<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _______ to ________
Commission file number 33-26467-D
CELL ROBOTICS INTERNATIONAL, INC.
(Exact Name of small business issuer as Specified in its Charter)
Colorado 84-1153295
____________________________ ________________
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification number)
2715 Broadbent Parkway N.E., Albuquerque, New Mexico 87107
_________________________________________________________________________
(Address of Principal Offices) (Zip Code)
Registrant's telephone number, including area code: (505) 343-1131
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the last 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
As of May 15, 1996, 3,843,414 shares of Common Stock of the Registrant were
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
<PAGE>
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet at March 31, 1996 (unaudited) and
December 31, 1995;
Consolidated Statement of Operations for the Three Months Ended
March 31, 1996 and March 31, 1995 (unaudited);
Consolidated Statement of Cash Flows for the Three Months Ended
March 31, 1996 and March 31, 1995 (unaudited); and
Notes to Unaudited Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying Consolidated Balance Sheet at March 31, 1996, the
Consolidated Statement of Operations for the Three Months Ended March 31, 1996
and March 31, 1995, and the Consolidated Statement of Cash Flows for the Three
Months Ended March 31, 1996 and March 31, 1995, are unaudited but reflect all
adjustments which are, in the opinion of management, necessary to a fair
presentation of the financial position, results of operations and cash flows
for the interim period presented, and not necessarily indicative of results
which may be expected for any other interim period or for the year as a whole.
<PAGE>
<PAGE>
CELL ROBOTICS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
As of As of
March 31, December 31,
1996 1995
__________ __________
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $857,589 $739,952
Restricted cash 0 425,000
Accounts receivable, net of allowance
for doubtful accounts of $1,841 174,210 389,608
Inventory 316,200 169,076
Other 30,763 29,067
__________ __________
Total current assets 1,378,762 1,752,703
Property and equipment, net 217,184 213,447
Other assets, net 100,655 33,963
__________ __________
$1,696,601 $2,000,113
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $161,536 $129,483
Payroll related liabilities 113,029 99,226
Royalties payable 38,349 56,587
Other current liabilities 2,794 24,871
__________ __________
Total current liabilities 315,708 310,167
Stockholders' equity:
Preferred stock, $.04 par value,
Authorized 2,500,000 shares,
no shares issued and outstanding
in 1996 and 1995 0 0
Common stock, $.004 par value,
Authorized 12,500,000 shares,
3,843,414 and 3,825,914 shares
issued and outstanding in 1996
and 1995, respectively 15,374 15,304
Additional paid in capital 11,312,499 11,271,008
Accumulated deficit (9,946,980) (9,596,366)
__________ __________
Total stockholders' equity 1,380,893 1,689,946
__________ __________
$1,696,601 $2,000,113
========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
CELL ROBOTICS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31, March 31,
1995 1996
__________ __________
<S> <C> <C>
Sales 58,624 $194,679
Cost of goods sold (53,904) (159,531)
__________ __________
Gross profit 4,720 35,148
__________ __________
Operating expenses:
Salaries 132,636 96,935
Payroll taxes and benefits 19,765 14,473
Rent and utilities 28,497 28,072
Travel 11,598 25,248
Depreciation and amortization 24,828 28,960
Professional fees 47,558 30,457
Other operating expenses 175,417 72,033
__________ __________
Total operating expenses 440,299 296,168
__________ __________
Loss from operations $(435,579) $(261,020)
Other income (deductions):
Rental income 5,850 3,949
Grant revenue 69,190 0
Interest income 10,520 2
Interest expense (595) (123,009)
__________ __________
Total other 84,965 (119,058)
__________ __________
Net Loss $(350,614) $(380,078)
========== ==========
Net Loss per common share
Weighted average shares outstanding
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
CELL ROBOTICS INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31, March 31,
1996 1995
__________ __________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(350,614) $(380,078)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 24,828 29,275
Decrease (Increase) in accounts
receivable 215,398 (33,211)
Increase in inventory (147,124) (71,569)
Increase in other current assets (1,696) (751)
Increase (Decrease) in accounts
payable and accrued expenses 5,541 (24,158)
Increase in accrued interest payable 0 116,760
__________ __________
Net cash used by operating activities (253,667) (363,731)
__________ __________
CASH FLOWS FROM INVESTING ACTIVITES:
Purchase of fixed assets (26,122) (5,603)
Cash paid for the development or
purchase of intangible assets (27,574) 0
__________ __________
Net cash used by investing activities (53,696) (5,603)
__________ __________
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 0 270,000
Release of formerly restricted proceeds
from a previous sale of common stock 425,000 0
__________ __________
Net cash provided by financing activities 425,000 270,000
__________ __________
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 117,637 (99,333)
Cash and cash equivalents:
Beginning of period 739,952 138,753
__________ __________
End of period $857,589 $39,420
======== ========
SUPPLEMENTAL INFORMATION:
Short term borrowings repaid with
common stock 0 160,000
Fair market value of common stock issued
for the acquisition of intangible assets 41,561 0
Interest paid 595 4,800
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
CELL ROBOTICS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 1996
(1) PRESENTATION OF UNAUDITED FINANCIAL STATEMENTS
The unaudited financial statements have been prepared in accordance with
the rules of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes otherwise necessary for a fair
presentation of financial position, results of operations and cash flows, in
conformity with generally-accepted accounting principles. However, the
information furnished, in the opinion of management, reflects all adjustments
necessary to present fairly the financial position, results of operations and
cash flows on a consistent basis. The results of operations are not
necessarily indicative of results which may be expected for any other interim
period or for the year as a whole.
(2) PURCHASE OF CERTAIN INTANGIBLE ASSETS
On January 9, 1996, the Company entered into a Purchase Agreement (the
"Agreement") with Tecnal Products, Inc. ("Tecnal"). The Agreement provides for
the acquisition of certain technological assets, primarily the rights under two
patents and a patent application. These patents and patent application relate
to an innovative laser design, and a medical device incorporating this laser
design. In exchange for these technological assets, the Company issued to
Tecnal, and its shareholders, an aggregate of 17,500 shares of the Company's
common stock, made cash payments on behalf of Tecnal in the amount of $14,800
and granted a one percent (1%) royalty on future sales of products
incorporating the acquired technology, with a lifetime maximum of $20,000.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF CELL ROBOTICS INTERNATIONAL, INC.
The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this report.
LIQUIDITY AND CAPITAL RESOURCES - MARCH 31, 1996 COMPARED TO DECEMBER 31, 1995
Total assets decreased from $2,000,113 at December 31, 1995 to $1,696,601
at March 31, 1996, a decrease of $303,512, or 15.2%. During this same period,
total liabilities increased slightly from $310,167 to $315,708.
The decrease in total assets was primarily a result of a $373,941, or
21.3% decrease in the Company's current assets from $1,752,703 to $1,378,762.
Although the restricted cash balance at December 31, 1995 of $425,000 was
released to the Company during this period, and accounts receivable decreased
from $389,608 to $174,210, the Company's cash position improved only slightly
from $739,952 to $857,589. The overall decrease in current assets was
moderately offset by a $147,124, or 87.0% increase in inventory.
