SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): January 28, 2000
PARADIGM MEDICAL INDUSTRIES, INC.
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(Exact name of registrant as specified in this Charter)
Delaware 0-28498 87-0459536
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identidication No.)
1127 West 2320 South, Suite A, Salt Lake City, Utah 84119
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (801) 977-8970
Does Not Apply
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. Acquisition of Vismed, Inc., d/b/a Dicon
On January 28, 2000, Paradigm Medical Industries, Inc. (the "Company")
entered into a letter of intent (the "Letter of Intent") with Vismed, Inc., a
California corporation, which does business under the trade name of Dicon
("Dicon"), and certain shareholders of Dicon for the purchase of all the
outstanding shares of common stock of Dicon. Dicon is a California domiciled
corporation which manufactures and sells innovative, proprietary medical
diagnostic instrumentation for chronic eye diseases. As consideration for the
purchase of all of the outstanding shares of Dicon, the Company will pay to the
holders of Dicon common stock an aggregate of 750,000 shares of the Company's
common stock. The Company will also grant piggyback registration rights to the
holders of Dicon common stock to register the shares of the Company's common
stock that they will be receiving in connection with the transaction in the
event the Company shall register any of its securities for sale pursuant to a
registration statement under the Securities Act of 1933, as amended.
The closing of the transaction is contingent upon, among other
conditions, the following: (i) execution and delivery of a definitive merger
agreement; (ii) a complete and satisfactory review by the Company, in the
Company's discretion, of the books, records, business and affairs of Dicon;
(iii) a complete and satisfactory review by Dicon, in Dicon's discretion of the
books, records, business and affairs of the Company; (iv) execution of
employment and non-competition agreements in form and substance acceptable to
the Company with executive officers and other key employees of Dicon to be
specified by the Company; (v) the absence of any material adverse change in the
financial condition, results of operations, business, assets, prospects or
liabilities of Dicon from that reflected in its financial statements as of
November 30, 1999; (vi) approval of the transaction by any regulatory
authorities having jurisdiction over the Company and Dicon; and (vii) receipt of
all licenses and permits necessary for the Company to conduct the business of
Dicon.
The Letter of Intent may be terminated by mutual agreement of the Board
of Directors of the Company and Dicon, or by action of the Board of Directors of
either the Company or Dicon, provided that the terminating party is not in
default under the terms of the Letter of Intent, if the closing of the
transaction does not occur on or prior to March 31, 2000. If for any reason the
Company takes action to terminate the Letter of Intent or the Company does not
have a doctrine of equivalence for its Photon technology, then the Company shall
pay a break up fee of $100,000 to Dicon representing reasonable costs and
expenses incurred by Dicon in connection with the transaction.
Following the closing of the transaction, it is the intention of the
Company to merge Dicon into a newly formed, wholly-owned subsidiary of the
Company with the results that the Company will then own all the outstanding
shares of common stock of Dicon. The Company intends to continue to operate the
business of Dicon in California.
ITEM 7. Financial Statements.
C. Exhibits
10.1. Letter of Intent among Paradigm Medical Industries,
Inc., Vismed, Inc., d/b/a Dicon and certain shareholders of Dicon.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PARADIGM MEDICAL INDUSTRIES, INC.
(Registrant)
Date: February 16, 2000. By: /s/ Thomas F. Motter
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Thomas F. Motter
President, Chief Executive Officer,
Chief Financial Officer and Treasurer
-2-
Exhibit 10.1
Mark R. Miehle, President and Chief Executive Officer
February 16, 2000
Page 1
January 27, 2000
Mark R. Miehle, President and
Chief Executive Officer
Dicon
10373 Roselle Street
San Diego, California 92121
Re: Purchase of Outstanding Shares of Vismed, Inc., d/b/a Dicon
Dear Mr. Miehle:
This letter, when countersigned by certain shareholders (collectively,
the "Sellers") of Vismed, Inc., d/b/a Dicon (the "Company"), will constitute an
agreement to sell, in the transaction described below (the "Transaction"), all
outstanding shares of common stock of the Company owned by Sellers. This
agreement is based on the terms, and subject to the conditions, described below.
