INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Indemnification Agreement") dated as
of June ____, 2000, is entered into by and among Paradigm Medical Industries,
Inc., a Delaware corporation ("Paradigm" or the "Buyer"), Paradigm Subsidiary,
Inc., a Delaware corporation and wholly owned subsidiary of Paradigm
("Subsidiary"), Vismed, Inc., d/b/a Dicon, a California corporation "(Dicon")
and the undersigned principal shareholders of Dicon (the "Dicon Shareholders")
(Paradigm, Subsidiary, Dicon and Dicon Shareholders collectively, the
"Parties").
W I T N E S S E T H :
WHEREAS, prior to the execution of this Indemnification 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 in the Plan of Reorganization and pursuant
to which Dicon will become a wholly owned subsidary of Paradigm; and
WHEREAS, the Plan of Reorganization provides that after the Effective Time
of the Merger, the holders of Dicon Common, pro rata in accordance with their
ownership of Dicon Common as of the Effective Time of the Merger, shall succeed
to Dicon's indemnification rights and obligations under the Plan of
Reorganization; and
WHEREAS, the obligation of Paradigm to proceed with the transactions
contemplated by the Plan of Reorganization is subject to, among other things,
the condition that the Dicon Shareholders execute this Indemnification Agreement
whereby the Dicon Shareholders shall expressly agree to be obligated for Dicon's
indemnification obligations under the Plan of Reorganization.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
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ARTICLE 1
DEFINITIONS
1.1 Certain Terms Defined. The terms defined in the Plan of Reorganization shall
for all purposes of this Indemnification Agreement have the meanings specified
in the Plan of Reorganization, unless the context expressly or by necessary
implication otherwise requires.
ARTICLE 2
AGREEMENT TO INDEMNIFY
2.1 Indemnification by Dicon Shareholders. Effective upon and after the
Effective Time of the Merger, the Dicon Shareholders, pro rata in accordance
with their ownership of Dicon Common as of the Effective Time of the Merger,
hereby expressly assume and agree to be obligated for Dicon's indemnification
obligations under the Plan of Reorganization. Without limiting the generality of
the foregoing sentence, Dicon Shareholders hereby expressly agree to indemnify
and hold harmless Paradigm and Subsidiary against and in respect of any direct
out-of-pocket loss, damage, or expense arising out of:
(a) Any claim, liability, or obligation suffered or incurred by Paradigm or
Subsidiary resulting from or arising out of any misrepresentation, breach, or
non-fulfillment of any representation, warranty, covenant, or agreement on the
part of Dicon contained in the Plan of Reorganization; and
(b) All actions, suits, investigations, proceedings, demands, assessments,
judgments, reasonable attorney's fees, direct out-of-pocket costs and expenses
incident to the foregoing, including (but not limited to) any audit or
investigation by any governmental entity.
2.2 Survival of Obligation to Indemnify. The provisions in the Plan of
Reorganiization dealing with indemnification including, but not limited to,
provisions dealing with the survival of the indemnification obligations of Dicon
and notice and procedure requirements shall apply equally to the indemnification
obligations of Dicon Shareholders under this Indemnification Agreement.
Accordingly, it is agreed that after the maximum aggregate amount for which any
shareholder of Dicon Common is required to indemnify Paradigm or Subsidiary
pursuant to this Indemnification Agreement and the Plan of Reorganization shall
not exceed such shareholder's Pro Rata Indemnification Obligation (as defined
below). A shareholder's Pro Rata Indemnification Obligation shall be determined
by multiplying (x) the Indemnity Amount by (y) the quotient of (A) the number of
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shares of Paradigm Common paid to such shareholder under the Plan of
Reorganization, divided by (B) the total number of shares of Paradigm Common
paid to shareholders of Dicon Common hereunder as part of the Merger
Consideration. Each of the undersigned Dicon Shareholders represents and
warrants that the number of shares of Dicon Common owned by him or it is set
forth following his or its signature.
