Section 1.2(ii) and 1.2(iii).
ARTICLE II
THE CLOSING
2.1 Closing. The closing of the transaction (the "Closing") will
take place at the offices of ▇▇▇▇▇▇, Price & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, unless a different date or place is
agreed to in writing by the parties hereto. Each party hereto shall use its
reasonable best efforts to cause the Closing to occur on or before June 20, 2000
unless this date is extended as provided herein (the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF OBF AND ▇▇▇▇▇▇
Except as disclosed in a document attached hereto (the "OBF/▇▇▇▇▇▇
Disclosure Schedule") referring specifically to the applicable representation
and warranty in this Agreement that identifies the basis for an exception to a
representation and warranty in this Agreement and that is delivered by OBF and
▇▇▇▇▇▇ to Paradigm and approved by Paradigm by execution of this Agreement, OBF
and ▇▇▇▇▇▇ each represent and warrant to Paradigm as set forth below, and such
representations and warranties shall be true and correct as of the date hereof
and at all times thereafter including, without limitation, the Closing Date, as
if made at all such times. As used in this Agreement (i) "Business Condition"
with respect to any business entity or group of business entities shall mean the
business and financial condition and prospects of such entity or entities taken
as a whole and (ii) "material adverse effect" on the Business Condition shall be
deemed to include, without limitation, (x) any inaccuracy in the capitalization
representation set forth in Section 3.2 below and (y) any material liability not
reflected on the OBF Financial Statements (as defined in Section 3.5 below). It
is agreed that the liability of ▇▇▇▇▇▇ in respect to any breach of the following
representations and warranties shall not exceed the value of the consideration
received by him under this Agreement and the Royalty Agreement and the
Consulting Agreement executed in connection with this Agreement. It is also
agreed that no claim shall be made in respect to such breach unless it exceeds
U.S. $7,500 and, in the case of a tax warranty or representation, is made within
six years after Closing or, in the case of all other representations and
warranties, is made within 18 months after Closing.
-2-
3.1 Organization, Good Standing and Power. OBF is a United Kingdom
registered limited company, duly organized, validly existing and in good
standing under the laws of the United Kingdom and has all requisite power and
authority to own, operate and lease its properties and to carry on its business
as it is now being conducted. Schedule 3.1 of the OBF/▇▇▇▇▇▇ Disclosure Schedule
contains a true and correct listing of all countries in which OBF is registered,
licensed and authorized to engage in business. OBF is not aware of any
threatened or pending action or inaction that could result in the loss of or an
adverse change in any such registration or license. OBF is in good standing
under all such registrations and licenses. OBF is duly qualified and in good
standing in each jurisdiction in which the failure to so qualify would have a
material adverse effect on its individual Business Condition. The OBF/▇▇▇▇▇▇
Disclosure Schedule also sets forth a true and complete list of the foreign
countries where OBF is qualified as a foreign entity. OBF has no subsidiaries.
OBF has no other direct or indirect equity interest in or loans to any
partnership, corporation, joint venture, business association or other entity.
3.2 Capital Structure.
(a) The authorized capital stock of OBF consists of 10,000
shares of Common Stock. There are 10,000 shares of OBF Common Stock issued and
outstanding, all of which are owned by ▇▇▇▇▇▇. Except as disclosed on Schedule
3.2 of the OBF/▇▇▇▇▇▇ Disclosure Schedule, there are no other debt, equity or
hybrid debt or equity interests or securities of OBF issued and outstanding.
(b) All outstanding OBF Shares and other OBF securities,
if any, are validly issued, fully paid and non-assessable and, except as
disclosed on the OBF/▇▇▇▇▇▇ Disclosure Schedule, are not subject to any liens,
claims, encumbrances or charges of any kind or nature or any preemptive rights
created by statute, or any agreement to which OBF is a party or by which OBF may
be bound. There are no options, warrants, calls, conversion rights, commitments
or agreements of any kind to which OBF is a party or by which OBF may be bound
that do or may obligate OBF to issue securities of any kind or nature or to
grant, extend or enter into any such option, warrant, call, conversion right,
commitment or agreement or which relate to the voting of the OBF Shares or other
OBF securities, if any.
3.3 Authority.
(a) OBF and ▇▇▇▇▇▇ have all requisite power and authority
to enter into this Agreement and to perform their obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement, the performance by OBF of its
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary action on the part of OBF and ▇▇▇▇▇▇. This Agreement shall constitute
legal, valid and binding obligations of OBF and ▇▇▇▇▇▇, enforceable against OBF
and ▇▇▇▇▇▇ in accordance with their respective terms, except as enforcement may
be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
-3-
equitable remedies is subject to the discretion of the court before which any
proceeding therefor may be brought.
(b) To the best knowledge of OBF and ▇▇▇▇▇▇, the execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and thereby, will not, conflict with or result
in any violation of any material statute, law, rule, regulation, judgment,
order, decree or ordinance applicable to OBF or its properties or assets, nor
will it conflict with or result in any breach or default (with or without the
giving of notice or the lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any material obligation or to
the loss of any material benefit under, or result in the creation of a material
lien, charge or encumbrance on any of the properties or assets of OBF pursuant
to any material agreement, contract, note, mortgage, indenture, lease
instrument, permit, concession, franchise, registration or license to which OBF
is a party or by which OBF or any of its properties or assets may be bound or
affected.
(c) To the best knowledge of OBF and ▇▇▇▇▇▇, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency, commission, regulatory authority or
other governmental authority or instrumentality, whether domestic or foreign
(collectively, a "Governmental Entity"), is required by or with respect to OBF
in connection with the execution and delivery of this Agreement and by OBF or
the consummation by OBF of the transactions contemplated hereby or thereby,
except for such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the laws of any foreign
country, which, if not obtained or made, would not have a material adverse
effect on the Business Condition of OBF. All approvals of OBF as required by
applicable law have been obtained and are in force and effect.
3.4 Dividends, Stock Purchases, Etc. Since April 30, 2000, OBF has
not (i) declared or paid any dividends (either in cash, property or its stock of
any class) upon, or made or become committed to make any other distribution with
respect to, or purchased, redeemed or otherwise beneficially acquired any of its
outstanding capital stock of any class, or become committed so to do; (ii) split
up, combined or reclassified any of its outstanding capital stock of any class,
or become committed so to do; or (iii) issued or become committed to issue any
additional capital stock of any class (whether or not from treasury stock,
heretofore authorized but unissued stock, or newly authorized stock) or any
options, rights or warrants to acquire, or securities convertible into or
exchangeable for, or which otherwise confer upon the holder or holders thereof
any right to acquire, any shares of capital stock of any class or any other
security or debt of Paradigm.
3.5 Financial Statements. OBF has furnished or made available to
Paradigm or will furnish or make available to Paradigm within five (5) days from
the date of this Agreement OBF's unaudited financial statements prepared by
McGill & Co., chartered accountants and registered auditors, for the period
ended February 29, 2000, including an unaudited balance sheet as of February 29,
2000, and an operating statement prepared by OBF as of May 31, 2000 (the
"Financial Statements"). The Financial Statements provided to Paradigm are
listed in Schedule 3.5 of the OBF/▇▇▇▇▇▇ Disclosure Schedule. The OBF Financial
-4-
Statements have been prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied and fairly present the financial
position of OBF as at the dates thereof and the results of its operations and
cash flows for the periods then ended. There has been no change in OBF's
accounting policies, except as described in notes to the OBF Financial
Statements.
3.6 Compliance With Law. To the best knowledge of ▇▇▇▇▇▇ and OBF,
OBF is in compliance with and have conducted its business so as to comply with
all laws, rules, regulations, judgments, decrees or orders of any Governmental
Entity applicable to its operations or with respect to which compliance is a
condition of engaging in the business thereof, except to the extent that failure
to comply could, individually or in the aggregate, not have had and is not
reasonably expected to have, a material adverse effect on the Business Condition
of OBF. There are no material judgments, orders, injunctions, decrees,
stipulations or awards (whether rendered by a court or administrative agency or
by arbitration) against OBF or against any of its properties or businesses.