This letter also represents a good-faith intention to negotiate and enter into a
definitive agreement in form and substance acceptable to the parties (the
"Agreement").
1. Fundamental Terms. The purchaser in the Transaction will be
Paradigm Medical Industries, Inc., a Delaware corporation (the
"Purchaser"). At the Closing, as to be defined in the
Agreement, Purchaser will succeed to ownership of all the
outstanding shares of the Company currently owned by Sellers
by the purchase of such shares from the holders thereof. As
consideration for such Transaction, Purchaser will issue or
cause to be issued to Sellers on a pro rata basis an aggregate
amount equal to 750,000 restricted shares (the "Shares") of
common stock of Purchaser. The Shares to be issued by
Purchaser on a pro rata basis to Sellers at Closing as
purchase consideration will be based upon the shares of common
stock held by Sellers at Closing, including any shares of
common stock issued by the Company to Sellers upon the
exercise of outstanding options or warrants prior to Closing.
Purchaser will treat the Transaction as a purchase of stock.
<PAGE>
Mark R. Miehle, President and Chief Executive Officer
February 16, 2000
Page 2
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The Company shall grant piggyback registration rights to
Sellers providing that if the Company shall register any of
its securities for sale pursuant to a Registration Statement
under the Securities Act of 1933, as amended, other than an
S-8 specifically registering options granted to employees of
the Company, the Company shall be required to offer all
Sellers holding Shares the opportunity to register any of
their Shares without cost to the holders thereof. In
connection with these piggyback registration rights, the
Company shall give all Sellers holding Shares notice by
certified mail at least thirty (30) business days prior to the
filing of a new Registration Statement.
All Sellers receiving Shares shall execute lockup agreements
not to publicly sell or to transfer any of their Shares for a
period of at least six (6) months following the Closing of the
Transaction.
The Company represents, by executing this letter, that there
are currently outstanding 5,964,710 shares of common stock,
options to purchase 530,340 shares of common stock at exercise
prices ranging from $.70 to $.78 per share, and warrants to
purchase 542,625 shares of common stock at an exercise price
of $2.00 per share. Sellers agree to obtain and deliver to
Purchaser at least 90% of the Company's outstanding shares of
common stock. Delivery of at least 90% of the common stock is
required for the closing. Purchaser and Sellers agree to
establish an escrow for undelivered stock and place a pro rata
amount of the purchase consideration into the escrow for
unlocated stockholders holding undelivered stock.
2. Definitive Agreement. Purchaser and Seller mutually agree to
proceed in good faith toward negotiation and execution of the
Agreement, which shall provide for the Transaction, and shall
contain full representations, warranties, conditions,
covenants and the like customary in transactions similar to
the Transaction. The Agreement shall be prepared and executed
by Purchaser and Sellers on or before February 29, 2000.
Without limiting the foregoing, it is agreed that the
Agreement shall include:
(a) Confirmations by the Company and Purchaser, without
material exception, that their respective audited financial
statements of the Company for the fiscal years ending December
31, 1996, 1997 and 1998, are accurate, complete and have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the
periods involved;
(b) Representations by the Company regarding the absences of
any liabilities other than those disclosed in the statements
referred to in (a) above;
<PAGE>
Mark R. Miehle, President and Chief Executive Officer
February 16, 2000
Page 3
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(c) Confirmation by the Company of no material adverse changes
in the financial condition, results of operations, business,
assets, or liabilities of the Company since November 30, 1999;
(d) Representations by the Company regarding no outstanding or
authorized options, warrants, purchase rights, conversion
rights, exchange rights or other contracts or commitments that
would require the Company to issue, sell or otherwise cause to
become outstanding any of its capital stock;
(e) Representations by the Company and Purchaser regarding
title to their respective assets and good standing of their
respective contracts with key customers and suppliers;
(f) Representations by the Company regarding full and timely
payment of all taxes by the Company for all periods up to and
including the Closing;
(g) Representations by the Company and Purchaser regarding
sole and exclusive rights to all licenses, trade names, logos,
technology and know-how used in their respective businesses;
(h) Representations by the Company and Purchaser regarding no
pending or threatened litigation or proceedings against either
of them by third parties or any local, state or federal
regulatory authorities, which may materially adversely affect
their respective business or financial condition;
(i) Representations by the Company regarding no violation or
violations of any environmental rules or regulations over the
past five years;
(j) Representations by the Company regarding all Federal,
state and local governmental licenses, consents, and
approvals;
(k) Representations by the Company and Purchaser regarding no
defaults under or accelerations of contracts or commitments,
all to their best knowledge and belief; and
(l) Representations by the Company regarding the authority,
power and good standing of the Company, and representations by
the Purchaser regarding the authority, power and good standing
of Purchaser.
