AGREEMENT OF MERGER
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This Agreement of Merger (this "Merger Agreement') dates as of June 5,
2000, is entered into by and among Paradigm Medical Industries, Inc., a Delaware
corporation "Paradigm" or the "Buyer"), Paradigm Subsidiary, Inc., a Utah
corporation and wholly owned subsidiary of Paradigm ("Subsidiary") and Vismed,
Inc., d/b/a Dicon, a California corporation ("Dicon") (Paradigm, Subsidiary, and
Dicon collectively, the "Parties").
W I T N E S S E T H :
WHEREAS, prior to the execution of this Merger Agreement, Paradigm,
Subsidiary and Dicon have entered into an Agreement and Plan of Reorganization
of even date herewith (the "Plan of Reorganization") providing for certain
representations, warranties, and agreements in connection with the transaction
contemplated; and
WHEREAS, the boards of directors of Paradigm, Subsidiary and Dicon have
approved the acquisition of Dicon by Paradigm; and
WHEREAS, the boards of directors of Paradigm, Subsidiary and Dicon have
approved the merger of Subsidiary into Dicon (the "Merger") upon the terms and
subject to the conditions set forth herein and in the Plan of Reorganization and
pursuant to which Dicon will become a wholly owned subsidary of Paradigm; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code")
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Terms Defined. The terms defined in the Plan of Reorganization shall
for all purposes of this Merger Agreement have the meanings specified in the
Plan of Reorganization, unless the context expressly or by necessary implication
otherwise requires.
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ARTICLE 2
AGREEMENT TO MERGE
2.1 Agreement to Merge. In accordance with the provision of Section 16-10a-1101
et seq. of the Utah Revised Business Corporation Act and Section 1100 et seq. of
the California Corporations Code, at the Effective Time of the Merger Subsidiary
shall be merged with and into Dicon upon the terms and conditions of this Merger
Agreement and the Plan of Reorganization. Pursuant to such Merger:
(a) The separate existence of Subsidiary shall cease in accordance with the
provisions of Section 16-10a-1106 of the Utah Revised Business Corporation Act
and Section 1100 et seq. Of the California Corporations Code.
(b) Dicon will be the Surviving Corporation in the Merger and will continue
to be governed by the laws of the State of California, and the separate
corporate existence of Dicon and all of its rights, privileges, immunities and
franchises, public or private, and all of its duties and liabilities as a
corporation organized under the laws of the State of California, will continue
unaffected by the Merger.
(c) The shares of Dicon Common owned by Dicon's shareholders immediately
prior to the Effective Time of the Merger shall be converted into Paradigm
Common in accordance with the terms and conditions of this Merger Agreement and
the Plan of Reorganization.
(d) The Dicon Options owned by Optionholder immediately prior to the
Effective Time of the Merger shall be converted into Paradigm Options in
accordance with the terms and conditions of this Merger Agreement and the Plan
of Reorganization.
(e) The shares of Subsidiary Common owned by Paradigm immediately prior to
the Effective Time of the Merger shall, by virtue of the Merger and without any
action on the part of Paradigm, automatically be converted into Dicon Common so
that, following such conversion, Dicon shall be a wholly owned subsidiary of
Paradigm.
2.2 Conversion of Dicon Common into Paradigm Common.
(a)(1) The total amount of Paradigm Common to be delivered by Paradigm to the
holders of Dicon Common, pro rata to their respective share ownership, shall be
921,500 shares, subject to adjustment as described below (such amount as
adjusted, the "Merger Consideration"). In addition, Paradigm shall deliver, on
the Closing Date, 22,500 shares of Paradigm Common to Mark R. Miehle, President
and Chief Executive Officer of Dicon, representing a transaction fee in
connection with the Merger.he Merger Consideration shall be provided by Paradigm
through Subsidiary and by virtue of Subsidiary's merger with and into Dicon.