Schedule 3.6 of the OBF/▇▇▇▇▇▇ Disclosure Schedule contains a summary of all
material violations of, or conflicts with, any applicable statute, law, rule,
regulation, ruling, order, judgment or decree, listed by each such Governmental
Entity, including any of the foregoing relating to any environmental or health
laws.
3.7 No Defaults. To the best knowledge of ▇▇▇▇▇▇ and OBF, OBF is
not, nor has it received notice that it is or would be with the passage of time
or the giving of notice, or both, in default or violation of any term, condition
or provision of (i) any judgment, decree, order, injunction or stipulation
applicable to OBF or (ii) any agreement, note, mortgage, indenture, contract,
lease, instrument, permit, registration, concession, franchise or license to
which OBF is a party or by which OBF or any of its properties or assets may be
bound, which violation or default could, individually or in the aggregate, have
a material adverse effect on the Business Condition of OBF.
3.8 Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation pending or, to the best knowledge of OBF and
▇▇▇▇▇▇, threatened, against OBF that, individually or in the aggregate, could be
reasonably expected to have a material adverse effect on the Business Condition
of OBF, or which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay any of the transactions contemplated hereby. Schedule 3.8 of
the OBF/▇▇▇▇▇▇ Disclosure Schedule sets forth with respect to each pending
action, suit, proceeding, claim, arbitration or investigation to which OBF is a
party, the forum, the parties thereto, a brief description of the subject matter
thereof and the amount of damages claimed. OBF is not aware of any reasonable
basis for any other such action, suit, proceeding, claim, arbitration or
investigation. OBF has delivered or made available to Paradigm correct and
complete copies of all correspondence prepared by its counsel for OBF's
independent public accountants in connection with any audits or reviews
completed by OBF's independent public accountants.
3.9 No Material Adverse Change. Since April 30, 2000, OBF has
conducted its business in the ordinary course and there has not occurred:
(a) Any material adverse change in the Business Condition
of OBF;
-5-
(b) Any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting any of the properties or
businesses of OBF;
(c) Any issuance, redemption, repurchase or other
acquisition of the shares of Common Stock of OBF or any declaration, setting
aside payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the Common Stock of OBF;
(d) Any increase in or modification of the compensation or
benefits payable or to become payable by OBF to any of its directors, officers
or employees, except in the ordinary course of business consistent with past
practice;
(e) Any material increase in or modification of any bonus,
pension, insurance or other employee benefit plan, payment or arrangement,
including, but not limited to, the granting of stock options, restricted stock
awards or stock appreciation rights made to, for or with any of its employees,
except in the ordinary course of business consistent with past practice;
(f) Any sale of the property or assets of OBF individually
in excess of U.S. $1,000 or in the aggregate in excess of U.S. $2,500;
(g) Any alteration in any term of any outstanding security
of OBF;
(h) Any (a) incurrence, assumption or guarantee by OBF of
any debt for borrowed money; (b) issuance or sale of any securities convertible
into or exchangeable for debt securities of OBF; (c) issuance or sale of options
or other rights to acquire from OBF, directly or indirectly, debt securities or
any securities convertible into or exchangeable for any such debt securities; or
(d) any material premium refunds;
(i) Any creation or assumption by OBF of any mortgage,
pledge, security interest, lien or other encumbrance on any of its assets or
properties;
(j) Any making of any loan, advance or capital
contribution to, or investment in, any person other than (a) travel loans or
advances made in the ordinary course of business of OBF and (b) other loans and
advances in an aggregate amount that does not exceed U.S. $1,000 outstanding at
any time;
(k) Any entry into or any amendment or relinquishment of
or any termination or renewal by OBF of any contract, lease transaction,
commitment or other right or obligation, except in the ordinary course of
business consistent with past practice;
(l) Any transfer or grant of a right under the OBF
Intellectual Property Rights (as defined in Section 3.16 below) other than those
transferred or granted in the ordinary course of business consistent with past
practice;
-6-
(m) Any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of OBF;
(n) Any violation of or conflict with any applicable laws,
statutes, orders, rules or regulations promulgated, or judgment entered by any
Governmental Entity, that, individually or in the aggregate, materially and
adversely affects (or, insofar as OBF knows, might reasonably be expected to
materially and adversely affect) the Business Condition of OBF;
(o) Any agreement or arrangement made by OBF to take any
action that, if taken prior to the date hereof, would have made any
representation or warranty set forth in this Section 3 untrue or incorrect as of
the date when made; or
(p) Any payment of amounts owing under OBF issued
insurance policies materially at variance with the Company's policy provisions
and policy payment history.
3.10 Absence of Undisclosed Liabilities. To the best knowledge of
OBF and ▇▇▇▇▇▇, except as disclosed in Schedule 3.10 of the OBF/▇▇▇▇▇▇
Disclosure Schedule or as reflected in the OBF Financial Statements and except
for liabilities and obligations arising after February 29, 2000 in the ordinary
course of business consistent with past practices that could not reasonably be
expected to have a material adverse effect on the Business Condition of OBF, OBF
has no liabilities or obligations (whether absolute, accrued or contingent, and
whether or not determined or determinable) of a character that, under GAAP,
should be accrued, shown or disclosed on an audited balance sheet of OBF
(including the footnotes thereto).
3.11 Information Supplied. None of the information supplied or to be
supplied by OBF pursuant to this Agreement and no representation or warranty
made herein or in any exhibit hereto or in any financial statement or schedule
attached hereto contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
3.12 Certain Agreements. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby or
thereby will (a) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any director or employee of OBF under any Plan (as defined in
Section 3.13 below) or otherwise, (b) materially increase any benefits otherwise
payable under any Plan or (c) result in the acceleration of the time of payment
or vesting of any such benefit.
-7-
3.13 Plans; Benefits; Employment Claims.
(a) All employee benefit plans, programs, policies,
commitments or other arrangements (whether or not set forth in a written
document) covering any active, former or retired employee or consultant of OBF
are listed in Schedule 3.13 of the OBF/▇▇▇▇▇▇ Disclosure Schedule (individually,
a "Plan" and, collectively, the "Plans").
(b) Except as described in Schedule 3.13 attached hereto,
no present or former employee of OBF has any claim against OBF (whether under
law, under any employment agreement, or otherwise) on account of or for (i)
overtime pay, other than overtime pay for work done in current payroll period;
(ii) wages or salary for any period other than the current payroll period; (iii)
vacation time off or pay in lieu of vacation time off, other than (x)
accumulated vacation pay as show in the schedule refined to above, and (y)
vacation time off (or pay in lieu thereof) earned in or in respect of the
current fiscal year; or (iv) any material violation of any statute, ordinance or
regulation relating to minimum wages or maximum hours of work.
(c) No person or party (including, but not limited to
governmental agencies of any kind) has filed, or to the knowledge of OBF or
▇▇▇▇▇▇ has threatened to file, any claim against OBF under or rising out of any
statute, ordinance or regulation relating to discrimination in employment or
employment practices. No person has any material claim under which OBF has any
material liability under any health, sickness, disability, medical, surgical,
hospital, or surgical, hospital, or similar benefit plan or arrangement, or by
virtue of his or her employment maintained by OBF, or to or by which OBF is a
party or is bound, which is not fully covered, subject only to standard
deductibles, by insurance maintained with reputable, financially responsible
insurers. No person has any claim or has filed any action or has threatened to
file any action or bring a claim by virtue of his or her employment by OBF
including, without limiting the generality of the foregoing, sexual harassment,
wrongful termination, or other actions.
3.14 Major Contracts. Except as disclosed in Schedule 3.14 of
the OBF/▇▇▇▇▇▇ Disclosure Schedule, OBF is not a party to or subject to:
(a) Any union contract or any employment or consulting
contract, agreement or arrangement providing for future compensation, whether
written or oral, with any officer, consultant, director or employee that is not
terminable by OBF on thirty (30) days' or less notice without penalty or
obligation to make payments related to such termination;
(b) Any plan, contract or arrangement, whether written or
oral, providing for bonuses, pensions, deferred compensation, severance pay or
severance benefits, retirement payments, profit-sharing payments or similar such
payments;
(c) Any joint venture contract, agreement or arrangement
or any other agreement that has involved or is expected to involve a sharing of
profits with another person or entity;
-8-
(d) Any existing marketing, distribution, agency or
brokerage agreement in which the annual amount involved exceeded U.S. $5,000 in
aggregate amount or pursuant to which OBF has granted or received most favored
nation pricing provisions or exclusive marketing rights related to any product,
group of products or territory;
(e) Any lease for realty or personal property in which the
amount of payments that OBF is required to make on an annual basis exceeds U.S.