<PAGE>
Mark R. Miehle, President and Chief Executive Officer
February 16, 2000
Page 4
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3. Conditions. The Closing of the Transaction contemplated by the
Agreement will be subject to certain conditions, including,
without limitation, the following:
(a) A complete and satisfactory review by Purchaser, in
Purchaser's discretion, of the books, records, business and
affairs of the Company and the Company's agreement to provide
to Purchaser and its agents complete access to all of the
Company's books, records and personnel;
(b) A complete and satisfactory review by the Company, in the
Company's discretion, of the books, records, business and
affairs of Purchaser and Purchaser's agreement to provide to
the Company and its agents complete access to all of
Purchaser's books, records and personnel;
(c) Execution of employment and non-competition agreements in
form and substance acceptable to Purchaser with executive
officers and other key employees to be specified by Purchaser;
(d) The absence of any material adverse change in the
financial condition, results of operations, business, assets,
prospects or liabilities of the Company from that reflected in
the latest interim financial statements of the Company
furnished to Purchaser as of November 30, 1999;
(e) Approval of the Transaction by any regulatory authorities
having jurisdiction over the Company and Purchaser; and
(f) Receipt of all licenses and permits necessary for
Purchaser to conduct the business of the Company.
4. Covenants. Pending execution of the Agreement, the Company
agrees that it will:
(a) Use its best efforts to maintain the businesses of the
Company and its employees, customers, assets and operations as
an ongoing business in accordance with past practices and in
accordance with commercially reasonable business practices;
(b) Conduct its business only in the ordinary course, and not
incur any indebtedness or accrue any capital expenditures in
the aggregate in excess of $50,000 or engage in any
extraordinary transactions without Purchaser's prior written
consent;
<PAGE>
Mark R. Miehle, President and Chief Executive Officer
February 16, 2000
Page 5
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(c) Not borrow any funds in aggregate amounts up to $100,000
under existing lines of credit or otherwise, except as
reasonably necessary for the ordinary operation of the
Company's business in a manner, and in amounts, in keeping
with historical practices;
(d) Not dispose of any assets of the Company, except in the
ordinary course of business;
(e) Not materially increase the annual level of compensation
of any employee, and not grant any unusual or extraordinary
bonuses, benefits or other forms of direct or indirect
compensation to any employee, officer, director or consultant,
except in amounts in keeping with past practices by formula or
otherwise;
(f) Not increase, terminate, amend or otherwise modify any
plan for the benefit of employees;
(g) Not issue any equity securities or other security rights;
(h) Not issue any stock in the Company, pay or collect any
related party receivables, enter into any related party
transactions of any nature, pay any dividends, redeem any
securities, or otherwise cause assets of the Company to be
distributed to any of its shareholders except by way of
compensation to employees who are also shareholders within the
limitations set forth above;
(i) Not agree to modify, to the disadvantage of the Company,
the terms of existing or hereafter accrued accounts payable;
(j) The Company shall supply Purchaser with a schedule of the
Company's accounts receivable as of January 31, 2000, and
shall show thereon which accounts Sellers consider collectable
within 120 days of January 31, 2000; and
(k) The Company shall provide Purchaser and its agents full
and complete access to all of the Company's books, records,
personnel and business locations and shall cooperate with
Purchaser in connection with Purchaser's investigation of the
Company.