Each share of Dicon Common issued and outstanding immediately prior to the
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Effective Time of the Merger shall, by virtue of the Merger and without any
action on the part of the holder thereof, automatically be canceled and
converted into the right to receive an amount per share equal to the Merger
Consideration divided by the total number of shares of Dicon Common issued and
outstanding at the Effective Time of the Merger, rounded to the nearest whole
share (such amount, the "Per Share Amount"). Each holder of a share or shares of
Dicon Common immediately prior to the Effective Time of the Merger shall be
virtue of the Merger and without any action on the part of such holder cease
being a shareholder of Dicon and automatically be converted into a shareholder
of Paradigm in an amount equal to the number of shares of Dicon Common held of
record by such holder at such time multiplied by the Per Share Amount. Rights of
dissenting shareholders are described in Section 2.3.
(a)(2) Each Dicon Option outstanding immediately prior to the Effective Time
of the Merger shall, by virtue of the Merger and without any action on the part
of the Optionholder, automatically be converted into the option to purchase
Paradigm Common (a "Paradigm Option"). The terms and provisions of the Paradigm
Option shall be the same as the terms and provisions of the Dicon Option except
that:
(i) the number of shares of Paradigm Common which may be purchased
pursuant to each Paradigm Option shall be determined by multiplying the number
of shares of Dicon Common covered by the applicable Dicon Option times the Per
Share Amount, and
(ii) the purchase price for each share of Paradigm Common covered by the
Paradigm Option shall be determined by dividing the purchase price for each
share of Dicon Common covered by the applicable Dicon Option by the Per Share
Amount.
(b) The Merger Consideration shall be delivered to the Disbursing Agent as
follows:
(i) No later than 10:00 a.m. (Mountain Standard Time) on the Closing
Date, paradigm and Subsidiary shall deliver the Merger Consideration to the
Disbursing Agent.
(ii) Promptly after the Effective Time of the Merger, and in accordance
with Section 2.3 hereof, the Disbursing Agent shall deliver to the holders of
Dicon Common at the Effective Time of the Merger, the Merger Consideration in
the proportion set forth in Section 2.2(a)(1) hereof.
2.3 Delivery of Certificates for Paradigm Common and Surrender of Certificates
for Dicon Common. All deliveries of Merger Consideration to be made to the
shareholders of Dicon Common shall be made by delivery of a certificate of
Paradigm Common by the Disbursing Agent to and in the name of each holder of
Dicon Common or its designated agent or transferee. After the Effective Time of
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the Merger, there shall be no further registry of transfers in respect of Dicon
Common. Promptly after the Effective Time of the Merger, Paradigm will cause the
Disbursing Agent to send a notice and a transmittal form to each holder of
record of Dicon Common immediately prior to the Effective Time of the Merger
advising such holders of the terms of the Merger Consideration to be effected in
connection with the Merger, the procedure for delivery to such shareholder of
the amount of Paradigm Common stock which such holder is entitled pursuant to
the terms hereof and the Plan of Merger. If any such Paradigm Common is to be
delivered to a name other than that in which the stock certificate is
registered, the certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer, and the person requesting such Paradigm
Common shall pay to the Disbursing Agent any transfer or other fees required by
reason of the deliver to any name other than that of the registered holder of
the certificate surrendered, or establish to the satisfaction of the Disbursing
Agent that such fee has been paid or is not applicable.
2.4 Dissenting Shareholders. The duties and rights of a dissenting shareholder
of Dicon Common, as well as the duties and rights of the Surviving Corporation
shall be as provided in the Utah Revised Business Corporation Act and the
California Corporations Code. If any such shareholder shall not perfect his
rights as a dissenting shareholder under Section 1300 et seq. of the California
Corporations Code, or such shareholder shall thereafter withdraw such election
or otherwise become bound by the provisions of this Agreement and the Plan of
Merger pursuant to the California Corporations Code, the amount of Paradigm
Common delivered to the Disbursing Agent with respect to such shareholder shall
be delivered by the Disbursing Agent to such shareholder in exchange for the
certificates representing such shareholder's shares of Dicon Common. If any such
shareholder thereafter receives payment for such shareholder's shares as
provided in the California Corporation Code the Disbursing Agent shall return to
the Surviving Corporation those shares of Paradigm Common which the Disbursing
Agent had been holding as due to such shareholder pursuant to the Plan of
Merger.
2.5 Surviving Corporation. Except as provided otherwise in the Plan of
Reorganization:
(a) The Articles of Incorporation of Dicon as in effect immediately prior to
the Effective Time of the Merger shall be the Articles of Incorporation of the
Surviving Corporation after the Effective Time.
