UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1997 Commission File
Number: 0-28498
PARADIGM MEDICAL INDUSTRIES, INC.
---------------------------------
Exact Name of Registrant
DELAWARE 87-0459536
- ------------------------------ ---------------
(State or other jurisdiction IRS Identification
of incorporation or organization) Number
1772 West 2300 South, Salt Lake City, Utah 84119
- ------------------------------------------ -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including Area Code (801) 977-8970
--------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for 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
----- ------
State the number of shares outstanding of each of the issuer's
classes of common equity as of the close of the period covered by
this report.
Class A Common Stock, $.001 par value 3,601,111
- ------------------------------------- ----------------
Title of Class Number of Shares
Outstanding as of
March 31, 1997
Series A Preferred, $.001 par value 114,284
- ----------------------------------- -----------------
Title of Class Number of Shares
Outstanding as of
March 31, 1997
Series B Preferred, $.001 par value 132,108
- ------------------------------------ ----------------
Title of Class Number of Shares
Outstanding as of
March 31, 1997
Transitional Small Business Disclosure Format
YES NO X
----- -----
<PAGE>
PARADIGM MEDICAL INDUSTRIES, INC.
FORM 10QSB
QUARTER ENDED MARCH 31, 1997
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
No.
----
Item 1. Financial Statements
Balance Sheets (unaudited) - March 31, 1997 and
December 31, 1996. . . . . . . . . . . . . . . . . . . 3
Statements of Operations (unaudited) for the three months
ended March 31, 1997 and March 31, 1996. . . . . . . . 4
Statements of Cash Flows (unaudited) for the three months
ended March 31, 1997 and March 31, 1996. . . . . . . . 5
Notes to Financial Statements (unaudited). . . . . . . 6
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . 7 to 9
PART II - OTHER INFORMATION
Other Information. . . . . . . . . . . . . . . . 10 to 11
Signature Page . . . . . . . . . . . . . . . . . 12
<PAGE>
PARADIGM MEDICAL INDUSTRIES, INC.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,669,992 $ 2,468,988
Marketable debt securities,
available for sale 512,763 509,411
Trade accounts receivable 798,828 18,288
Inventories 582,968 407,610
Prepaid expenses 21,757 14,093
------------ -----------
Total current assets 3,586,308 3,418,330
Deferred charges 941,938 120,000
Property and equipment, net 132,001 129,494
------------ -----------
Total assets $ 4,660,247 $ 3,667,824
============= ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 99,431 $ -0-
Accounts payable -
related parties 972,190 35,767
Accrued expenses 231,010 277,473
Note payable to bank -
current 3,360 3,278
------------ -----------
Total current liabilities 1,305,991 316,518
Note payable, less
current portion 14,733 15,605
------------ -----------
Total liabilities 1,320,724 332,123
Stockholders' equity:
Preferred stock, Authorized:
5,000,000 $.001 par value shares
Series A, Authorized: 500,000
shares; issued and outstanding:
122,764 $.001 par value shares
at December 31, 1996 and 114,284
$.001 par value shares at
March 31, 1997 (aggregate
liquidation preference of
$457,136 at March 31, 1997) 114 122
Series B, Authorized: 500,000
shares; issued and outstanding:
448,398 $.001 par value shares
at December 31, 1996 and 132,108
$.001 par value shares at March
31, 1997 (aggregate liquidation
preference of $528,432 at March
31, 1997) 132 448
Additional paid-in capital,
preferred stock 606,121 1,900,637
Common stock, Authorized:
20,000,000 shares; issued and
outstanding: 3,194,061 $.001
par value shares at December 31,
1996 and 3,601,111 $.001 par
value shares at March 31, 1997 3,601 3,194
Additional paid-in capital,
common stock 7,620,023 6,261,097
Treasury stock, 2,600 shares,
at cost (3,777) (3,777)
Unearned compensation (44,199) (63,141)
Accumulated deficit (4,855,255) (4,772,548)
Unrealized gain
on marketable debt
securities, available-for-
sale 12,763 9,669
---------- ---------
Total stockholders'
equity 3,339,523 3,335,701
---------- ---------
Total liabilities and
stockholders' equity $ 4,660,247 $ 3,667,824
============ ===========
</TABLE>
The accompanying notes are an integral
part of the financial statements
<PAGE>
PARADIGM MEDICAL INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
March 31,
-------------------------
1997 1996
---------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Sales $ 928,789 $ 23,171
Sales discounts (55,000) -0-
--------- ---------
Net sales 873,789 23,171
Cost of sales 311,535 18,348
--------- --------
Gross profit 562,254 4,823
--------- --------
Operating expenses:
Marketing and selling 112,152 34,037
General and administrative 458,788 140,614
Research and development 98,033 23,835
--------- --------
Total operating expenses 668,973 198,486
--------- --------
Operating loss (106,719) (193,663)
--------- --------
Other income (expense):
Interest income 24,475 2,738
Interest expense (463) (17,277)
--------- --------
24,012 (14,539)
--------- --------
Net loss (82,707) (208,202)
--------- --------
Net loss attributable to common