The net result of fixed assets acquisition, on the one hand, and
depreciation, on the other, led to a $3,737 increase in net property and
equipment. Other assets, net, increased from $33,963 to $100,655 as a result
of the acquisition of certain intangible assets from Tecnal Products, Inc. and
the capitalization of costs related to internally-developed software.
During the three-month period ending March 31, 1996, the Company's total
liabilities increased $5,541 from $310,167 to $315,708. Increases in accounts
payable and payroll related liabilities were substantially offset by decreases
in royalties payable and other current liabilities.
As a result of the foregoing, the Company's working capital decreased from
$1,442,536 at December 31, 1995 to $1,063,054 at March 31, 1996, a decrease of
$379,482, or 26.3%.
Stockholders' equity showed a corresponding decline for the quarter, from
$1,689,946 at December 31, 1995 to $1,380,893 at March 31, 1996, a decline of
$309,053, or 18.3%.
Other than the foregoing, management knows of no other trend, or other
demands, commitments, events or uncertainties that will result in, or that are
reasonably likely to result in, a material impact on the liquidity and capital
resources of the Company.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1995 (UNAUDITED).
In October, 1995, the Company embarked on a comprehensive re-design of its
core optical trapping, cutting, and manipulating products. This effort was
undertaken to provide customers with a new, computer-controlled, workstation-
based product line. As a result of this re-design, the Company's new products
required testing and certification by an outside entity to ensure compliance
with certain regulations of the Federal Communication Commission (FCC) and
European Community Directive 93/465/EE, which became effective January 1, 1996.
Although such a certification is typically not time-consuming, many other
companies required the same type of testing during the same time-frame. As a
result, the Company was unable to obtain a testing appointment early enough in
the first quarter of 1996 to allow for the assembly and shipment of the newly-
designed product by March 31, 1996. The majority of orders received during the<PAGE>
<PAGE>
first quarter of 1996 were for the newly-designed products. Therefore,
although the Company had a backlog of approximately $330,000 at March 31, 1996,
revenues for the three months then ended amounted to only $58,624, compared
with revenues of $194,679 for the same period last year. This represents a
$136,055, or 69.9% decrease. All products in the Company's new instrument line
have now passed both FCC and European Community testing.
Costs of sales decreased from $159,531 during the three-month period
ending March 31, 1995 to $53,904 for the comparable period in 1996, reflecting
decreased sales. Gross profit decreased similarly from $35,148 to $4,720. The
Company's gross margin as a percent of sales decreased from 18.1% during the
1995 period, to 8.1% during the comparable period in 1996. This was also the
result of the low volume of sales during the first quarter of 1996.
Total operating expenses increased $144,131, or 48.7%, from $296,168
during the three-month period ending March 31, 1995, to $440,299 during the
comparable period in 1996. Salaries and other operating expenses accounted for
the majority of this increase. Salaries increased $35,701, or 36.8%, from
$96,935 to $132,636, reflecting increased pay rates, and the addition of
personnel. During the three months ended March 31, 1996, other operating
expenses increased $103,384, or 143.5%, to $175,417 from $72,033 during the
comparable period in 1995. This bulk of this increase was subcontracted
research and other expenses incurred in relation to the Company's two grants
under the Small Business Innovation Research Program, funded by the federal
government. Expenditures by the Company related to these grants are
reimbursable by the federal government, and such reimbursement is reflected in
grant revenue. Also contributing to the increase in other operating expenses
was increased expenditures related to the re-design of the Company's core
products, and the design of new products incorporating the technology acquired
from Tecnal Products, Inc.
As a result of the foregoing, the Company incurred a loss from operations
of $(435,579) during the three-month period ending March 31, 1996, an increase
of $174,559 over the $(261,020) loss from operations incurred during the
comparable period of 1995.
During the three months ended March 31, other income and expenses
increased from a $119,058 net deduction during the period in 1995, to a $84,965
net contribution to income during the period in 1996. Two factors were
primarily responsible for this change. First, interest expense was
significantly reduced from the 1995 to the 1996 period, having gone from
$123,009 in 1995 to $595 in 1996. This reduction reflects the conversion to
equity of a shareholders' note payable in September, 1995, substantially
reducing the Company's outstanding debt. Secondly, the Company realized
$69,190 in grant revenue during the 1996 period, as it was reimbursed for
expenditures related to work performed under its two Small Business Innovation
Research grants. In addition, during the first quarter of 1996, the Company
realized $10,520 in interest income, primarily the result of interest on funds
raised during the Company's private offering of its securities.
The Company's net loss for the three months ended March 31, 1996 was
$(350,614), which is a slight improvement over the net loss of $(380,078)
incurred during the comparable period of last year. On a per share basis, this
amounts to a $(0.09) loss per share during the first quarter 1996, compared to
a $(.34) loss per share during the first quarter of 1995. As a result of the
Company's private placement of its securities in September, 1995, the weighted
average common shares outstanding increased from 1,132,294 at March 31, 1995 to
3,833,222 at March 31, 1996.
Other than the foregoing, management knows of no trend, or other demands,
commitments, events or uncertainties that will result in, or are reasonably
likely to result in, a material impact on the Company's results of operations.
<PAGE>
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 1: Purchase Agreement between Cell Robotics, Inc. Tecnal
Products, Inc., dated effective January 9, 1996.
Reports on Form 8-K: None
<PAGE>
<PAGE>
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, thereunto duly authorized.
CELL ROBOTICS INTERNATIONAL, INC.
Dated: May 17, 1996 By: /s/ Ronald K. Lohrding
______________ _____________________________
Ronald K. Lohrding
President
Dated: May 17, 1996 By: /s/ Craig T. Rogers
______________ _____________________________
Craig T. Rogers
Chief Financial Officer
<PAGE>
PURCHASE AGREEMENT
This Purchase Agreement is made by and among Cell Robotics, Inc., a New
Mexico corporation, with principal place of business at 2715 Broadbent Parkway
NE, Albuquerque, New Mexico ("CRI" or the "Purchaser"), Tecnal Products, Inc.,
a New Mexico corporation with principal place of business at 2441 Ridgecrest
Drive SE, Albuquerque, New Mexico ("Tecnal" or the "Seller"), and the holders
of all of the issued and outstanding stock of Tecnal, Lovelace Scientific
Resources, Inc., a New Mexico corporation ("LSR"); Warren Parkhurst; Eugene
Merfeld; Ephron Catlin, III; and Dr. Guy McClung (collectively the "Individual
Shareholders"). The Effective Date of this Agreement shall be January 9, 1996.
WHEREAS, Tecnal owns certain intellectual property, information, and
assets concerning the design, construction, application and commercial
development of certain laser technology, and
WHEREAS, CRI desires to purchase such intellectual property, information
and asset from Tecnal,
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and for other good and valuable consideration, the Parties
agree to the sale and purchase of such property under the terms and conditions
set forth below.
1. DEFINITIONS
As used in this Agreement, the following terms shall, unless the context
otherwise requires, have the following respective meanings:
1.01 "Affiliate" means with reference to any Person, a spouse of that
Person, a relative (by blood, adoption or marriage) of that Person within the
third degree, any director, officer, or employee of that Person, any
corporation, association, firm or other entity of which that Person is a
member, director, officer or employee, and any other Person directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, that Person.
