REGISTRATION RIGHTS AGREEMENT
June 20, 2000
To the holder of all of the outstanding
securities of Ocular Blood Flow, Ltd. ("OBF"),
pursuant to the Stock Purchase Agreement
dated June 9, 2000
Dear Sir:
This will confirm that, in consideration of your agreement to sell and
transfer to Paradigm Medical Industries, Inc, a Delaware corporation,
("Paradigm"), all of the securities of OBF held by you, in exchange for shares
of the restricted Common Stock of Paradigm and a cash payment, all pursuant to,
and as provided in, that Stock Purchase Agreement dated June 9, 2000 (the
"Purchase Agreement") entered into by and among Paradigm, OBF and yourself and
as an inducement to OBF and you to consummate the transaction contemplated by
the Purchase Agreement, Paradigm covenants and agrees with the you as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the
Securities Act.
"Common Stock" shall mean the common stock, $0.001 par value
per share, of Paradigm, as constituted as of the date of this
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Restricted Stock" shall mean the shares of Paradigm Common
Stock issued to you pursuant to the Purchase Agreement, excluding
shares (i) which have been registered under the Securities Act pursuant
to an effective registration statement filed thereunder and disposed of
in accordance with the registration statement covering them; or (ii)
which have been publicly sold pursuant to Rule 144 under the Securities
Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time.
"Selling Expenses" shall mean the expenses so described in
Section 5.
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2. Restrictive Legend. Each certificate representing Common Stock
shall, except as otherwise provided herein be stamped or otherwise imprinted
with a legend substantially in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE. THIS SECURITY IS SUBJECT TO A REGISTRATION
RIGHTS AGREEMENT BY AND BETWEEN PARADIGM, PARADIGM SUBSIDIARY AND THE
SHAREHOLDER, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF
PARADIGM.
3. Notice of Proposed Transfer. Prior to any proposed transfer of any
Restricted Stock (other than under the circumstances described in Section 4),
you shall give written notice to Paradigm of your intention to effect such
transfer. The notice shall describe the manner of the proposed transfer and
shall be accompanied by an opinion of counsel satisfactory to Paradigm to the
effect that the proposed transfer may be effected without registration under the
Securities Act, whereupon you shall be entitled to transfer such Restricted
Stock in accordance with the terms of its notice; provided, however, that no
such opinion of counsel shall be required for a transfer to one or more partners
of the transferor (in the case of a transferor that is a partnership) or to an
affiliated corporation (in the case of a transferor that is a corporation). Each
certificate for Restricted Stock transferred as above provided shall bear the
legend set forth in Section 2, except that such certificate shall not bear such
legend if (i) Paradigm receives a satisfactory opinion of counsel that such
transfer is in accordance with the provisions of Rule 144 (or any other rule
permitting public sale without registration under the Securities Act); or (ii)
the opinion of counsel referred to above is to the further effect that the
transferee and any subsequent transferee (other than an affiliate of Paradigm)
would be entitled to transfer such securities in a public sale without
registration under the Securities Act.
4. Demand Registration. For a period of five (5) years from the date
beginning six (6) months from the date hereof (the "Term"), you may make a
written request for registration under the Securities Act (the "Demand
Registration") of all or part of your Restricted Stock; provided, however, that
Paradigm need effect a total of only one Demand Registration on your behalf.
Such request shall specify the number of shares of Restricted Stock proposed to
be registered. You shall execute such documentation as may be reasonably
necessary to effect the registration and resale of your Restricted Stock
proposed to be included in such a registration statement upon the exercise of
the Demand Registration.
5. Registration Procedures. If and whenever Paradigm is required by the
provisions of Section 4 to use its best efforts to effect the registration of
your Restricted Stock under the Securities Act, Paradigm will, as expeditiously
as possible:
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(a) prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in paragraph (a) above and comply with the provisions of
the Securities Act with respect to the disposition of all Restricted Stock
covered by such registration statement in accordance with the holders' intended
method of disposition set forth in such registration statement for such period;
(c) furnish to you such number of copies of the registration
statement and the printed prospectus included therein (including each
preliminary prospectus) as you reasonably may request in order to facilitate the
public sale or other disposition of your Restricted Stock covered by such
registration statement;
(d) after the filing of the registration statement, Paradigm
will promptly notify you of all comments delivered to Paradigm by the Commission
and take all reasonable actions required to respond to such comments;
(e) use its best efforts to register or qualify the Restricted
Stock covered by such registration statement under the securities or "blue sky"
laws of such jurisdictions as you reasonably shall request, provided, however,
that Paradigm shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction;
(f) use its best efforts to list the Restricted Stock covered
by such registration statement with any securities exchange on which the Common
Stock of Paradigm is then listed;
(g) immediately notify you at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which Paradigm has knowledge as a result of which the
prospectus contained in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing; and
(h) in connection with each registration hereunder, you will
furnish to Paradigm in writing such information with respect to themselves and
the proposed distribution by them as reasonably shall be necessary in order to
assure compliance with applicable securities laws.