$1,500;
(f) Any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of companies or other entities or
indebtedness for borrowed money by way of direct loan, sale of debt securities,
purchase money obligation, conditional sale, guarantee, leasehold obligations or
otherwise;
(g) Any material license agreement, either as licensor or
licensee;
(h) Any contract containing covenants purporting to limit
the freedom of OBF to compete in any line of business in any geographic area;
(i) Any insurance policy or fidelity or surety bond;
(j) Any agreement of indemnification relating to OBF or
any of its officers, directors or employees;
(k) Any agreement, contract or commitment relating to
capital expenditures that involves future payments individually in excess of
U.S. $1,500 or in the aggregate in excess of U.S. $5,000 by OBF;
(l) Any agreement, contract or commitment relating to
personal services to be rendered by any person to OBF requiring the payment of
more than U.S. $1,000 per month or the disposition or acquisition of any assets
by OBF; or
(m) Any other agreement, contract or commitment that is
material to OBF's business.
Each agreement, contract, mortgage, indenture, plan, lease,
instrument, permit, concession, franchise, arrangement, license, regulations and
commitment listed on the OBF/▇▇▇▇▇▇ Disclosure Schedule pursuant to this Section
3.14 is valid and binding on OBF, and is in full force and effect, and neither
OBF nor to the best knowledge of OBF, any other party thereto has breached or is
aware of any facts that would lead it to believe that it has breached, any
provision of, or is in default under the terms of any such agreement, contract,
mortgage, indenture, plan, lease, instrument, permit, concession, franchise,
arrangement, license, regulation or commitment. To the best knowledge of OBF, no
such agreement, contract, mortgage, indenture, plan, lease, instrument, permit,
concession, franchise, arrangement, license or commitment contains any material
-9-
liquidated damages, penalty or similar provision. To the best knowledge of OBF,
no party to any such agreement contract, mortgage, indenture, plan, lease,
instrument, permit, registration, concession, franchise, arrangement, license or
commitment intends to cancel, withdraw, modify or amend the same.
3.15 Taxes.
(a) All tax returns, statements, reports and forms
(including, but not limited to, estimated tax returns and reports and
information returns and reports) required to be filed with any taxing authority
with respect to any taxable period ending on or before the Closing Date, by or
on behalf of OBF (collectively, the "OBF Returns"), have been or will be filed
when due (including any extensions of such due date), and all amounts shown due
thereon on or before the Closing Date have been or will be paid on or before
such date. The balance sheets included in the OBF Financial Statements (i) fully
accrue all actual and contingent liabilities for taxes with respect to all
periods through February 29, 2000 and OBF has not and will not incur any tax
liability in excess of the amount reflected on the OBF Financial Statements with
respect to such periods and (ii) properly accrues in accordance with GAAP all
liabilities for taxes payable after February 29, 2000 with respect to all
transactions and events occurring on or prior to such date. All information set
forth in the footnotes to the OBF Financial Statements relating to tax matters
is true, complete and accurate in all material respects.
(b) No material tax liability since February 29, 2000 has
been incurred other than in the ordinary course of business and adequate
provision has been or will be made for all taxes since that date in accordance
with GAAP on at least a quarterly basis. OBF has withheld and paid to the
applicable financial institution or taxing authority all amounts required to be
withheld. Neither OBF nor any member of any affiliated or combined group of
which OBF has been a member has granted any extension or waiver of the
limitation period applicable to any of the OBF Returns.
(c) There is no material claim, action, suit, proceeding
or investigation now pending or (to the best knowledge of OBF) threatened
against or with respect to OBF in respect of any tax or assessment. No notice of
deficiency or similar document of any tax authority has been received by OBF,
and there are no liabilities for taxes (including liabilities for interest
additions to tax and penalties thereof and related expenses) with respect to the
issues that have been raised (and are currently pending) by any tax authority
that could, if determined adversely to OBF, materially and adversely affect the
liability of OBF for taxes. There are no liens for taxes against the assets of
OBF except liens for current taxes not yet due. OBF has not been and will not be
required to include any material adjustment in its taxable income for any tax
period (or portion thereof) pursuant to applicable tax laws as a result of
transactions, events or accounting methods employed prior to the Closing.
-10-
3.16 Intellectual Property.
(a) OBF owns or is licensed or otherwise entitled to
exercise all rights under or with respect to all intellectual property including
without limitation, inventions, patents, copyrights, trademarks or service marks
owned or used in connection with its business. Schedule 3.16 of the OBF/▇▇▇▇▇▇
Disclosure Schedule lists all inventions, patents, trademarks, works of
authorship, registered and unregistered copyrights, registered and unregistered
trademarks, trade names and service marks, and all applications therefor owned
or licensed by OBF (the "Intellectual Property Rights"), and further specifies
the jurisdictions in which each such matter and registration has been filed,
including the respective registration or application numbers. Schedule 3.16 of
the OBF/▇▇▇▇▇▇ Disclosure Schedule also lists all material licenses, sublicenses
and other agreements (oral or written) as to which OBF is a party and pursuant
to which OBF or any other person or entity owns or is licensed or otherwise
authorized or obligated with respect to any Intellectual Property Right and
includes the identity of all parties thereto. OBF is not, nor as a result of the
execution and delivery of this Agreement or the performance of OBF's obligations
hereunder will be, in violation of any license, sublicense or other agreement
applicable to it, whether or not described in the OBF/▇▇▇▇▇▇ Disclosure
Schedule. Except to the extent clearly and conspicuously disclosed in Schedule
3.16 of the OBF/▇▇▇▇▇▇ Disclosure Schedule, OBF is the sole and exclusive owner
or licensee of, with full right, title and interest in and to (free and clear of
any liens, claims or encumbrances), the Intellectual Property Rights, and has
the sole and exclusive right in respect thereof (and, except as set forth in
Schedule 3.16 of the OBF/▇▇▇▇▇▇ Disclosure Schedule is not contractually
obligated to pay any compensation to any third party with respect thereto).
3.17 Restrictions on Business Activities. There is no material
agreement, judgment, injunction, order or decree binding upon OBF that has or
could reasonably be expected to have the effect of prohibiting or materially
impairing any business practice of OBF, any acquisition of property by OBF or
the conduct of business by OBF as currently conducted or as currently proposed
to be conducted.
3.18 Title to Properties; Absence of Liens and Encumbrances;
Condition of Equipment.
(a) Schedule 3.18 of the OBF/▇▇▇▇▇▇ Disclosure Schedule
sets forth a true, complete and accurate list of all real property owned or
leased by OBF and summarizes all material lease terms, including the aggregate
annual rental or other fees payable, the length of all leases and the number of
extensions available.
(b) OBF has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
properties and assets, whether real, personal or mixed, used in its business,
free and clear of any liens (other than liens for taxes that are not yet
delinquent), claims, charges, pledges, security interests or other encumbrances,
except as reflected in the OBF Financial Statements and except for such
imperfections of title and encumbrances, if any, that are not substantial or
-11-
material in character, amount or extent, and that do not materially detract from
the value, or interfere with the present use, of the property subject thereto or
affected thereby.
(c) The machinery, equipment and other personal property
(collectively, the "Equipment") owned or leased by OBF is, taken as a whole (i)
adequate for the conduct of the business of OBF consistent with its past
practice, (ii) suitable for the uses to which it is currently employed, (iii) in
good operating condition, (iv) regularly and properly maintained, (v) not
obsolete, dangerous or in need of renewal or replacement, except for renewal or
replacement in the ordinary course of business and (vi) free from all defects,
except, with respect to clauses (ii) through (v) of this Section 3.18(c), as
would not have a material adverse effect on the Business Condition of OBF.