ARTICLE 3
MISCELLANEOUS
3.1 Termination; Expenses. This Indemnification Agreement shall terminate in the
event of and upon termination of the Plan of Reorganization.
3.2 Prior Agreements; Modifications. This Indemnification Agreement 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,
Dicon Shareholders, Subsidiary and Paradigm.
3.3 Captions and Table of Contents. The captions and table of contents in this
Indemnification Agreement are for convenience only and shall not be considered a
part of or affect the construction or interpretation of any provision of this
Indemnification Agreement.
3.4 Governing Law. The terms of this Indemnification 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 Indemnification 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 Indemnification
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:
If to Paradigm or Subsidiary:
2355 South 1070 West
Salt Lake City, Utah 84119
Attention: Thomas F. Motter, President and
Chief Executive Officer
Facsimile Number:
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 Dicon Shareholders:
To their respective addresses or facsimile telephone numbers
following their signatures below.
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 Indemnification Agreement by Dicon Shareholders may be
expressly waived only in writing by Paradigm. 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 Paradigm or Subsidiary in exercising any right,
power, or privilege under this 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. The rights and remedies expressly specified in this
Indemnification Agreement are cumulative and are not exclusive of any rights or
remedies which either party would otherwise have.
3.9 Attorney's Fees. In the event any party hereto institutes litigation to
enforce its rights or remedies under this Indemnification Agreement, the party
prevailing in such litigation shall be entitled to receive an award from the
non-prevailing party of the prevailing party's reasonable attorney's fees and
costs incurred in connection with such litigation. The foregoing shall include
reasonable attorney's fees and costs incurred at trial, on any appeal and in any
proceeding in bankruptcy.
3.10 Consent to Jurisdiction. Each of the Parties irrevocably consents to the
non-exclusive jurisdiction of the courts of the State of Utah located in the
County of Salt Lake, and of the United States District Court for the Central
District of Utah for purposes of any suit, action, or proceeding relating to
this Indemnification Agreement or the Plan of Reorganization (a "Related
Proceeding") and irrevocably waives, to the fullest extent it may effectively do
so, (i) any objection it may have to the laying of venue of any Related
Proceeding in any such court, and (ii) the defense of an inconvenient forum to
the maintenance of any Related Proceeding in any such court. IN WITNESS WHEREOF,
each of the parties hereto, intending to be legally bound hereby, has duly
executed this Indemnification Agreement as of the date first written above.
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Dicon:
VISMED, INC., d/b/a DICON
By: /s/ Mark H. Miehle
--------------------
Mark H. Miehle, President and
and Chief Executive Officer
Paradigm:
PARADIGM MEDICAL INDUSTRIES, INC.
By: /s/ Thomas F. Motter
--------------------
Thomas F. Motter, President and
Chief Executive Officer
Subsidiary:
PARADIGM SUBSIDARY, INC.
By: /s/ Thomas F. Motter
----------------------
Thomas F. Motter, President and
Chief Executive Officer
Dicon Shareholders:
POLYCARE OPTICAL
By: /s/ Sammy Simarco
-----------------------
Its:_________________________
Number of Shares Owned: 4,509,868
Facsimile Telephone Number:
Address:
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/s/ Mark R. Miehle
------------------
Mark R. Miehle
Number of Shares Owned: 327,560
Facsimile Telephone Number:
Address:
/s/ Neil Davis
-----------------
Neil Davis
Number of Shares Owned: 240,000
Facsimile Telephone Number:
Address:
RH CAPITAL ASSOCIATES
/s/ Robert Horwitz
--------------------
___________________________
Its:_______________________
Number of Shares Owned: 152,667
Facsimile Telephone Number:
Address:
Eberhardt Family Trust
(UTD) dated 3/12/92
By: ________________________
Richard Eberhardt, Trustee
Number of Shares Owned:86,670
Facsimile Telephone Number:
Address:
/s/ George Mansfield
------------------------
George Mansfield
Number of Shares Owned: 114,000
Facsimile Telephone Number:
Address:
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