1.02 "Technological Assets" means all of the technological information,
intellectual property, and physical work product owned by Tecnal and used in or
related to the commercialization of laser devices and Products by Tecnal,
including, but not limited to, the following:
1.02.1 "Patents" meaning any patent that has issued or may issue
from the Technology and any patent which may issue from any divisional,
continuation, re-issue or substitute application based thereon, including any
patents which issue from applications not yet made as of the date hereof.
Without limiting the generality of the foregoing, the Patents shall include:
1.02.1.1 US patent 5,432,811 entitled "Laser Rod with
Polyhedron Shaped Ends" issued 11 July 1995, and all extensions, continuations,
re-issues and re-examinations arising therefrom.
1.02.1.2 Pending PCT application PCT/US94/02270 entitled
"Laser" filed 2 March 1994.
1.02.1.3 Pending US patent application 08/297,295 entitled
"Laser Skin Perforator" filed 29 August 1995.
1.02.2 "Technology" meaning trade secrets, intellectual property,
confidential information, know-how and inventions incorporated in the Patents
or utilized in the Products or any portion or phase of any scientific or
technical information related thereto.
<PAGE>
<PAGE>
1.02.3 "Future Improvements" meaning any and all discoveries,
inventions and improvements in processes, manufacturing techniques and the like
relative to the articles falling within the scope of the Patents and
Technology.
1.02.4 "Incidental Technology" meaning trade secrets, secrets
intellectual property, confidential information, know-how and inventions
incorporated in the Patents, Future Improvements or Incidental Patents,
including any portion or phase of any scientific or technical information
related thereto.
1.02.5 "Incidental Patents" meaning any patents that may issue
from the Incidental Technology and any patents which may issue from any
divisional, continuation, re-issue or substitute application based thereon,
including any patents which issue from applications not yet made as of the date
hereof.
1.02.6 "Incidental Future Improvements" meaning any and all
discoveries, inventions and improvements in processes, manufacturing techniques
and the like relative to the articles falling both within the scope of the
Patent, Products and Technology, and also relative to patents, products and
technology other than the Patents, Products, and Technology. Notwithstanding
the foregoing, Incidental Future Improvements shall not be construed to mean
any inventions, discoveries, or improvements thereon, which do not include
elements of the Patents, Products or Technology.
1.02.7 "NTEC License" meaning all rights and entitlements
conferred upon the Seller by virtue of that certain License Agreement between
the Seller on one hand, and NTEC, a Russian enterprise, on the other, dated 28
July 1994.
1.02.8 "Development Work Products" meaning all notes, drawings,
designs, formulas, prototypes, business plans, market research, business
research, technical research, ideas, inventions, invention disclosures, and
other works, whether or not reduced to practice, developed or commercialized in
connection with the development or commercialization of the Technology,
including without limitation all intellectual property and work product
produced by the Seller, its Shareholders, and their respective contractors and
affiliates in connection with any previous effort to commercialize or develop
the Patents, Products, or Technology.
1.03 "CRI Stock" shall mean common stock of Cell Robotics International,
Inc., a publicly traded company, duly authorized and issued by the company
under Rule 144 of the United States Securities and Exchange Commission.
1.04 "Improvement" or "Improvements" shall mean any patented or unpatented
modification of a device, method, or Product described in or contemplated by
the Technological Assets.
1.05 "Letter of Intent" shall mean that certain letter entitled "Letter of
Intent to acquire the Intellectual Property of Tecnal Products, Inc." dated 29
September 1995 and signed by CRI and Tecnal on 16 October 1995.
1.06 "Net Revenues" for the purpose of computing royalties under the
provisions of Section 5.04 below, means the aggregate of (i) the amount billed
to the Purchaser's customer and collected by the Purchaser for the sale of
Products containing elements described in or by the Technological Assets after
the deduction of shipping costs, sales taxes, gross receipts or excise taxes,
trade and quantity discounts, export tariffs, duties and fees, returns and
allowances paid directly or indirectly by the Purchaser, and (ii) Amounts
collected as royalties, license fees, license maintenance fees, and other
monetary revenues collected in exchange for the production of Products
containing elements described in or by the Technological Assets by others.<PAGE>
<PAGE>
1.07 "Person" or "Persons" means a corporation, trust, association,
partnership, organization, business, an individual, a governmental or political
subdivision or agency, or an organized entity of any type.
1.08 "Product" or "Products" shall mean a commercial application utilizing
the Technological Assets to be acquired herewith.
2. WARRANTIES AND REPRESENTATIONS OF THE SELLER
Seller represents and warrants to CRI as follows:
2.01 Corporate organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of New
Mexico. Seller has the corporate power and authority to own, operate and lease
its properties and to carry on its business as now being conducted.
2.02 Authorization. Seller has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The board of directors and the shareholders of Seller
have duly approved and authorized the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and no other
corporate proceedings on the part of Seller are necessary to approve and
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement constitutes the valid and
binding agreement of Seller enforceable in accordance with its terms, except as
the enforceability hereof may be subject to applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally and
to general principles of equity.
2.03 Ownership. Except as otherwise provided in this Agreement: (i) the
Seller owns the Technological Assets; (ii) the Seller has the power and
authority to enter into this Agreement and to perform its obligations under
this Agreement, including but not limited to assigning the Technological Assets
to CRI in accordance with the terms and conditions of this Agreement; (iii) the
Technological Assets are free and clear of all liens, claims and restrictions
of third parties whatsoever, and to the best of Seller's knowledge, can be
assigned to CRI without infringing upon or otherwise acting adversely to any
such interest of any Person (including present or former officers, directors,
employees, consultants, contractors or shareholders of the Seller or its
Affiliates) in and to the Technological Assets; and (iv) the Seller is not
obligated or subject to any liability whatsoever to make any payments by way of
royalties, fees, or otherwise to any owners of, licensor of, or other claimant
to the Technological Assets with respect to the use or sale thereof.
2.04 Right to Offer. Except as otherwise provided in this Agreement,
Seller has the legal power to extend and offer for sale to the Purchaser the
Technological Assets, and that it has not made, nor will it make, any
commitments to others inconsistent with, or in derogation of, such rights, and
that it has not granted to any other Person any right, license, assignment,
shop right, or privilege thereto or thereunder, for any application whatsoever.
The Seller, LSR and the Individual Shareholders represent and warrant that the
execution of this Purchase Agreement has been duly authorized by all necessary
corporate actions of the Seller, LSR and the Individual Shareholders.
2.05 Absence of Pending Legal Actions. Except as otherwise provided in
this Agreement, the Technological Assets, to the best of Seller's knowledge, do
not infringe upon or violate any US patent or other US proprietary right of any
other Person, except that the foregoing representation and warranty shall not
apply to US patent number 5,165,418. Purchaser represents and warrants that
Purchaser is aware that US patent number 5,165,418 is a potentially interfering
patent with respect to the Technological Assets, that same may materially and
adversely affect the value of the Technological Assets to CRI, and as to which<PAGE>
<PAGE>
the Purchaser, covenants and agrees to, and hereby does, assume all risk of
loss, diminution in value, or other damage or harm to CRI of any nature
whatsoever. The Seller further represents and warrants that there is no
pending or threatened claim or legal proceeding against the Seller contesting
the validity or right to use any of the Technological Assets, nor has the
Seller received any notice that any of the rights of use of the Technological
Assets conflicts or will conflict with the asserted rights of any other Person.