3.19 Governmental Authorizations and Licenses. OBF is the holder of
all licenses, authorizations, permits, concessions, registrations, certificates
and other franchises of any Governmental Entity required to operate its business
(collectively, the "Licenses") and is in compliance with the terms, conditions,
limitations, restrictions, standards, prohibitions, requirements and obligations
of all of such Licenses, except where the failure to hold any such License or to
so comply would not have a material adverse effect on the Business Condition of
OBF. The Licenses are in full force and effect on the date hereof and will be in
full force and effect on the Closing Date, except as noted in Schedule 3.19
hereof. There is not now pending, nor to the best knowledge of OBF and ▇▇▇▇▇▇
are there threatened, any action, suit, investigation or proceeding against OBF
before any Governmental Entity with respect to the Licenses, nor is there any
issued or outstanding notice, order or complaint with respect to the violation
by OBF of the terms of any such License or any rule or regulation applicable
thereto.
3.20 Environmental Matters.
(a) To the best knowledge of OBF and ▇▇▇▇▇▇, no substance
that is regulated by any Governmental Entity or that has been designated by any
Governmental Entity to be radioactive, toxic, hazardous or otherwise a danger to
health or the environment (a "Hazardous Material") is present in, on or under
any property that OBF has at any time owned, operated, occupied or leased.
(b) To the best knowledge of OBF and ▇▇▇▇▇▇, OBF has not
transported, stored, used, manufactured, released or exposed its employees or
any other person to any Hazardous Material in violation of any applicable
statute, rule, regulation, order or law, except where such violation would not
have a material adverse effect on the Business Condition of OBF.
(c) To the best knowledge of OBF and ▇▇▇▇▇▇, OBF has
obtained all permits, consents, waivers, exemptions, licenses, approvals and
other authorizations (collectively, "Environmental Permits") required to be
obtained under the applicable statutes, rules, regulations, orders or laws of
any Governmental Entity relating to land use, public and employee health and
safety, pollution or protection of the environment (collectively, "Environmental
Laws"), except where the failure to obtain such an Environmental Permit would
-12-
not have a material adverse effect on the Business Condition of OBF. To the best
knowledge of OBF and ▇▇▇▇▇▇, Schedule 3.20 of the OBF/▇▇▇▇▇▇ Disclosure Schedule
sets forth a true, complete and accurate list of all such Environmental Permits,
each of which is in full force and effect on the date hereof and will be in full
force and effect on the Closing Date. To the best knowledge of OBF and ▇▇▇▇▇▇,
OBF (i) is in full compliance in all of the material respects with all of the
terms and conditions of the Environmental Permits and (ii) is in compliance in
all material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulation, code, plan,
order, decree, judgment, notice or demand letter issued, entered into,
promulgated by or approved thereunder. OBF has not received any notice nor is
OBF or ▇▇▇▇▇▇ aware of any past or present condition or practice of the business
conducted by OBF that, to the best knowledge of OBF and ▇▇▇▇▇▇, forms or could
be reasonably expected to form the basis of any material claim, action, suit,
proceeding, hearing or investigation against OBF, arising out of the
manufacture, processing, distribution, use, treatment, storage, spill, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any Hazardous Material by OBF.
3.21 Insurance. Schedule 3.21 of the OBF/▇▇▇▇▇▇ Disclosure Schedule
lists and summarizes all insurance policies and fidelity or surety bonds
covering the assets, Inventories, business, equipment, properties, operations,
employees, officers and directors of OBF, the amounts of coverage under each
such policy and bond of OBF. Within the last four years, OBF has not been
refused any requested insurance or bond coverage. Except as disclosed on the
OBF/▇▇▇▇▇▇ Disclosure Schedule, all premiums payable under all of such policies
and bonds have been paid and OBF is otherwise in full compliance with the terms
of all of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage). Such policies of insurance and bonds
are of the type and in amounts customarily carried by persons and entities
conducting businesses similar to that of OBF. OBF does not know of any
threatened termination of or material premium increase with respect to, any of
such insurance policies or bonds.
3.22 Labor Matters. To the best knowledge of OBF and ▇▇▇▇▇▇, OBF is
in compliance in all material respects with all currently applicable laws, rules
and regulations respecting employment, discrimination in employment, terms and
conditions of employment, wages and hours and occupational safety and health and
employment practices, and has not and currently is not engaged in any unfair
labor practice. OBF has not received any notice from any Governmental Entity,
and there has not been asserted before any Governmental Entity, any claim,
action or proceeding to which OBF is a party or involving OBF, and there is
neither pending nor, to OBF's and ▇▇▇▇▇▇'▇ best knowledge, threatened, any
investigation or hearing concerning OBF arising out of or based upon any such
law, regulation or practice.
3.23 Agents; Customers and Complaints. Schedule 3.23 of the
OBF/▇▇▇▇▇▇ Disclosure Schedule sets forth the names and addresses of the sales
agents or brokers of OBF as of April 30, 2000. As of the date hereof, OBF has no
unresolved customer or agent complaints filed with a Governmental Entity
concerning its products and/or services.
-13-
3.24 Questionable Payments. Neither OBF nor, to OBF's best
knowledge, any director, officer or other employee of OBF has: (i) made any
payments or provided services or other favors in any country in order to obtain
preferential treatment or consideration by any Governmental Entity with respect
to any aspect of the business of OBF or which would be unlawful in such country
or (ii) made any political contributions that would not be lawful under the laws
of the country in which such payments were made. Neither OBF nor, to OBF's and
▇▇▇▇▇▇'▇ best knowledge, any director, officer or other employee of OBF nor, to
OBF's and ▇▇▇▇▇▇'▇ best knowledge, any customer or supplier of any of them, has
been the subject of any inquiry or investigation by any Governmental Entity in
connection with payments or benefits or other favors to or for the benefit of
any governmental or armed services official, agent, representative or employee
with respect to any aspect of the business of OBF or with respect to any
political contribution.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇
▇▇▇▇▇▇ represents and warrants to Paradigm:
(a) he is an "accredited investor" within the meaning of Rule 501
under the Securities Act and, if an entity, was not organized for the specific
purpose of acquiring Paradigm Shares;
(b) he has sufficient knowledge and experience in investing in
companies similar to Paradigm so as to be able to evaluate the risks and merits
of its investment in Paradigm and it is able financially to bear the risks
thereof. ▇▇▇▇▇▇ has received and reviewed copies of Paradigm's public filings
with the Securities and Exchange Commission; and
(c) he has had an opportunity to negotiate the terms of this
transaction and discuss with Paradigm management, to his satisfaction, the
business, management and financial affairs of Paradigm and he has read and
understands this Agreement and all other documents and instruments entered into
or provided in connection herewith and he has had an opportunity to consult with
such independent advisors as he has deemed necessary or advisable in connection
with the transactions described in this Agreement and other documents and
instruments entered into in connection herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARADIGM
Except as noted on the Paradigm Disclosure Schedule, Paradigm
represents and warrants as follows:
5.1 Organization, Good Standing and Power. Paradigm is a corporation
validly existing and in good standing under the laws of the state of Delaware
and has all requisite corporate power and authority to own, lease and operate
-14-
its properties and to carry on its business as it is now being conducted.
Paradigm has delivered to OBF and ▇▇▇▇▇▇ complete and correct copies of its
Certificate of Incorporation and Bylaws, as amended to the date hereof.
5.2 Authority.
(a) Paradigm has all requisite corporate power and
authority to enter into and execute and deliver this Agreement and to consummate
the transactions contemplated hereby and thereby, subject to approval of the
transactions by applicable Governmental Entities having jurisdiction over its
business. This Agreement, when executed and delivered by Paradigm, will
constitute the valid and binding obligation of Paradigm, enforceable in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies is subject to
the discretion of the court before which any proceeding therefor may be brought.