(b) the Bylaws of Dicon as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation after the Effective Time.
(c) from and after the Effective Time, the Board of Directors and officers of
Paradigm shall be the Board of Directors and officers of the Surviving
Corporation.
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2.6 Effectiveness of Merger. The Merger shall become effective at the Effective
Time of the Merger as defined in the Plan of Reorganization.
ARTICLE 3
MISCELLANEOUS
3.1 Termination. This Merger Agreement shall terminate in the event of and upon
termination of the Plan of Reorganization.
3.2 Prior Agreements; Modifications. This Merger Agreement and the Plan of
Reorganization constitute the entire agreement between the parties with respect
to the subject matter hereof, and shall supersede all prior agreements,
documents, or other instruments with respect to the matters covered hereby. This
Agreement may be amended by an instrument in writing signed by each of Dicon,
Subsidiary and Paradigm ; provided, however, that no such amendment entered into
without the written consent of the shareholders of Dicon may decrease the Merger
Consideration.
3.3 Captions and Table of Contents. The captions and table of contents in this
Merger Agreement are for convenience only and shall not be considered a part of
or affect the construction or interpretation of any provision of this Merger
Agreement.
3.4 Governing Law. The terms of this Merger Agreement shall be governed by, and
interpreted and construed in accordance with the provisions of, the laws of the
State of Delaware without regard to its conflicts of law principles.
3.5 Counterparts. This Merger Agreement may be executed in any number of
counterparts, each of which, when so executed, shall constitute an original copy
hereof.
3.6 Severability. If any clause, provision, or section of this Agreement is
ruled illegal, invalid, or unenforceable by any court of competent jurisdiction,
the invalidity or unenforceability of such clause, provision, or section shall
not affect any of the remaining provisions hereof.
3.7 Notices. Any notice, request, instruction, or other document to be given
hereunder shall be in writing and shall be transmitted by certified or
registered mail, postage prepaid, by reputable express courier, or by facsimile
transmission. The addresses or facsimile telephone numbers to which such
communications shall be sent are as follows:
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If to Dicon:
10373 Roselle Street
San Diego, California 92121
Attention: Mark R. Miehle, President and
Chief Executive Officer
Facsimile Number:
With a copy to:
Luce, Forward, Hamilton & Scripps LLP
600 West Broadway, Suite 2600
San Diego, California 92101
Attention: Dennis J. Doucette, Esq.
Facsimile Number: (619) 232-8311
If to Paradigm:
2355 South 1070 West
Salt Lake City, Utah 84119
Attention: Thomas F. Motter, President and
Chief Executive Officer
Facsimile Number: (801) 977-8973
With a copy to:
Mackey, Price & Williams
170 South Main Street, Suite 900
Salt Lake City, Utah 84101-1655
Attention: Randall A. Mackey, Esq.
Facsimile Number: (801) 575-5006
If to the Disbursing Agent:
Mackey, Price & Williams
170 South Main Street, Suite 900
Salt Lake City, Utah 84101-1655
Attention: Randall A. Mackey, Esq.
Facsimile Number: (801) 575-5006
or to such other address or facsimile telephone number as any party may from
time to time designate to the others in writing.
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3.8 Waiver. The performance of any covenant or agreement or the fulfillment of
any condition of this Merger Agreement by Dicon, Subsidiary or Paradigm may be
expressly waived only in writing by the other parties. Any waiver hereunder
shall be effective only in the specific instance and for the purpose for which
given. No failure or delay on the part of Dicon, Subsidiary or Paradigm in
exercising any right, power, or privilege under this Merger Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege.
IN WITNESS WHEREOF, each of the parties hereto, intending to be legally bound
hereby, has duly executed this Merger Agreement as of the date first written
above.
VISMED, INC., d/b/a DICON
By: /s/ Mark R. Miehle
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Mark R. Miehle, President and
and Chief Executive Officer
PARADIGM MEDICAL INDUSTRIES, INC.
By: /s/ Thomas F. Motter
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Thomas F. Motter, President and
Chief Executive Officer
PARADIGM SUBSIDIARY, INC.
By: /s/ Thomas F. Motter
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Thomas F. Motter, President and
Chief Executive Officer
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