2.06 Compliance with Letter of Intent. Seller has substantially complied
with the Letter of Intent. No material information requested by Purchaser
regarding the Technological Assets has been withheld from the Purchaser during
the period of due diligence, and all of the information provided to Purchaser
during the period of due diligence is true, correct and complete to the best
knowledge and belief of the Seller. Seller, LSR and the Individual
Shareholders further represent that they have used their best efforts to make
the Purchaser aware of any potential problems or issues pertaining to the
Technological Assets which they have knowledge of and which may materially and
adversely affect the successful commercial application of the Technological
Assets, including without limitation, the existence of an inventor's agreement
regarding laser assisted blood sampling dated 9 May 1991 between Hutech, a
corporation duly organized and existing under the laws of Japan and Golubev
Nikolaj Aleksandrovitch, Polushkin Valerij Gennadievitch, Nikiruj Ernest
Jaroslavovitch, Ten Anrej Michajlovitch, and Yoshio Hida, and other issues
which may affect the utility of Japanese patent number JP 4314428, pertaining
to laser assisted blood sampling. Seller, LSR and the Individual Shareholders
make no representation or warranty that CRI will be able to commercialize the
Technological Assets and Purchaser hereby assumes all risk that it will not be
able to commercialize the Technological Assets.
2.07 Satisfaction of PCT Legal Fees. At the time of execution of this
Agreement, the Seller has satisfied, paid in full, and brought current the
accounts of Mr. Brian Lucas, Esq., in the approximate amount of $3,300,
representing legal services rendered by Mr. Lucas related to the PCT filing
(PCT/US94/02272) and Patent 5,432,811 international filing for international
patent protection.
2.08 Stock Ownership Among Tecnal's Shareholders. Seller, LSR, and the
Individual Shareholders represent and warrant that LSR and the Individual
Shareholders collectively own all of the issued and outstanding common stock of
Tecnal and that all of the issued and outstanding Tecnal common stock is held
by the following Persons in the following percentages:
LSR 49.500%
Warren Parkhurst 24.750%
Ephron Catlin, III 12.375%
Eugene Merfeld 12.375%
Dr. Guy McClung 1.000%
2.09 Indemnity. Seller and the Individual Shareholders will indemnify,
defend and hold harmless CRI, its successors, affiliates and assigns, from and
against damages, losses, or liabilities arising from any breach or violation of
any of the representations and warranties made by the Seller in this Section 2.
Seller's indemnity shall include all cost, as well as reasonable attorney's
fees, incurred or expended by CRI, its affiliates or assigns, as a result of
such breach.
3. WARRANTIES AND REPRESENTATIONS OF THE PURCHASER
Purchaser represents and warrants to Seller, LSR, and the Individual
Shareholders as follows:
<PAGE>
<PAGE>
3.01 Corporate organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of New
Mexico. Purchaser has the corporate power and authority to own, operate and
lease its properties and to carry on its business as now being conducted.
3.02 Authorization. Purchaser is a controlled subsidiary of Cell Robotics
International, Inc. Purchaser has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The board of directors of Purchaser has duly approved and authorized
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and no other corporate proceedings on the
part of Purchaser are necessary to approve and authorize the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement constitutes the valid and binding
agreement of Purchaser enforceable in accordance with its terms, except as the
enforceability hereof may be subject to applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally and
to general principles of equity
3.03 Consents and Approvals. To the best of Purchaser's knowledge,
neither the execution and delivery by Purchaser of this Agreement nor the
consummation by Purchaser of the transactions contemplated hereby, including
but not limited to the issuance and delivery of the CRI Stock, will (i)
conflict with or result in a breach of any provision of the Articles of
Incorporation or By-laws of Purchaser, or (ii) except for those of the
following events which would not prevent the consummation of the transactions
contemplated by this Agreement and would not result in any change in or effect
on Purchaser that would have a material adverse effect on Purchaser's ability
to consummate the transactions contemplated hereby (A) violate, or conflict
with, or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or require consents from any other party or result in the termination or
in a right of termination or cancellation of, or accelerate or result in a
right to accelerate the performance required by, or result in the creation of
any lien, security interest, charge or encumbrance upon any of the properties
of Purchaser, or result in being declared or in the right to declare void,
voidable, or without further binding effect any of the terms, conditions or
provisions of, any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, lease, contract, agreement or other instrument or commitment
or obligation to which Purchaser is a party, (B) violate any order, writ,
injunction, decree, judgment, ruling, law, rule or regulation of any court or
United States governmental authority, applicable to Purchaser or any of its
properties, or (C) require any consent, approval or authorization of, or notice
to, or declaration, filing or registration with, any governmental or regulatory
authority. No consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority is necessary to be
obtained or made by Purchaser in connection with the execution, performance and
delivery of this Agreement.
3.04 No Violations. To the best of Purchaser's knowledge, the Purchaser
is not in violation of any applicable law, statute, order, rule, regulation or
directive of any governmental or self-regulatory authority or judgment, decree,
or award entered by any federal, state, local or foreign court or governmental
authority or arbitrator or arbitration panel relating to the Purchaser with
respect to any matter that would have a material adverse effect on its business
or property or on its ability to perform its obligations under this Agreement
and under all documents to be executed by Purchaser pursuant to this Agreement.
3.05 Completion of Due Diligence. The Purchaser warrants and represents
that it has completed and resolved the specific issues and concerns described
in the Letter of Intent to its complete satisfaction.
<PAGE>
<PAGE>
3.06 Satisfaction of US Legal Fees. Prior to, or concurrent with, the
execution of this Agreement, the Purchaser agrees to have made payment to Dr.
Guy McClung the amount of $11,500.00 representing the total payment due from
Tecnal for all previous legal work concerning application and prosecution of
patents by Dr. McClung.
3.07 Satisfaction of PCT Legal Fees. Prior to the execution of this
Agreement, the Purchaser has paid to the Seller the amount of $1,650.00 as a
non-refundable deposit to be used for payment of legal fees to Mr. Brian Lucas
in accordance with the terms of the Letter of Intent. Upon the execution of
this Agreement, and as a condition to Seller's transfer to Purchaser of the
Technological Assets, Purchaser shall pay to Seller the additional sum of
$1,650.00.
3.08 Obligation to Secure NTEC Compliance. Purchaser acknowledges that
the NTEC License requires prior approval from the Licensor as a condition to
the lawful assignment of the NTEC License to Purchaser. Purchaser further
acknowledges that any assignment of the NTEC License without the prior approval
of the Licensor constitutes a default under the NTEC License and is possible
grounds for termination of the NTEC License. Seller makes no representation or
warranty that the approval of the Licensor for the transfer has been obtained
and Purchaser acknowledges that the Licensor's approval has not been obtained.
The Purchaser warrants and represents that concurrent with the execution of
this Agreement or within a reasonable time thereof, it has secured, or will
secure, agreements or other documentation supporting the acceptance of the
transfer of the NTEC License, as anticipated herein, by NTEC. The Purchaser
further accepts all responsibility and risk associated with obtaining such
agreements and supporting documentation. Seller shall deliver to Purchaser the
assignment of the NTEC License to Purchaser upon Purchaser's certification to
Seller that Purchaser has obtained all necessary consents and approvals of
third parties for the lawful transfer of the NTEC License to Purchaser.