(b) To the best knowledge of Paradigm, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and thereby, will not conflict with or result in any violation of any
material statute, law, rule, regulation, judgment, order, decree or ordinance
applicable to Paradigm or its properties or assets, nor will it conflict with or
result in any breach or default (with or without the giving of notice or the
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of any material
benefit under (i) any provision of the Certificate of Incorporation or Bylaws of
Paradigm or of any of its Subsidiaries or (ii) any material agreement, contract,
note, mortgage, indenture, lease, instrument, permit, concession, franchise or
license to which Paradigm is a party or by which Paradigm or its properties or
assets may be bound or affected.
5.3 Board Authorization. Prior to the Closing, the Board of
Directors of Paradigm will have authorized the Articles of Merger and the
execution and delivery of this Agreement and the performance by Paradigm of its
obligations under the Agreement.
ARTICLE VI
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
DATE; ADDITIONAL AGREEMENT
6.1 Conduct of Business of OBF.
(a) During the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the Closing
Date, OBF shall carry on its business in the usual, regular and ordinary course
in substantially the same manner as conducted prior to the date of this
Agreement and, to the extent consistent with such businesses, use all
commercially reasonable efforts consistent with past practice and policies to
preserve intact its present business organizations, keep available the services
of its present officers and key employees and preserve its relationships with
-15-
customers, suppliers, distributors, agents, brokers, licensors, licensees,
Governmental Entities, and others having business dealings with them, to the end
that its good will and ongoing businesses shall be unimpaired at the Closing
Date. OBF shall promptly notify Paradigm of any event or occurrence not in the
ordinary course of business of OBF, and any event which could have a material
and adverse effect on the Business Condition of OBF. Except as expressly
contemplated by this Agreement or disclosed in the OBF/▇▇▇▇▇▇ Disclosure
Schedule, OBF shall not, without the prior written consent of Paradigm:
(i) Grant any options, warrants, or stock
purchase rights;
(ii) Enter into any commitment or transaction
not in the ordinary course of business to be performed over a period longer than
six months in duration, or to purchase fixed assets with an aggregate purchase
price exceeding U.S. $5,000, or (ii) sell or commit to sell any products with an
aggregate purchase price greater than U.S. $5,000 in any single month if the
expected profit margins are lower than those customarily obtained for sales of
similar products by OBF in the past.
(iii) Grant any severance or termination pay to
any director, officer, employee or consultant, except mandatory payments made
pursuant to standard written agreements outstanding on the date hereof (any such
agreement or arrangement to be disclosed in Schedule 6.1 of the OBF/▇▇▇▇▇▇
Disclosure Schedule);
(iv) Transfer to any person title to any rights
to OBF Intellectual Property Rights;
(v) Enter into or amend any agreements pursuant
to which any other party is granted marketing, agency or other similar rights of
any type or scope with respect to any products of OBF;
(vi) Except in the ordinary course of business
with prior notice of Paradigm, violate, amend or otherwise modify the terms of
any of their material contracts binding on OBF set forth on the OBF/▇▇▇▇▇▇
Disclosure Schedule;
(vii) Commence a lawsuit other than for the
routine collection of bills or for a breach of this Agreement;
(viii) Declare or pay any dividends on or make
any other distributions (whether in cash, stock or property) in respect of any
of its capital stock, or split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect of, lieu
of or in substitution for shares of its capital stock, or repurchase or
otherwise acquire, directly or indirectly, any shares of its capital stock in
accordance with agreements providing for the repurchase of shares in connection
with any termination of service to OBF;
-16-
(ix) Issue, deliver or sell, authorize or
propose the issuance, delivery or sale of, or purchase or propose the purchase
of, any shares of its capital stock or securities convertible into, or
subscriptions, rights, warrants, or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities;
(x) Solicit approval for and effect any
amendments to OBF's governing documents (other than as contemplated by this
Agreement);
(xi) Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to the Business Condition of OBF;
(xii) Sell, lease, license or otherwise dispose
of any of its properties or assets except in the ordinary course of business and
consistent with past practice;
(xiii) Incur any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others or loan money to others;
(xiv) Adopt or amend any Plan, or enter into any
employment contract, pay any special bonus or special remuneration to any
director, employee or consultant, or increase the salaries or wage rates of its
employees other than pursuant to scheduled employee reviews under OBF's normal
employee review cycle, as the case may be, or in connection with the hiring of
employees other than officers in the ordinary course of business, in all cases
consistent with past practice;
(xv) Revalue any of its assets, including
without limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business and consistent
with past practice;
(xvi) Pay, discharge or satisfy in an amount in
excess of U.S. $25,000 in any one case any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business of
liabilities reflected or reserved against OBF's Financial Statements or those
incurred after the date of the April 30, 2000 Balance Sheet in the ordinary
course of business;
(xvii) Make any material tax election other than
in the ordinary course of business and consistent with past practice, change any
material tax election, adopt any material tax accounting method practice, change
any material tax accounting method, file any material tax return (other than any
estimate tax returns, payroll tax returns or sale tax returns) or any amendment
to a material tax return, enter into any closing agreement, settle any tax claim
-17-
or assessment, or consent to any tax claim or assessment, without the prior
written or unwritten consent of Paradigm, which consent will not be reasonably
withheld; and
(xviii) Engage in any activities or transactions
that are outside the ordinary course of its business consistent with past
practice.
(b) Unless and until this Agreement shall have been
terminated by either party pursuant to Article VIII, OBF shall not, directly or
indirectly, through any officer, director, agent or otherwise, (i) solicit,
initiate or encourage submission or proposals or offers from any person relating
to any acquisition or purchase of all or substantially all of the assets of, or
any equity interest in, OBF or any merger, consolidation, business combination
or similar transaction with OBF, or (ii) participate in any discussions or
negotiations regarding, furnish to any other person any confidential information
with respect to, or otherwise cooperate with any way with, or participate in,
facilitate or encourage, any effort or attempt by any other person to do or seek
any of the foregoing.
(c) Each of Paradigm, OBF and ▇▇▇▇▇▇ shall not take, or
fail to take, any action which from the date hereof through the Closing would
cause or constitute a breach of any of their respective representations,
warranties and covenants set forth in this Agreement or which would from the
date hereof through the Closing cause any of such representations or warranties
to be inaccurate. In the event of, and promptly after becoming aware of, the
occurrence of or the pending or threatened occurrence of any event which would
cause or constitute such a breach of inaccuracy, each party shall give detailed
notice thereof to the other parties and shall use its best efforts to prevent or
promptly remedy such breach or inaccuracy.
(d) Each of Paradigm, OBF and ▇▇▇▇▇▇ shall promptly apply
for or otherwise seek, and use its commercially reasonable efforts to obtain all
consents and approvals required to be obtained by it for the consummation of
this transaction, and OBF shall use its best efforts to obtain all necessary
consents, waivers and approvals under any of OBF's material agreements,
contracts licenses or leases in connection with this transaction, except such
consents and approvals which Paradigm and OBF agree OBF shall not seek to
obtain, as contemplated by the OBF/▇▇▇▇▇▇ Disclosure Schedule.
(e) Paradigm, OBF and ▇▇▇▇▇▇ shall each use its best
efforts to effectuate the transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to closing under this Agreement.
(f) ▇▇▇▇▇▇ and OBF shall take all reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
OBF with respect to this transaction and will promptly cooperate with and
furnish information to Paradigm in connection with any such requirements imposed
upon OBF, Paradigm or any other party in connection with this transaction. OBF
shall take all reasonable actions to obtain (and to cooperate with Paradigm in
obtaining) a consent, authorization, order or approval of, or any exception by,
-18-
any Governmental Entity, required to be obtained or made by OBF (or by Paradigm)
in connection with this transaction or the taking of any action contemplated, by
this Agreement, and to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
by this Agreement and to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby, to lift or rescind any injunction or restraining order or other order
adversely affecting the ability or the parties to consummate the transactions
contemplated hereby, and to effect all necessary registrations and filings and
submissions or information required by any Governmental Entity, and to fulfill
all conditions to this Agreement.