shareholders $(82,707) $(208,202)
========= =========
Net loss per common share $(.02) $(.09)
========= =========
Shares used in computing net loss
per common share 3,386,356 2,352,031
========= ==========
</TABLE>
The accompanying notes are an integral
part of the financial statement
<PAGE>
PARADIGM MEDICAL INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
March 31,
-----------------------
1997 1996
--------- ----------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $(82,707) $(208,202)
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Depreciation 6,804 3,392
Common stock issued for compensation 41,810 17,758
Amortization of deferred charge 9,515
Amortization of debt offering costs 5,166
Issuance of bridge notes and
warrants for services 25,000
Increase (decrease) from changes in:
Trade accounts receivable (780,800) 34,993
Inventories (175,358) 12,678
Prepaid expenses (7,664) 5,567
Deferred charges (831,453) -0-
Accounts payable - related parties 972,190 -0-
Trade Accounts payable 63,664 (203,305)
Accrued expenses (46,463) 14,660
-------- -------
Net cash used in
operating activities (830,262) (292,293)
-------- --------
Cash flows from investing activities:
Purchase of property and equipment (9,311) ( 11,047)
Purchase of marketable debt
securities - available for sale (258) -0-
-------- -------
Net cash used in investing
activities (9,569) (11,047)
------- -------
Cash flows from financing activities:
Proceeds from issuance of promissory
notes and warrants -0- 500,000
Proceeds from exercise of warrants 41,625 -0-
Principal payments on notes payable (790) (5,800)
------- -------
Net cash used in financing
activities 40,835 (494,200)
------- -------
Net decrease in cash and cash
equivalents (798,996) 190,860
Cash and cash equivalents
at beginning of period 2,468,988 192,454
--------- -------
Cash and cash equivalents
at end of period $ 1,669,992 $383,314
=========== ========
Supplemental disclosure of
cash flow information:
Cash paid for interest $ 463 $ 2,107
</TABLE>
The accompanying notes are an integral
part of the financial statements.
<PAGE>
PARADIGM MEDICAL INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. Significant Accounting Policies:
-------------------------------
In the opinion of management, the accompanying financial
statements contain all adjustments (consisting only of normal
recurring items) necessary to present fairly the financial
position of Paradigm Medical Industries, Inc. (the Company) as of
March 31, 1997, and the results of its operations for the three
months ended March 31, 1996 and 1997, and its cash flows for the
three months ended March 31, 1996 and 1997. The results of
operations for the periods presented are not necessarily
indicative of the results to be expected for the full year
period.
Net Loss Per Share
- ------------------
Net loss per common share is computed on the weighted
average number of common and common equivalent shares outstanding
during each period. Common stock equivalents consist of
convertible preferred stock, common stock options and warrants.
Common equivalent shares are excluded from the computation when
their effect is anti-dilutive. Other common stock equivalents
have not been included in loss years because they are
anti-dilutive.
2. Legal Proceedings:
------------------
On March 31, 1995, the Company entered into an agreement
with an investment banking company to obtain capitalization
through a public offering. The agreement was deemed terminated
if the required capitalization was not obtained by December 31,
1995. In a complaint filed in November 1996, the investment
banking company and its principal officer requested
356,780 shares of the Company's common stock, along with monthly
payments of $3,000 for three years, as compensation under the
agreement. Shortly after the filing of the complaint, the
principal officer of the investment banking company passed away.
His estate is to be substituted as a plaintiff party. On May 9,
1997, the Company entered into an agreement with the principal
officer's estate to settle the action by the Company paying the
estate an initial payment of $5,000, plus $1,500 per month for 36
months in return for dismissal of the action with prejudice and
release of all claims. The settlement must be approved by the
United States District Court for the District of Utah. If the
settlement is not approved, the Company intends to vigorously
defend the action. Nevertheless, in the event the Company does
not prevail in its defenses, the lawsuit could have a material
adverse impact on the Company's financial condition and could
result in dilution to the Company's shareholders.
3. Preferred Stock Conversions:
----------------------------
Under the Company's Articles of Incorporation, holders of
the Company's preferred stock have the right to convert such
stock into shares of the Company's common stock at the rate of
1.2 shares of common stock for each share of preferred stock.
During the three month period ended March 31, 1997, 7,420 shares
of Series A Preferred Stock and 316,290 shares of Series B
Preferred Stock were converted into 8,904 and 379,548 shares of
the Company's common stock, respectively.