3.09 CRI Common Stock. The CRI Stock to be delivered by CRI in payment
for the Technological Assets and the noncompetition covenants of the Seller,
LSR, and the Individual Shareholders shall be transferred, assigned and
conveyed free and clear of all liens, claims, charges and other encumbrances
and restrictions of any kind or nature. Cell Robotics International, Inc. and
CRI each have the power, authority and capacity to transfer and deliver the CRI
Stock pursuant to this Agreement. No legend or other reference to any
purported restriction, lien, or other encumbrance shall appear upon any
certificate representing the CRI Stock to be issued and delivered by CRI
pursuant to this Agreement, except for the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") and
are "restricted securities" as that term is defined in Rule
144 under the Act. The shares may not be offered for sale,
sold or otherwise transferred except pursuant to an
effective registration statement under the Act or pursuant
to an exemption from registration under the Act, the
availability of which is to be established to the
satisfaction of the Company."
All of the shares of CRI Stock to be issued and delivered by CRI pursuant to
this Agreement shall be duly authorized and validly issued and are fully paid
and nonassessable. There are no contracts or other agreements relating to the
issuance, sale, or transfer of the CRI Stock to be issued and delivered by CRI
pursuant to this Agreement. In the event that any CRI Stock is registered with
the Securities and Exchange Commission, the holders of the CRI Stock issued
pursuant to this Agreement shall have the right to participate in such
registration with respect to the CRI Stock held by them.
<PAGE>
<PAGE>
3.010 Indemnity. Purchaser will indemnify, defend and hold harmless
Seller, its successors, shareholders, affiliates and assigns, from and against
damages, losses, or liabilities arising from any breach or violation of any of
the representations and warranties made by the Purchaser in this Section 3.
Purchaser's indemnity shall include all cost, as well as reasonable attorney's
fees, incurred or expended by Seller, its successors, shareholders, affiliates
or assigns, as a result of such breach.
4. STATEMENT OF SALE AND TRANSFER OF RIGHTS
4.01 Sale and Purchase of Technological Assets. In consideration of the
payment made under Section 5 and Purchaser's satisfaction of Purchaser's other
obligations set forth in this Agreement, the Seller, for itself, its successors
and assigns, does hereby sell, transfer, and assign to CRI Seller's entire
right, title, and interest in and to the Technological Assets. The Purchaser
is hereby given entire rights to have, make, produce, sell, divest, license,
sublicense, contract, or use the Technological Assets in any way it sees fit
without further consideration of the Seller or Shareholders. Purchaser hereby
assumes and agrees to perform all obligations of "Licensee" under the NTEC
License. Purchaser shall indemnify and hold harmless Seller, LSR, and the
Individual Shareholders from all claims, loss, damage, and expense, including
attorneys fees, arising out of or resulting from Purchaser's use of the
Technological Assets or any products or applications utilizing the
Technological Assets in whole or in part, or from any breach of the obligations
of the Licensee under the NTEC License.
4.02 Execution and Delivery of Assignment Instrument. Seller, concurrent
with the execution of this Agreement, shall execute an Assignment in
substantially the same form as shown in Exhibit A attached hereto, assigning to
CRI all of Seller's right, title and interest in and to the Technological
Assets. The Assignment shall be delivered to Purchaser only upon Purchaser's
performance of all obligations of Purchaser under this Agreement, including
Purchaser's obligation to deliver the CRI common stock to Seller as required
under Article 5, and Purchaser's obligation to obtain all necessary consents
and approvals for the lawful assignment of the NTEC License to Purchaser.
4.03 Delivery of Property. Concurrently with the delivery to Purchaser of
the Assignment in accordance with Section 4.02, and from time to time
thereafter as additional information becomes available to the Seller, the
Seller shall supply to the Purchaser all documentation, data, models,
prototypes, and other tangible assets and records pertaining to, or included
as, the Technological Assets.
4.04 Improvements and Modifications. The Purchaser is hereby given
complete and entire right to any future improvements and/or modifications to
devices, Products, and technologies arising from its use of the Technological
Assets including right to file and prosecute new patents, establish trade
secrets or otherwise protect such improvements as the Purchaser and its
management see fit, without further consideration to or by the Seller or its
Shareholders.
5. PAYMENT
5.01 Purchase Price;Allocation. In consideration of the sale and transfer
of the Technological Assets by Tecnal and the covenants of LSR and the
Individual Shareholders respecting noncompetition and noninterference, CRI<PAGE>
<PAGE>
shall issue and deliver 17,500 shares of CRI common stock and shall pay the
royalties due under the Royalty Agreement (as herein defined), which shall be
allocated between the Technological Assets and the noncompetition covenants as
follows:
Technological Assets 14,985 shares of CRI Stock to Tecnal
Royalty Agreement to Tecnal
LSR noncompetition covenant 1,245 shares of CRI Stock to LSR
Parkhurst noncompetition covenant 622 shares of CRI Stock to Parkhurst
Merfeld noncompetition covenant 311 shares of CRI Stock to Merfeld
Catlin noncompetition covenant 311 shares of CRI Stock to Caitlin
McClung noncompetition covenant 26 shares of CRI Stock to McClung
Seller, Purchaser, LSR, and the Individual Shareholders agree to use the
foregoing allocation for tax reporting purposes under Section 1060 of the
Internal Revenue Code of 1986, as amended.
5.02 Liquidation of Tecnal. LSR and the Individual Shareholders agree to
cause Tecnal to be liquidated and dissolved prior to its fiscal year ending
September 30, 1996, and agree to take all necessary and appropriate action to
accomplish such liquidation and dissolution prior to said fiscal year end.
5.03 Redemption of LSR's Tecnal Stock. Concurrent with the delivery of
the shares of CRI Stock to be issued and delivered by CRI pursuant to this
Agreement, or within 30 days thereafter, Tecnal shall transfer to LSR 11,205
shares of the CRI Stock in redemption of all of LSR's shares of common stock in
Tecnal.
5.04 Redemption of Tecnal Stock of Individual Shareholders. Concurrent
with the delivery of the shares of CRI Stock to be issued and delivered by CRI
pursuant to this Agreement, or within 30 days thereafter, Tecnal shall transfer
to the Individual Shareholders 3,780 shares of the CRI Stock and the Royalty
Agreement, in redemption of all of the shares of Tecnal common stock owned by
the Individual Shareholders, to be distributed among the Individual
Shareholders in accordance with the following percentages:
Warren Parkhurst 49.00% interest in Royalty Agreement
1,852 shares of CRI Stock
Ephron Catlin, III 24.50% interest in Royalty Agreement
926 shares of CRI Stock
Eugene Merfeld 24.50% interest in Royalty Agreement
926 shares of CRI Stock
Dr. Guy McClung 2.00% interest in Royalty Agreement
76 shares of CRI Stock
As used herein, "Royalty Agreement" means Purchaser's agreement to pay a
royalty payment in the amount of 1% of Net Revenues; provided, however, that
the total aggregate amount of such royalty payment will not exceed $20,000.