(g) Paradigm shall take all reasonable actions necessary
to comply promptly with all legal requirements which may be imposed on it with
respect to this transaction and will promptly cooperate with and furnish
information to OBF in connection with this transaction. Paradigm and OBF shall
take all reasonable actions to obtain (and to cooperate with OBF in obtaining)
and consent, authorization, order or approval of, or exemption by, and
Governmental Entity required to be obtained or made by OBF or any of its
subsidiaries action contemplated by this Agreement, and to defend all lawsuits
or other legal proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transaction contemplated hereby, and to effect all necessary
registrations and filings and submissions of information required by any
Governmental Entity, and to fulfill all conditions to this Agreement.
(h) ▇▇▇▇▇▇ and OBF shall give Paradigm and its agents,
full and complete access to all books, records, personnel, properties, assets
and facilities of OBF for Paradigm's inspection and due diligence, in its
discretion and Paradigm may make copies of documents and information subject to
Section 11.18 below.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect This
Transaction. The respective obligation of each party to effect this transaction
shall be subject to the satisfaction prior to the Closing of the following
conditions:
(a) Legal Action. No temporary restraining order,
preliminary injunction or permanent injunction or other order preventing the
consummation of this transaction shall have been issued by any Governmental
Entity and remain in effect, and no litigation seeking the issuance of such and
order or injunction, or seeking relief against OBF, ▇▇▇▇▇▇ or Paradigm if this
transaction is consummated, shall be pending which, in the good faith judgment
of OBF's governing entity or Paradigm's Board of Directors (acting upon the
written opinion of their respective outside counsel) has a reasonable
probability of resulting in such order, injunction or relief and such relief
would have a material adverse effect on the Business Condition of such party. In
the event any such order or injunction shall have been issued, each party agrees
to use commercially reasonable efforts to have an such injunction lifted.
-19-
(b) Statutes. No action shall have been taken, and no
statute, rule, regulation or order shall have been enacted, promulgated or
issued or deemed applicable to this transaction by any Governmental Entity which
would (i) make the consummation of this transaction illegal, (ii) prohibit
Paradigm's or OBF's ownership or operation of all or a material portion of the
business or assets of OBF, or Paradigm or compel Paradigm or OBF to dispose of
or hold separate all or a material portion of the business or assets of OBF, or
Paradigm, as a result of this transaction or (iii) render Paradigm or OBF unable
to consummate this transaction, except for any waiting period provisions.
7.2 Conditions to Obligations of Paradigm. The obligations of
Paradigm to effect this transaction are subject to the satisfaction of the
following conditions, unless waived by Paradigm:
(a) Representations and Warranties. The representations
and warranties of OBF set forth in this Agreement (determined without regard to
any materiality qualifiers, including without limitation "material adverse
effect") shall be true and correct in all respects as of the date of this
Agreement and as of the Closing Date, unless any failures to be true and
correct, individually or in the aggregate, do not have and could not reasonably
be expected to have a material adverse effect on the Business Condition of OBF;
and there shall have been no wilful breach by OBF of any of its representations
or warranties made in this Agreement. Paradigm shall have received a certificate
signed by the Managing Director of OBF to such effect on the Closing Date.
(b) No Material Adverse Change. There shall have been no
material adverse change in the Business Condition of OBF from the date of this
Agreement through the Closing Date and Paradigm shall have received a
certificate signed by the Managing Director of OBF to such effect on the Closing
Date.
(c) Performance of Obligations of ▇▇▇▇▇▇ and OBF. ▇▇▇▇▇▇
and OBF shall have performed all obligations and covenants required to be
performed by it under this Agreement prior to the Closing Date, and Paradigm
shall have received a certificate signed by the Managing Director of OBF to such
effect on the Closing Date.
(d) Regulatory Approvals. All authorizations, consents,
orders or approvals of, or declarations of, or declarations or filing with, or
expiration of waiting periods imposed by, any Governmental Entity necessary for
the consummation of the transactions contemplated by this Agreement and the
transactions referred to in Article I above shall have been obtained.
(e) Consents. Paradigm shall have received duly executed
copies of all material third-party non-regulatory consents and approvals
contemplated by this Agreement or the OBF/▇▇▇▇▇▇ Disclosure Schedule in form and
substance reasonably satisfactory to Paradigm.
-20-
(f) Resignation of Governing Personnel. The governing
personnel of OBF in office immediately prior to the Closing Date shall have
resigned effective as of the Closing Date.
(g) Legal Opinion. Paradigm shall have received an opinion
of OBF's legal counsel, in form and substance acceptable to Paradigm, to the
effect that:
(i) this Agreement has been duly authorized,
executed and delivered by ▇▇▇▇▇▇ and OBF and constitutes the valid and binding
obligations of ▇▇▇▇▇▇ and OBF, and all corporate action required by ▇▇▇▇▇▇ and
OBF in order to effect the transactions contemplated hereby has been taken;
(ii) OBF is a registered limited company duly
organized and validly existing in good standing under the laws of the United
Kingdom and is duly authorized to conduct its business as presently conducted;
(iii) the authorized capital stock of OBF
consists of 10,000 ordinary shares of stock and there are 10,000 ordinary shares
of OBF stock issued and outstanding, all of which are owned by ▇▇▇▇▇▇. All
issued and outstanding OBF Shares have been duly authorized, validly issued and
are fully-paid and nonassessable;
(iv) upon delivery to Paradigm of the stock
certificates evidencing all of the issued and outstanding OBF Shares, said stock
will be free and clear of all liens, claims, encumbrances or other adverse
interests; and
(v) neither the execution and delivery by ▇▇▇▇▇▇
or OBF of this Agreement, nor the compliance by ▇▇▇▇▇▇ or OBF with the terms and
provisions hereof, will conflict with or result in a breach of any of the terms,
conditions or provisions of the governing instrument with respect to OBF, or
with any judgment, order, injunction, decree, law, statute, regulation or ruling
with or of any court or governmental entity to which ▇▇▇▇▇▇ or OBF is subject,
or will constitute a default thereunder.
In rendering such opinion, such counsel may rely, to the
extent such counsel deems such reliance necessary or appropriate, upon
certificates of public officials or of any officer or officers of ▇▇▇▇▇▇ or OBF,
provided the extent of such reliance is specified in such opinion and executed
copies of such opinions and certificates are furnished to Paradigm.
7.3 Conditions to Obligations of ▇▇▇▇▇▇ and OBF. The obligation of
▇▇▇▇▇▇ and OBF to effect this transaction is subject to the satisfaction of the
following conditions unless waived by ▇▇▇▇▇▇ and OBF:
-21-
(a) Representations and Warranties. The representations
and warranties of Paradigm set forth in this Agreement shall be true and correct
in all material respects (except for such representations and warranties which
are qualified by their terms by a reference to materiality, which
representations and warranties as so qualified shall be true in all aspects) (i)
as of the date of this Agreement, and (ii) as of the Closing Date as though made
on and as of each such date, except as otherwise contemplated by this Agreement,
and OBF shall have received a certificate signed by the chief executive officer
and the chief financial officer of Paradigm to such effect.
(b) Performance of Obligations of Paradigm. Paradigm shall
have performed all obligations and covenants required to be performed by them
under this Agreement prior to the Closing Date, and ▇▇▇▇▇▇ and OBF shall have
received a certificate signed by the President and Chief Executive Officer of
Paradigm to such effect.
(c) Legal Opinion. ▇▇▇▇▇▇ shall have received an opinion
of Paradigm's legal counsel, in form and substance satisfactory to ▇▇▇▇▇▇, to
the effect that:
(i) Paradigm is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with all requisite corporate power and corporate authority to execute, deliver
and perform this Agreement;
(ii) the execution, delivery and performance of
this Agreement by Paradigm will not conflict with any of the terms, provisions
or conditions of the Certificate of Incorporation or the Bylaws of Paradigm;
(iii) the execution, delivery and performance of
this Agreement has been duly authorized by all necessary corporate action on the
part of Paradigm and is enforceable against Paradigm in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating to
or limiting creditor's rights generally.
In rendering such opinion such counsel may rely, to the
extent such counsel deems such reliance necessary or appropriate, upon
certificates of public officials or of any officer or officers of Paradigm,
provided the extent of such reliance is specified in such opinion and executed
copies of such certificates are furnished to ▇▇▇▇▇▇.