5. Closing. The Closing of the Transaction shall take place at
the offices of Vismed, Inc. d/b/a Dicon, 10373 Roselle Street,
San Diego, California 92121, unless a different date or place
is agreed to in writing by the parties hereto. Each party
hereto
<PAGE>
Mark R. Miehle, President and Chief Executive Officer
February 16, 2000
Page 6
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shall use its reasonable best efforts to cause the closing to
occur on or before March 17, 2000.
6. Expenses. Each party to this letter of intent shall bear its
own expenses if the Transaction is not consummated. Purchaser
shall bear all expenses if the Transaction is consummated.
7. Press Releases and Disclosure. Each party agrees that it will
not issue any press release or other disclosure of this letter
of intent or of the Transaction without the prior approval of
the other party, which shall not be unreasonably withheld,
unless, in the good faith opinion of Purchaser's counsel, such
disclosure is required by law.
8. Termination. This letter of intent and the Transaction
contemplated by this letter of intent may be terminated at any
time (a) by mutual agreement of the Boards of Directors of the
Company and Purchaser; or (b) by action of the Board of
Directors of either the Company or Purchaser, provided that
the terminating party is not then in default under the terms
of this letter of intent or the Agreement, if the Closing
shall not occur on or prior to March 31, 2000. In the event of
such termination, all provisions hereof shall terminate. If
termination shall occur as permitted herein, each party will
pay its own expenses incurred in connection with the
Transaction at the time of such termination. If for any reason
Purchaser takes action to terminate this letter of intent or
the Agreement, or Purchaser does not have a doctrine of
equavelence for its Photon technology, then Purchaser shall
pay a break fee of $100,000 to the Company representing
reasonable costs and expenses incurred by the Company in
connection with the Transaction.
9. No Third Party Negotiations. Sellers agree that, pending
execution of the Agreement, they will not directly or
indirectly solicit, entertain or encourage inquiries or
proposals or enter into an agreement or negotiate with any
other party, to sell, or enter into any merger or
consolidation with respect to, the business and/or assets of
the Company or its subsidiary or any shares of any class of
capital stock thereof.
10. Governing Law. This letter of intent shall be construed under
the laws of the State of Delaware.
11. Counterparts. This letter of intent may be signed in
counterparts, but all such counterparts shall be considered as
a single document.
<PAGE>
Mark R. Miehle, President and Chief Executive Officer
February 16, 2000
Page 7
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If the foregoing correctly sets forth our mutual understanding, please
so indicate by signing in the space below and returning one copy of this letter
for our records.
PURCHASER:
PARADIGM MEDICAL INDUSTRIES, INC.
By: /s/ Thomas F. Motter
--------------------------------
Thomas F. Motter, President and
Chief Executive Officer
Agreed and accepted to this 27th day of January 2000.
THE COMPANY:
VISMED, INC., d/b/a/ DICON
By: /s/ Mark R. Miehle
---------------------------------
Mark R. Miehle, President and
Chief Executive Officer
<PAGE>
Mark R. Miehle, President and Chief Executive Officer
February 16, 2000
Page 8
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SELLERS:
By executing this Agreement, the following Sellers agree to vote in
favor of the Transaction at any special meeting of stockholders called for the
purpose of approving the Transaction and any related documents.
<TABLE>
<CAPTION>
Number of
Date Name Signature Shares
<S> <C> <C> <C>
1/28/2000 Polycare Optical /s/ Sammy Sumargo 4,509,868
- --------------------- ----------------------------------
1/27/2000 Mark R. Miehle /s/ Mark R. Miehle 327,560
- --------------------- ----------------------------------
1/27/2000 Neil Davis /s/ Neil Davis 240,000
- --------------------- ----------------------------------
1/28/2000 RH Capital Associates /s/ Robert Horowitz 152,667
- --------------------- ----------------------------------
1/28/2000 Richard Eberhardt /s/ Richard Eberhardt 140,000
- --------------------- ----------------------------------
1/28/2000 George Mansfield /s/ George Mansfield 114,000
- --------------------- ----------------------------------
</TABLE>