The parties herein agree, however, that the Purchaser may at any time relieve
itself of this obligation to pay royalties by paying said individual
shareholders an amount equal to the difference between any amount previously
paid at the time such relief is sought and $20,000. Royalties described in
this section will be paid directly to the Individual Shareholders on a
quarterly basis with payment due within 30 days of the end of CRI's normal
fiscal quarter.<PAGE>
<PAGE>
5.05 Tax Consequences. All parties to this Agreement hereby acknowledge
and represent and warrant to each other that they have had an opportunity to
consult with their respective tax advisers concerning the tax consequences of
the transactions, transfers, redemptions, and liquidation of Tecnal, as
contemplated by this Agreement.
5.06 Investment Letter. Seller, LSR and the Individual Shareholders shall
sign and deliver to CRI, with respect to the CRI Stock, an investment letter in
the form attached hereto as Exhibit B.
6. PATENT MAINTENANCE, PROSECUTION, AND LITIGATION
6.01 Exclusive Rights. After Seller has provided all reasonably necessary
information, drawings, blueprints, and other data and has executed all
necessary papers, documents, and instruments, CRI shall have exclusive right to
cause to be prepared, filed and prosecuted, at its own expense, any
applications for patent in the United States on the Technology, as well as any
corresponding applications for patent in such other countries as may be deemed
advisable by CRI. In connection with such patents, Seller (until such time as
Seller is liquidated and dissolved) and the Individual Shareholders, shall, at
the request of, and cost to, CRI, do all acts necessary for obtaining,
sustaining, re-issuing, disclaiming, or extending such applications, excepting
only those acts of the Individual Shareholders where such obligation would
interfere or coincide with professional services normally offered to others.
6.02 Notice of Patent Assignments. All Patents transferred to CRI
hereunder shall be the sole and exclusive property of CRI and CRI shall be
responsible for processing all Patent assignments with appropriate patent
offices. Seller (until such time as Seller is liquidated and dissolved) and
Shareholders shall, upon demand, execute and deliver to CRI such documents as
may be deemed necessary or advisable by counsel for CRI for filing in the
appropriate patent offices, to evidence the assignment of the Patents and
patent rights herein included. All cost and expense associated with such
filings shall be the sole responsibility of CRI.
6.03 Decisions. All decisions with respect to the preparation, filing and
prosecution of any and all Patents, or patent applications, or the undertaking
of any acts for obtaining, sustaining, re-issuing, disclaiming, defending, or
extending Patents or patent applications shall be made at the sole and absolute
discretion of CRI, and CRI should have no liability whatsoever to the Seller or
Shareholders with respect to any such decision.
6.04 Cooperation in Litigation. In the event that any infringement claims
or suits are brought against the Purchaser, or by the Purchaser against others,
relating to the sale or use of Products arising from the Technological Assets,
the Seller (until such time as Seller is liquidated and dissolved) and the
Individual Shareholders agree to cooperate in the defense or prosecution of
such claims and/or suits in support of the Purchaser and make available to the
Purchaser such documents and/or witnesses and/or personnel as may be helpful in
aiding the Purchaser and its counsel in presenting its case. The cost of
providing such witnesses and personnel shall be billed to the Purchaser at the
then-effective professional rates charged to other clients by the Seller or the
Individual Shareholder.
6.05 Nonassertion. The Seller agrees that, with respect to any practice
of the Technological Assets by the Purchaser, or Purchaser's Affiliates,
contractors, transferees, distributors, agents, or licensees, the Seller will
not assert against such Persons any claims of infringement or subrogation of
rights with respect to use of any of the Technological Assets or Products
arising therefrom.
<PAGE>
<PAGE>
6.06 Trademarks. CRI or its assigns may affix on all and any Products a
trademark, tradename or servicemark selected by CRI, which marks or
designations shall be the sole and exclusive property of CRI and as to which
CRI shall have the right at its expense to file applications for registration
in the United States and any foreign jurisdictions.
6.07 Public Disclosure. Seller, LSR, and the Individual Shareholders
severally agree to forbear from and not to permit others to make or permit any
public disclosure of any of the Technological Assets.
7. NONCOMPETITION AND CONFIDENTIALITY
7.01 Seller, LSR, and the Individual Shareholders, for themselves, their
Affiliates, successors and assigns, covenant to and with CRI, its successors,
Affiliates, and assigns, that Seller will not directly or indirectly either as
principal, agent, manager, employee, owner, partner, stockholder, director, or
other officer of a corporation, creditor, consultant or otherwise, solicit,
attempt to obtain or assist any other Person other than CRI in soliciting or
attempting to obtain or accept any business that competes directly or
indirectly with the business of CRI utilizing the Technological Assets; nor
shall Seller, LSR, or the Individual Shareholders consult or enter into any
research and development or themselves directly or indirectly conduct such
research or development on their own behalves relating to the discovery of the
processes, inventions, improvements, developments or the like pertaining to any
matter included within the present scope of the Technological Assets, except on
behalf of CRI, unless CRI shall have otherwise expressly consented thereto in
writing. Because of the nature of the business of CRI, the parties agree that
it is reasonable for this covenant to apply for a period of three (3) years
following the effective date of this Agreement and shall apply to the entire
geographical area of the world. If the duration or geographical area is
determined by a court to be overly broad in scope, such terms shall be modified
only to the extent necessary to bring this covenant within the requirements of
the law and shall be interpreted to provide CRI with the broadest protection
allowed under the law.
7.02 All of the parties hereto further covenant between themselves that
all information concerning the customers, clients, marketing, and business of
each party is confidential information and will be treated by all parties as
such, and that they will not directly or indirectly make use of such
information or divulge such information to third parties without the express
written permission of the originating party.
7.03 Seller, LSR, and the Individual Shareholders, severally agree not to
disclose, provide or otherwise make available, in whole or in part, any of the
Technology, Incidental Technology, or other components of the Technological
Assets to third parties and shall severally exercise their respective best
effort to ensure the non-disclosure of any of the foregoing Technological
Assets.
8. NOTICES
Any notice provided or permitted in the Agreement to be given among the
parties hereto must be made in writing, addressed to the party to be notified
at the address set forth below, or such other address as to which each party
may make known to the others in writing. Such notices must be communicated (i)
by telefax or similar electronic method providing confirmation of receipt, (ii)
depositing the same in the United States Mail as certified mail with return
receipt requested and postage paid for delivery, or (iii) delivering the same
in person or by express mail courier with delivery receipt, to such party.
Notice shall be deemed to have been given 24 hours after the time of
transmittal if sent by telefax or other electronic method, and 72 hours after<PAGE>
<PAGE>
being deposited in the United States Mail, and as indicated on a delivery
receipt for hand delivered notices. All notices and other communications under
this Agreement shall be addressed as set forth below:
If to CRI: Ronald Lohrding, Ph.D., President
2715 Broadbent Parkway, NE
Albuquerque, New Mexico 87107
Fax: (505) 344-8112
If to Tecnal Products: Leonard M. LaFebre, Secretary
2441 Ridgecrest Dr., SE
Albuquerque, New Mexico 87108
Fax: (505) 262-7852
If to LSR: Herbert L. Whitaker, Jr., Ph.D., President
2441 Ridgecrest Dr., SE
Albuquerque, New Mexico 87108
Fax: (505) 262-7852
If to Warren Parkhurst: 1800 Barker-Cypress Rd.