(d) Payment of Purchase Consideration. Paradigm shall pay
the Purchase Consideration as required in Section 1.2 of this Agreement.
-22-
ARTICLE VIII
TERMINATION
8.1 Termination.
(a) This Agreement may be terminated at any time prior to
the Closing Date:
(i) by mutual written agreement of Paradigm, OBF
and ▇▇▇▇▇▇;
(ii) by Paradigm, if there has been a breach by
OBF or ▇▇▇▇▇▇ of any representation, warranty, covenant or agreement set forth
in this Agreement on the part of OBF or ▇▇▇▇▇▇ which is material and which OBF
or ▇▇▇▇▇▇ fails to cure within three (3) business days after notice thereof is
given by Paradigm (except that no cure period shall be provided for a breach by
OBF or ▇▇▇▇▇▇ which by its nature cannot be cured);
(iii) by OBF or ▇▇▇▇▇▇, if there has been a
breach by Paradigm of any representation, warranty, covenant or agreement set
forth in this Agreement on the part of Paradigm which is material and which
Paradigm fails to cure within three (3) business days after notice thereof is
given by OBF (except that no cure period shall be provided for a breach by
Paradigm which by its nature cannot be cured);
(iv) by Paradigm, OBF or ▇▇▇▇▇▇, if this
transaction shall not have been consummated on or before June 20, 2000.
(b) Where action is taken to terminate this Agreement
pursuant to this Section 8.1 it shall be sufficient for such action to be
authorized by the Board of Directors or other governing entity of the party
taking such action.
(c) In the event of termination of this Agreement as
provided in this Section, the provisions of this Agreement shall forthwith
become void, except that the agreements contained or referred to in Sections
11.15 (expenses), 11.16 (brokers, finders), 11.17 (public announcements) and
11.18 (confidentiality) shall survive. Notwithstanding the foregoing, in the
event of a breach of this Agreement by any party hereto, nothing herein shall
limit the remedies at law or in equity of the other party with respect thereto.
ARTICLE IX
INDEMNIFICATION
9.1 Obligation of ▇▇▇▇▇▇ To Indemnify. Subject to the time
limitations set forth in Section 9.1 below, ▇▇▇▇▇▇ agrees to indemnify, defend
and hold harmless Paradigm and its respective directors, officers, employees,
agents, subsidiaries, affiliates, successors and assigns, from and against all
losses, liabilities, claims, damages, deficiencies, costs and expenses,
including without limitation interest, penalties and attorneys' fees and
disbursements (collectively, the "Losses" and singularly, a "Loss"), based upon,
-23-
arising out of or otherwise related to any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of OBF or ▇▇▇▇▇▇ contained in
this Agreement or in any document or other papers delivered pursuant to this
Agreement and in respect of any third party claim made based upon facts alleged
which, if true, would have constituted any such inaccuracy or breach. For
purposes of this Agreement, Paradigm shall be deemed to have suffered a Loss if
and to the extent that such Loss has been suffered by OBF.
9.2 Notice and Opportunity to Defend.
(a) Notice of Asserted Liability. Promptly after receipt
by any person entitled to indemnity under this Agreement (the "Indemnitee") of
notice of any demand, claim or circumstances which, with the lapse of time,
would or might give rise to a claim or the commencement or threatened
commencement of any action, proceeding or investigation (an "Asserted
Liability") that may result in a Loss, the Indemnitee may, at its option, give
notice thereof (the "Claims Notice") to ▇▇▇▇▇▇ (the "Indemnifying Party"). The
Claims Notice shall describe the Asserted Liability in reasonable detail, and
shall indicate the amount (estimate, if necessary and to the extent feasible) of
the Loss that has been or may be suffered by the Indemnitee.
(b) Opportunity To Defend. The Indemnifying Party may
elect to compromise or defend, at its own expense and by its own counsel, any
Asserted Liability. If the Indemnifying Party elects to compromise or defend
such Asserted Liability, it shall within thirty (30) days after the Claims
Notice is given or sooner, if the nature of the Asserted Liability so requires,
notify the Indemnitee of its intent to do so, and the Indemnitee shall
cooperate, at the expense of the Indemnifying Party, in the compromise of, or
defense against, such Asserted Liability. If the Indemnifying Party elects not
to compromise or defend the Asserted Liability, fails to notify the Indemnitee
of its election as herein provided or contests its obligation to indemnify under
this Agreement, the Indemnitee may pay, compromise or defend such Asserted
Liability. Notwithstanding the foregoing, neither the Indemnifying Party nor the
Indemnitee may settle or compromise any claim over the objection of the other,
provided, however, that consent to settlement or compromise shall not be
unreasonably withheld. In any event, the Indemnitee and the Indemnifying Party
may participate, at their own expense, in the defense of such Asserted
Liability. If the Indemnifying Party chooses to defend any claim, the Indemnitee
shall make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such defense.
(c) Disputes with Third Parties. Anything in this Section
9.2(c) to the contrary notwithstanding, in the case of any Asserted Liability by
any supplier, distributor, agent, broker, shareholder, franchisee, customer or
other third party doing business with OBF prior to the Closing in connection
with which Paradigm may make a claim against ▇▇▇▇▇▇ for indemnification pursuant
to this Section 9.2(c), Paradigm may, at its option, give a Claims Notice with
respect thereto but, unless Paradigm and the Indemnifying Party otherwise agree,
Paradigm shall have the exclusive right at its option to defend any such matter,
subject to the duty of Paradigm to consult with the Indemnifying Party and its
attorneys in connection with such defense and provided that no such matter shall
be compromised or settled by Paradigm without the prior consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. The
-24-
Indemnifying Party shall have the right to recommend in good faith Paradigm
proposals to compromise or settle claims brought by a supplier, agent, or
customer, and Paradigm agrees to present such proposed compromises or
settlements to such supplier, distributor, shareholder, franchisee or customer.
All amounts required to be paid in connection with any such Asserted Liability
pursuant to the determination of any court, governmental or regulatory body or
arbitrator, and all amounts required to be paid in connection with any such
compromise or settlement consented to by the Indemnifying Party, shall be borne
and paid by the Indemnifying Party. The parties agree to cooperate fully with
one another in the defense, compromise or settlement of any Asserted Liability.
In the event any compromise, settlement or judgment amount includes amounts
resulting from frivolous or groundless claims or defenses made by Indemnitee,
the Indemnifying Party shall not bear the portion of the amount to be paid
relating to such frivolous or groundless claims.
ARTICLE X
REPURCHASE OPTION
10.1 Option to Repurchase Rights to Flow Analyzer, Inc. ▇▇▇▇▇▇ shall
have the option to repurchase all rights to the Blood Flow Analyzer from
Paradigm for the total Purchase Consideration of 100,000 Paradigm Shares and the
payment of an amount equal to the cash paid to ▇▇▇▇▇▇ at Closing pursuant to
Sections 1.2(ii) and 1.2(iii) in the event Paradigm does not sell at least 500
Blood Flow Analyzers during the five (5) year period beginning on the Closing
Date.
ARTICLE XI
GENERAL PROVISIONS
11.1 Survival of Representations, Warranties, Covenants and
Agreements. Except as provided below with regard to Section 3.15, all
representations, warranties, covenants and agreements in this Agreement or in
any document or instrument delivered pursuant to this Agreement shall be deemed
to be conditions to this transaction and shall survive the consummation of this
transaction for a period of twenty-four (24) months after the Closing Date.
Notwithstanding the foregoing, except as provided below with regard to Section
3.15, all representations, warranties, covenants and agreements shall survive
the Closing Date for forty-eight (48) months following the Closing Date if such
representations, warranties, covenants and agreements are breached due to fraud
or gross negligence. Notwithstanding the foregoing, the tax obligations set
forth in Section 3.15 above shall survive the consummation of this transaction
and the Closing Date for an indefinite period of time.
11.2 Amendment. This Agreement may be amended by the parties hereto,
by action taken by their respective Boards of Directors or governing personnel,
at any time before or after approval of this transaction by OBF; provided,
however, that following approval of this transaction by OBF, no amendment hereto
shall be made that by law requires the further approval of OBF without obtaining
such further approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of both of the parties hereto.
