ESCROW AGREEMENT
----------------
This Escrow Agreement (this "Escrow Agreement") dated as of May 16, 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"), Vismed,
Inc., d/b/a Dicon, a California corporation ("Dicon"), and Mackey Price &
Xxxxxxxx, a Utah professional corporation (the "Disbursing Agent")(Paradigm,
Subsidiary, Dicon and Disbursing Agent, collectively, the "Parties").
W I T N E S S E T H :
WHEREAS, prior to the execution of this Escrow Agreement, Paradigm,
Subsidiary and Dicon have entered into an Agreement and Plan of Reorganization
of even date herewith (the "Plan of Reorganization") and a related Agreement of
Merger (the "Merger Agreement"), both of even date herewith; 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 the Merger
Agreement pursuant to which Dicon will become a wholly owned subsidiary of
Paradigm; and
WHEREAS, the Plan of Reorganization and the Merger Agreement contemplate
the execution of this Escrow Agreement for the purposes stated herein and
therein.
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 Escrow Agreement have the meanings specified in the
Plan of Reorganization, unless the context expressly or by necessary implication
otherwise requires.
ARTICLE 2
ESTABLISHMENT AND DISTRIBUTION OF ESCROW
2.1 Escrow Account. Pursuant to the provisions of Section 2.2 of the Plan of
Reorganization
(a) Upon the execution and delivery of the Plan of Reorganization and this
Agreement, Paradigm shall pay $100,000 (the "Deposit Amount") to the Disbursing
Agent, to be held as part of the Escrow Account.
(b) Paradigm and Subsidiary shall deliver the Merger Consideration to the
Disbursing Agent no later than 10:00 a.m. (Mountain Standard Time) on the
Closing Date.
2.2 Distribution of Escrow Account. The Escrow Account shall be distributed as
follows:
(a) The Deposit Amount shall be paid to Dicon as liquidated damages
representing reasonable costs and expenses incurred by Dicon if (i) Paradigm
takes action to terminate the Plan of Reorganization pursuant to Section 11.1(a)
of the Plan of Reorganization, or (ii) Dicon takes action to terminate the Plan
of Reorganization pursuant to Section 11.1(b) or (e) of the Plan of
Reorganization. If there is no such action to Terminate the Plan of
Reorganization, the Deposit Amount shall be returned to Paradigm.
(b) Promptly after the Effective Time of the Merger, and in accordance with
Sections 2.3 and 2.5 of the Plan of Reorganization, 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) of the
Plan of Reorganization.
ARTICLE 3
MISCELLANEOUS
3.1 Termination. This Escrow Agreement shall terminate in the event of and upon
termination of the Plan of Reorganization.
3.2 Prior Agreements; Modifications. This Escrow Agreement, the 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 Escrow Agreement may be amended by an instrument in writing signed
by each of the Parties.
2
3.3 Captions and Table of Contents. The captions and table of contents in this
Escrow Agreement are for convenience only and shall not be considered a part of
or affect the construction or interpretation of any provision of this Escrow
Agreement.
3.4 Governing Law. The terms of this Escrow 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 Escrow 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 Escrow 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:
If to Dicon:
00000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, President and
Chief Executive Officer
Facsimile Number:
With a copy to:
Xxxx, Forward, Xxxxxxxx & Scripps LLP
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile Number: (000) 000-0000
3
If to Paradigm:
0000 Xxxxx 0000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, President and
Chief Executive Officer
Facsimile Number: (000) 000-0000
With a copy to:
Xxxxxx, Price & Xxxxxxxx
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
If to the Disbursing Agent:
Xxxxxx, Price & Xxxxxxxx
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
or to such other address or facsimile telephone number as any party may from
time to time designate to the others in writing.
3.8 Waiver. The performance of any covenant or agreement or the fulfillment of
any condition of this Escrow Agreement by the Parties 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 the Parties in exercising any right, power, or privilege
under this Escrow 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.
4
IN WITNESS WHEREOF, each of the parties hereto, intending to be legally bound
hereby, has duly executed this Escrow Agreement as of the date first written
above.
VISMED, INC., d/b/a DICON
By: /s/ Xxxx X. Xxxxxx
---------------------
Xxxx X. Xxxxxx, President and
and Chief Executive Officer
PARADIGM MEDICAL INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Xxxxxx X. Xxxxxx, President and
Chief Executive Officer
PARADIGM SUBSIDIARY, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Xxxxxx X. Xxxxxx, President and
Chief Executive Officer
MACKEY PRICE & XXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxx
----------------------
Xxxxxxx X. Xxxxxx, President
5