Apt. 1007
Houston, TX 77084
Fax: (713) 579-3637
If to Ephron Catlin, III: 2137 Winrock
Houston, TX 77057
Fax: (713) 977-7935
If to Eugene Merfeld: 145 Tremont Street
Suite 304
Boston, MA
Fax: (617) 426-4646
If to Guy McClung, Ph.D.: 16690 Champion Forest Dr.
Suite 347
Spring, TX 77379-7023
Fax: (713) 893-2167
9. MISCELLANEOUS
9.01 Applicable Law. This Agreement and all amendments thereto shall be
construed and enforced in accordance with the laws of the State of New Mexico,
and, where applicable, the laws of the United States, and the rights of the
parties shall be governed by the laws thereof.
9.02 Titles and Headings. The titles and headings of various sections and
paragraphs of this Agreement are for convenience only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
9.03 Severability. Wherever there is any conflict between any provision
of this Agreement and any statute, law, regulation or judicial precedent, the
latter shall prevail, but in such extent the provisions of this Agreement thus
affected shall be curtailed and limited only to the extent necessary to bring
it within the requirements of the law. In the event that any part, section,
paragraph or clause of this Agreement shall be held by a court of proper
jurisdiction to be invalid or unenforceable, the entire Agreement shall not
fail on account thereof, but the balance of the Agreement shall continue in
full force and effect unless such construction would clearly be contrary to the
intention of the parties or would result in unconscionable justice.
<PAGE>
<PAGE>
9.04 Grievances. The parties to this Agreement hereby agree that any
claims or disputes between the parties arising out of or concerning this
Agreement shall be presented in writing to all of the parties hereto within
ninety (90) days of the discovery of the facts leading to such claim or
dispute, and that the party claimed to have been at fault shall respond in
writing to such complainant within thirty (30) days of receipt of such notice.
The claimant(s) and respondent(s) will exercise all reasonable means to resolve
and/or rectify such grievances within 120 days of receipt of the original
complaint.
9.05 Arbitration. The parties to this Agreement hereby agree that any
claims or disputes between the parties arising out of or concerning this
Agreement, which are not rectified under Section 9.05 shall be submitted to
binding and mandatory arbitration as follows:
9.05.1 Any controversy or claim arising out of or relating to this
Agreement or the breach thereof, shall be settled by arbitration in
Albuquerque, New Mexico in accordance with the rules of conciliation and
arbitration of the American Arbitration Association then in effect (the
"Rules") and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
9.05.2 Any claim, notice of which is not given in writing to the
other parties within ninety (90) days of (i) the date of occurrence or the last
date to occur of the facts on which said claim is based, or (ii) the date of
discovery of such facts (unless the date by which such facts would have been
discovered had the claimant exercised ordinary care and diligence is an earlier
date, in which case such earlier date shall be substituted for the date of such
discovery) shall be forever barred.
9.05.3 Arbitrator(s) selected in connection with a proceeding
hereunder need not be residents of the State of New Mexico.
9.05.4 Each of the parties will cooperate with the others in
establishing, prior to the selection of any arbitrator, appropriate
qualifications and criteria for selection, and will attempt to agree upon and
select a single arbitrator. If the parties fail to agree on such
qualifications and criteria or to select a single arbitrator then such
selection shall be made in accordance with the Rules provided that, in any
dispute which shall require a decision as to the existence, scope or
applicability of rights in intellectual property, any arbitrator selected by
whatever means shall possess a reasonable degree of expertise and experience in
dealing with such disputes.
9.05.5 All reasonable efforts shall be made to hold a hearing on
the claims submitted within sixty (60) days after the appointment of the
arbitrator(s). In conducting the hearing the arbitrator(s) are hereby
directed, where feasible, to adhere to the then-existing American Arbitration
Association Procedures and Rules relating to commercial disputes. The parties
to each claim shall be equally liable for the reasonable expenses of the
arbitrators hearing the dispute, and the arbitrators shall each be compensated
for the proceedings. The parties agree to advance in equal amounts the
expected amount of required compensation as estimated by the arbitrators at the
commencement of the proceedings. As provided below, however, the arbitrators
may ultimately assess such compensation against any party as part of their
decision.
9.05.6 The decision or award of the arbitrator(s) shall be given
in writing within thirty (30) days after the conclusion of the hearing, but
failure to give such decision within such period will not invalidate the same.
The arbitrator(s) are authorized hereby to award not only damages but also
specific performance, if such relief in their opinion is appropriate. The<PAGE>
<PAGE>
arbitrators shall include in their award reasonable attorney's fees (which the
parties hereto agree by contract to be part of the damages due) to the party or
parties the arbitrator deem to be the prevailing party, unless the arbitrators
expressly find that such an award would be inappropriate under the
circumstances of the dispute. The arbitrators may also assess against any
party any or all costs and expenses of the arbitration.
9.05.7 The award or decision of the arbitrators shall be final and
conclusive in all respects and the parties hereto expressly waive any right of
appeal or judicial review of the same. Nothing herein shall prevent any party
from petitioning a court specified in section 12.01 above to enforce such
decision or award.
9.05.8 Any party hereto shall be entitled to recover reasonable
attorney's fees and costs incurred in enforcing any arbitration award or
decision made pursuant hereto. In addition, any party who refuses to submit a
dispute to arbitration as provided herein, or who brings suit on a claim or
dispute that is subject to arbitration as provided herein without first
submitting such claim to the grievance process and arbitration set forth, shall
pay the reasonable attorney's fees and other expenses incurred by any party
hereto required to enforce the arbitration provisions hereof and/or to obtain a
stay or dismissal of such legal proceedings.
9.06 Execution of Multiple Counterparts. This Agreement may be executed
in multiple counterparts. Each such copy bearing the original authorized
signature of the Purchaser and the original authorized signatures of the
Seller, LSR, and the Individual Shareholders shall have the full force and
effect of a complete original agreement between the signatories and any
complete counterset of original signatures shall be considered a complete
original Agreement.
TECNAL PRODUCTS, INC. TECNAL PRODUCTS, INC.
By: ________________________________ By: ___________________________________
Herbert L. Whitaker, Ph.D., Leonard M. LaFebre,
President Secretary
CELL ROBOTICS, INC.
By: ___________________________________
Ronald Lohrding, Ph.D., President
LOVELACE SCIENTIFIC RESOURCES, INC.
By: ___________________________________
Herbert L. Whitaker, Ph.D.