-25-
11.3 Extension; Waiver. At any time prior to the Closing Date, OBF,
▇▇▇▇▇▇ and Paradigm, by action taken by their respective Boards of Directors or
governing personnel, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other, (ii) waive
any inaccuracies in the representations and warranties made to it contained
herein or in any document or instrument delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of it
contained herein. Any agreement on the part of either party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by such party.
11.4 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) or if sent by telecopy,
confirmation received, to the respective party at the following addresses and/or
telecopy numbers, with the original thereof being mailed by registered or
certified mail, return receipt requested (or at such other address or telecopy
number for the parties hereto as shall be specified by like notice):
(a) If to Paradigm, to:
Paradigm Medical Industries, Inc.
2355 South ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
and Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Mackey Price & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to ▇▇▇▇▇▇ or OBF, to:
▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 9JU
England
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: 011 441 666 823763
-26-
11.5 Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such references shall be deemed to be to a Section or
Exhibit to this Agreement, unless otherwise indicated. The words "include",
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation". The Table of Contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
11.6 Counterparts. This Agreement may be executed in one or more
counterparts, all of which, when taken together, shall be considered one and the
same agreement, and this Agreement shall become effective when one or more
counterparts have been signed by each of the parties hereto and delivered to the
other parties hereto.
11.7 Entire Agreement. This Agreement and the documents and
instruments attached hereto as Exhibits and all other agreements between the
parties hereto delivered pursuant to this Agreement constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior agreements and understandings, both written and oral,
between the parties hereto with respect to the subject matter hereof and are not
intended to confer upon any other person or entity any rights or remedies
hereunder except as otherwise expressly provided herein.
11.8 No Transfer. This Agreement and the rights and obligations set
forth herein may not be transferred or assigned by operation of law or otherwise
without the consent of both parties hereto. This Agreement is binding upon and
will inure to the benefit of each party hereto and their respective successors
and permitted assigns.
11.9 Severability. If any provision of this Agreement, or the
application thereof, is for any reason whatsoever and to any extent deemed to be
invalid or unenforceable, the remainder of this Agreement and the application
thereof to other persons, entities or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties hereto
further agree to replace any such void or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of the void or
unenforceable provision hereof.
11.10 Other Remedies. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party hereto will be deemed
cumulative with, and not exclusive of, any other remedy conferred hereby or by
law or equity on such party; and the exercise of any one remedy will not
preclude the exercise of any other remedy otherwise available at law or in
equity.
11.11 Further Assurances. Both parties hereto agree to cooperate
fully with other party hereto and to execute such further instruments, documents
and agreements and to give such further written assurances as may be reasonably
requested by the other party hereto in order to evidence and reflect the
transactions described herein and contemplated hereby and to carry into effect
the intents and purposes of this Agreement, including any merger of OBF with
Paradigm or any entity following the Closing.
-27-
11.12 No Third Party Beneficiary Rights. No provision of this
Agreement is intended, nor will any provision hereof be interpreted, to provide
or create any third party beneficiary rights or any other rights of any kind
whatsoever in any client, customer, supplier affiliate, stockholder, employee,
distributor, partner of either party hereto or any other person or entity, and
all of the provisions hereof shall be deemed to be personal in nature and
between the parties to this Agreement.
11.13 Mutual Drafting. This Agreement is the joint product of
Paradigm, ▇▇▇▇▇▇ and OBF, and each provision hereof has been subject to the
mutual consultation, negotiation and agreement of Paradigm and ▇▇▇▇▇▇, and shall
not be construed for or against either party hereto.
11.14 Governing Law. This Agreement shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware, without giving effect to its choice of law principles.
11.15 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby and thereby shall be
paid by the party incurring such costs and expenses.
11.16 Brokers or Finders. Paradigm, ▇▇▇▇▇▇ and OBF each represent,
as to itself and, to the extent applicable, its subsidiaries, that, no agent,
broker, investment banker or other firm or person is, or will be, entitled to
any broker's or finder's fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement.
11.17 Public Announcements. Each party hereto will consult in
advance with the other concerning the timing and content of any announcements,
press releases and public statements concerning this transaction and will not
make any such announcement, press release or public statement without the
other's prior consent; provided, however, that Paradigm may make any public
statement or announcement concerning this transaction without OBF's or ▇▇▇▇▇▇'▇
prior consent if, in the opinion of counsel for Paradigm, such public statement
or announcement is required or advisable to comply with applicable law.
11.18 Confidentiality. No party hereto shall release, publish,
reveal or disclose, directly or indirectly, any business or technical
information of the other party hereto or any of its Subsidiaries considered by
the other party as "confidential", "secret" or "proprietary" (or words of
similar meaning) including, but not limited to, systems, processes, formulas,
recipes, data, functional specifications, computer programs, blue prints,
know-how, improvements, discoveries, developments, designs, inventions,
techniques, new products, marketing and advertising methods, distribution
methods and programs, supplier agreements, customer or distributor lists,
pricing policies, financial information, projections, forecasts, strategies,
budgets or other information related to its business or its distributors,
suppliers or customers (collectively, "Confidential Material"), except to the
party's directors, officers, employees, financial advisors, legal counsel,
independent public accountants or other agents, advisors or representatives who
shall require access thereto on a "need-to-know" basis for the purpose of the
-28-
transactions contemplated by this Agreement and who shall agree in writing to be
bound by the terms of this Section 11.18. The parties hereto agree to take all
reasonable precautions to safeguard the confidentiality of the other party's
Confidential Material and to exercise the same degree of care with respect to
such other party's Confidential Material that the party in possession of such
Confidential Material exercises with respect to its own confidential
information. Neither party hereto shall make or permit to be made, except in
furtherance of the transactions contemplated by this Agreement, any copies,
abstracts or summaries of the other party's Confidential Material. In addition,
all Confidential Material belonging to the other party hereto shall be used
solely for the purpose of the investigation and evaluation contemplated by this
Section 11.18, and shall not be used for any other purpose, including any use
that would be to the detriment of the other party hereto or its Subsidiaries,
nor shall such Confidential Material be used in competition with the other party
hereto or its Subsidiaries. The restrictions on disclosure of information
contained in this Section 11.18 do not extend to any information that (a) is
already known to the receiving party; (b) was or is independently developed by
the receiving party; (c) is now or hereafter becomes available to the public
other than as a consequence of a breach of obligations under this Section 11.18
or (d) is disclosed to third parties hereto outside of the receiving party in
accordance with terms approved by the disclosing party. Upon written request,
the parties hereto shall return all writings, documents and materials containing
Confidential Material with a letter confirming that all copies, abstracts and
summaries of the Confidential Material have been returned or destroyed. In the
event that either party hereto becomes legally required to disclose the other
party's Confidential Material, it shall provide such other party with prompt
written notice of such requirement prior to such disclosure. In the event that a
protective order or other remedy is not obtained, or such other party waives
compliance with the provisions of this Section 11.18 with respect to the
Confidential Material subject to such requirement, such party agrees to furnish
only that portion of the Confidential Material that it is legally required to
furnish and, where appropriate, agrees to use its best efforts to obtain
assurances that such Confidential Material will be accorded confidential
treatment.
11.19 Attorneys' Fees. In the event any legal action or arbitration
or other proceeding is brought for the enforcement of this Agreement or in
connection with any other provisions of this Agreement, the successful and
prevailing party or parties shall be entitled to reasonable attorneys' fees and
other costs incurred in such action or proceeding.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-29-
IN WITNESS WHEREOF, Paradigm, OBF and the ▇▇▇▇▇▇ have each caused
this Agreement to be signed effective as of the date first written above.
OCULAR BLOOD FLOW, LTD. PARADIGM MEDICAL INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------- -----------------------
Its: Managing Director Its: CEO
---------------------- --------
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-30-
EXHIBIT INDEX
Exhibit 3 OBF/▇▇▇▇▇▇ Disclosure Schedule
Exhibit 5 Paradigm Disclosure Schedule
ANNEXES
Annex I Royalty Agreement
Annex II Registration Rights Agreement
-31-