6. Expenses. All expenses incurred by in connection with a registration
pursuant to Section 4, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for Paradigm, fees and expenses (including
counsel fees) incurred in connection with complying with state securities or
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"blue sky" laws, fees of the National Association of Securities Dealers, Inc.,
transfer taxes, and fees of transfer agents and registrars, shall be borne by
Paradigm; provided, however, that Paradigm shall not be required to pay for any
registration proceeding begun pursuant to Section 4 if the registration request
is subsequently withdrawn by the Registered Holder.
7. Indemnification and Contribution.
(a) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant to Section 4, Paradigm will indemnify
and hold you harmless against any losses, claims, damages or liabilities, joint
or several, to which you may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Restricted Stock were registered under the Securities Act
pursuant to Section 4, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse you for any legal or other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that Paradigm will not be liable in any
such case if and to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information furnished
by any such seller, or any such controlling person in writing specifically for
use in such registration statement or prospectus.
(b) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant to Section 4, you will indemnify and
hold harmless Paradigm, each person, if any, who controls Paradigm within the
meaning of the Securities Act, each officer of Paradigm who signs the
registration statement, and each director of Paradigm, against all losses,
claims, damages or liabilities, joint or several, to which Paradigm or such
officer, director, or controlling person may become subject under the Securities
Act or otherwise insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the registration
statement under which such Restricted Stock was registered under the Securities
Act pursuant to Section 4, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse Paradigm and each such officer, director, and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that you will be liable hereunder in any
such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to you, as such, furnished in writing to
Paradigm by you specifically for use in such registration statement or
prospectus, and provided, further, however, that your liability shall not exceed
the net proceeds received by you from the sale of Restricted Stock covered by
such registration statement.
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(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action or the threat of commencement, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to such indemnified party other than under this
Section 7 and shall only relieve it from any liability which it may have to such
indemnified party under this Section 7 if and to the extent the indemnifying
party is prejudiced by such omission. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 7 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with and oversight of
counsel so selected, provided, however, that, if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be reasonable
defenses available to it which are different from or additional to those
available to those available to the indemnifying party or if the interests of
the indemnified party reasonably may be deemed to conflict with the interests of
the indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assert such legal defenses and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party as
incurred.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of Restricted Stock exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 7 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 7 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such selling holder
or any such controlling person in circumstances for which indemnification is
provided under this Section 7; then, and in each such case, Paradigm and such
holder will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in such proportion
so that such holder is responsible for the portion represented by the percentage
that the public offering price of its Restricted Stock offered by the
registration statement bears to the public offering price of all securities
offered by such registration statement, and Paradigm is responsible for the
remaining portion; provided, however, that, in any such case, (A) no holder will
be required to contribute any amount in excess of the net proceeds of the sale
of all such Restricted Stock sold by it pursuant to such registration statement;
and (B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity.
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8. Changes in Common Stock. If, and as often as, there is any change in
the Common Stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
9. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Stock to the public without registration:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of Paradigm under the
Securities Act and the Exchange Act; and
(c) furnish you forthwith upon request a written statement by
Paradigm as to its compliance with the reporting requirements of such Rule 144
and of the Securities Act and the Exchange Act, a copy of the most recent annual
or quarterly report of Paradigm, and such other reports and documents so filed
by Paradigm as you may reasonably request in availing itself of any rule or
regulation of the Commission allowing you to sell any Restricted Stock without
registration.
10. Representations and Warranties of Paradigm. Paradigm represents and
warrants to you as follows:
(a) The execution, delivery and performance of this Agreement
by Paradigm have been duly authorized by all requisite corporate action and will
not violate any provision of the law, any order of any court or other agency of
government, the Certificate of Incorporation or Bylaws of Paradigm or any
provision of any indenture, agreement or other instrument to which it or any of
its properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of Paradigm.
(b) This Agreement has been duly executed and delivered by
Paradigm and constitutes the legal, valid and binding obligation of Paradigm,
enforceable in accordance with its terms.
11. Miscellaneous.
(a) All covenants and agreements contained in this Agreement
by or on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto (including,
without limitation, transferees of any Restricted Stock), whether so expressed
or not.
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(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by certified or registered
mail, return receipt requested, postage prepaid, addressed as follows:
(i) if to Paradigm or any other party hereto, at the
address of such party set forth in the Purchase Agreement;
(ii) if to any subsequent holder of Restricted Stock,
to it at such address as may have been furnished to Paradigm
in writing by such holder;
or, in any case, at such other address as shall have been furnished in writing
to Paradigm by you in accordance with the provisions of this paragraph.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(d) This Agreement may not be amended or modified, and no
provision hereof may be waived, without the written consent of Paradigm and the
holders of the outstanding shares of Restricted Stock.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) The obligations of Paradigm to register shares of
Restricted Stock under Section 4 shall terminate five (5) years and six (6)
months from the date of this Agreement.
(g) If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be entitled
to attorney's fees, costs and disbursements in addition to any other relief to
which such party may be entitled.
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this Agreement, whereupon this Agreement
shall be a binding Agreement between Paradigm and you.
Very truly yours,
PARADIGM MEDICAL INDUSTRIES, INC.
By: /s/ Thomas F. Motter
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Title: CEO
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Agreed to and accepted as of the date first above written.
By: ____________________________________
Print Name: _____________________________
Title:____________________________________
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