President
<PAGE>
<PAGE>
INDIVIDUAL SHAREHOLDERS:
_________________________________________________
Warren Parkhurst
_________________________________________________
Eugene Merfeld
_________________________________________________
Ephron Catlin, III
_________________________________________________
Dr. Guy McClung
gfk\345496<PAGE>
<PAGE>
Exhibit A
ASSIGNMENT
FOR GOOD AND VALUABLE CONSIDERATION, the receipt, sufficiency and adequacy
of which are hereby acknowledged, Tecnal Products, Inc., a corporation of New
Mexico, does hereby:
SELL, ASSIGN AND TRANSFER to Cell Robotics, Inc., a New Mexico corporation
with its principal place of business at 2715 Broadbent Parkway, NE,
Albuquerque, New Mexico 87107 U.S.A. (the "Assignee"), free and clear of all
claims, liens, encumbrances, obligations or limitation, the entire right, title
and interest for the United States and all foreign countries, in and to:
United States Patent 5,432,811 issued 07/11/95 entitled "Laser Rod With
Polyhedron Shaped Ends"; pending U.S. Application Serial No. 08/297,295 filed
08/29/94 entitled "Laser Skin Perforator"; and pending PCT Application Serial
No. PCT/US94/02270 entitled "Laser" filed 03/02/94; and all original,
continuation, reexamined and reissued patents which have been or shall be
issued in the United States and all foreign countries on inventions, designs
and improvements disclosed therein; and specifically including the right to
file foreign applications under provisions of any conventions or treaty and
claim priority based on such application in the United States;
AUTHORIZE AND REQUEST the issuing authority to issue any and all United
States and foreign patents granted on said applications and such designs,
inventions and improvements to the assignee;
WARRANT AND COVENANT that no assignment, grant, mortgage, license or other
agreement affecting the rights and property herein conveyed has been or will be
made to others by the undersigned, and that the full right to convey the same
as herein expressed is possessed by the undersigned;
TO BE BINDING on the heirs, assigns, representatives and successors of the
undersigned and extend to the successors, assigns and nominees of the Assignee.
TECNAL PRODUCTS, INC.
By: _____________________________________________
Herbert L. Whitaker, Ph.D., President
<PAGE>
<PAGE>
Exhibit B
Form of Investment Letter
INVESTMENT LETTER
[COMPANY]
[COMPANY ADDRESS]
Gentlemen:
1. This is to confirm the representations and agreements of the
undersigned ("Investor") that Investor hereby agrees to purchase and acquire
_________________________ shares of the $._______ par value per share Common
Stock and _________________ Class _______ Common Stock Purchase Warrants of
___________________________, a ______________ corporation (the "Company"), for
Investor's own account, for investment and not with a view to resale or other
distribution thereof.
2. The representations and agreements confirmed hereby are made for the
purpose of the Company's reliance in connection with a private placement of the
shares of the Company as hereinafter set forth. Investor fully understands and
agrees that the shares are offered by the Company at a price which was
arbitrarily determined without regard to any value of the shares. Investor
fully understands that some of the transactions wherein the shares were issued
to other persons, were done without regard to any assets or other criteria of
value.
3. The undersigned, by reason of his knowledge and experience in
financial and business matters, and/or such knowledge and experience of his
offeree representative, if retained, believes himself capable of evaluating the
merits and risks of this investment.
4. In connection therewith, Investor represents and warrants his
understanding that his investment is extremely speculative and subject to a
high degree of risk. Investor further understands that because of the
speculative nature of his investment, he may lose his entire investment and
Investor represents that he has the economic wherewithal to absorb a total loss
of his investment.
5. The undersigned acknowledges receipt of such information as he and
his offeree representative, if retained, deem necessary or appropriate as a
prudent and knowledgeable investor in evaluating the purchase of the shares.
The undersigned acknowledges that the Company has made available to him or his
offeree representative the opportunity to obtain additional information to
evaluate the merits and risks of this investment. The undersigned acknowledges
that he and his offeree representative, if retained, had the opportunity to ask
questions of the Company, and, to the extent he or his offeree representative,
as the case may be, availed himself of such opportunity, he received
satisfactory answers from the Company, or its affiliates, associates, or
employees concerning the terms and conditions of the offering.
6. Based upon the foregoing, Investor acknowledges the risk and highly
speculative aspect of the shares he is acquiring in the Company, and
understands the proposed use of the funds by the Company, he is familiar with
the management, contemplated operations, financial conditions and all other
factors regarding the Company, and has fully satisfied himself with respect to
the nature of the investment, and has received no assurances of any kind
whatsoever relative thereto, nor have there been any other representations made
by the Company or any of its principals or affiliates regarding any potential
increment in value of the Company's stock acquired by Investor.
<PAGE>
<PAGE>
7. The undersigned hereby represents, warrants and agrees that he is
acquiring the shares solely for his own account, for investment, and not with a
view to the distribution or resale thereof. The undersigned further represents
that his financial condition is such that he is not under any present necessity
or constraint to dispose of such shares to satisfy any existing or contemplated
debt or undertaking.
8. THE UNDERSIGNED IS AWARE OF THE FACT THAT THE SHARES OF COMMON STOCK
HAVE NOT BEEN REGISTERED NOR IS REGISTRATION CONTEMPLATED UNDER THE SECURITIES
ACT OF 1933, AND ACCORDINGLY, THAT SUCH SHARES MUST BE HELD INDEFINITELY UNLESS
THEY ARE SUBSEQUENTLY REGISTERED UNDER SAID ACT OR UNLESS, IN THE OPINION OF
COUNSEL FOR THE COMPANY, A SALE OR TRANSFER MAY BE MADE WITHOUT REGISTRATION
THEREUNDER. The undersigned is further aware that he is not and may not ever
be entitled to make any sales or transfers of the shares pursuant to the
exemption afforded by Rule 144 promulgated under said Act. The undersigned
agrees that any certificate evidencing the shares may bear a legend restricting
the transfer thereof subject to the approval of the Company that the transfer
is lawful.
9. Investor agrees that the shares being acquired will not be sold,
transferred or assigned without a valid registration statement being in effect,
or in the opinion of counsel for the Company, pursuant to an exemption from
registration.
10. The undersigned understands that no federal or state agency has
recommended or endorsed the purchase of the shares or passed on the adequacy of
the information provided by the Company.
11. The undersigned acknowledges that neither the Company nor any person
acting on behalf of the Company offered to sell him shares by means of any form
of general advertising, such as media advertising or seminars.
12. With such understandings, Investor does hereby reaffirm the
acquisition of the shares and delivers the full purchase price set forth in
this letter.
DATED:
_______________________________________________________________________________
SIGNATURE: ____________________________________________________________________
SOCIAL SECURITY NO. - I.D. NO. ________________________________________________
NAME: _________________________________________________________________________
ADDRESS: ______________________________________________________________________
_______________________________________________________________________
REGISTERED REPRESENTATIVE: ___________________________________________________
NUMBER OF SHARES: ____________________________________________________________
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS FOUND
ON PAGES 3 AND 4 OF THE COMPANY'S FORM 10-QSB FOR THE THREE MONTHS ENDED
MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 857,589
<SECURITIES> 0
<RECEIVABLES> 176,051
<ALLOWANCES> 1,841
<INVENTORY> 316,200
<CURRENT-ASSETS> 1,378,762
<PP&E> 604,702
<DEPRECIATION> 387,518
<TOTAL-ASSETS> 1,696,601
<CURRENT-LIABILITIES> 315,708
<BONDS> 0
0
0
<COMMON> 15,374
<OTHER-SE> 1,365,519
<TOTAL-LIABILITY-AND-EQUITY> 1,696,601
<SALES> 58,624
<TOTAL-REVENUES> 144,184
<CGS> 53,904
<TOTAL-COSTS> 440,299
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 595
<INCOME-PRETAX> (350,614)
<INCOME-TAX> 0
<INCOME-CONTINUING> (350,614)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (350,614)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> 0
</TABLE>