4. Common Stock Issuances
---------------------
As of March 31, 1997, 12,500 shares of the Company's common
stock had been issued for the exercise of warrants. An
additional 6,098 shares of the Company's common stock was issued
to a former employee for past services rendered and recorded as
compensation expense.
5. Related Party Transactions:
--------------------------
On January 8, 1997, the Company subcontracted the
subassembly of the Laser Module piece of the Photon(trademark)
laser cataract system. During the period ended March 31, 1997,
the Company purchased 8 Laser Module subassemblies for a total
purchase price of $128,000, from a manufacturer whose President
sat on the Company's Board of Directors, and as of March 31, 1997
owed that company $80,000 which is included in accounts payable.
The Company has subcontracted the manufacturing of its
Precisionist and Photon laser cataract systems to a company that
is a shareholder. During the three month period ended March 31,
1997, the Company purchased design and manufacturing services
from that company in the amount of $890,000, and as of March 31,
1997 owed that company $892,190 which is included in accounts
payable.
In 1988, the Company signed an exclusive patent license
agreement with a company which owns the patent for the
laser-based Photon(trademark) laser system. This company is
owned by a shareholder of the Company. The agreement provides
for the payment of a 1% royalty on all sales proceeds related
directly or indirectly, to the Photon machine. The agreement
terminates on July 7, 2003. Through September 30, 1996, no
significant royalties have been earned under this agreement. The
Company has also entered into a consulting agreement with this
individual which provides for annual consulting fees of $25,000
through July 7, 2003.
A law firm, of which a director of the Company is a
partner, has rendered legal services to the Company. During the
three month period ended March 31, 1997, the Company paid this
firm $21,849 for legal services, and as of March 31, 1997, owed
this firm $21,350, which is included in accounts payable.
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of
Financial Condition and results of Operations contains forward
looking statements which involve risks and uncertainties. The
Company's actual results could differ materially from those
anticipated in these forward looking statements as a result of
certain factors discussed in this section. The Company's fiscal
year runs from January 1 to and including December 31.
General
The Company is engaged in the development, manufacture and
sale of ophthalmic surgical devices designed to perform minimally
invasive cataract removal surgery. Paradigm's activities for the
three months ended March 31, 1996 include international and
domestic sales of the Precisionist 3000 Plus(trademark) Phaco
system, research and development of the Precisionist
ThirtyThousand(trademark) and the Photon(trademark) laser
cataract system, and primary research for other new products and
businesses. Paradigm's activities for the three months ended
March 31, 1997 include international and domestic sales of the
Precisionist 3000 Plus(trademark) and Precisionist
ThirtyThousand(trademark) and Photon(trademark) laser cataract
systems, as well as primary research for other new products and
businesses.
Results of Operations
Sales increased by $905,618, or 3,908%, to $928,789 for the
three months ended March 31, 1997 from $23,171 for the comparable
period in 1996. Net sales increased by $850,618, or 3,671%, to
$873,789. The difference of $55,000 between sales and net sales
is a result of promotional discounts related to the Company's new
product launch. The increase in sales and net sales was a result
of the Company launching the Photon Ocular Surgery System(trademark) and
the Precisionist ThirtyThousand(trademark), the latest generation
of Paradigm products on March 31, 1997.
Cost of sales increased $283,672, or 1,548%, to $302,020
for the three months ended March 31, 1997 from $18,348 for the
comparable period in 1996, as a result of the increased sales.
The gross margin for the three months ended March 31, 1997 of 61%
is up from the gross margin for the comparable period in 1996 of
21% because sales in 1997 were comprised of new products with a
higher sophistication which command a higher margin.
Marketing and selling expenses increased by $78,115, or
230%, to $112,152 for the three months ended March 31, 1997 from
$34,037 for the comparable period in 1996. The increase was a
result of the Company adding two additional sales representatives
and increasing promotional activities in anticipation of
launching the Photon Ocular Surgery System and the Precisionist
ThirtyThousand during the first quarter of 1997.
General and administrative expenses increased by $318,174,
or 226%, to $458,788 for the three months ended March 31, 1997
from $140,614 for the comparable period in 1996. This was the
result of an increase in personnel and costs associated with
pre-production activities, for possible bad debts and the cost
of defending a pending lawsuit.
Research and development expenses increased by $74,198, or
311%, to $98,033 for the three months ended March 31, 1997 from
$23,835 for the comparable period in 1996. This was the result
of hiring four additional employees and costs associated with
developing the Company's new products.
Upgrades
To garner sales, the Company offers the ultrasonic
Precisionist(trademark) system with an unconditional arrangement
under which the customer may trade in their
Precisionist(trademark) system to upgrade to a Precisionist
ThirtyThousand(trademark) Ocular Surgery System(trademark) or,
upon FDA clearance, a Photon(trademark) laser cataract system
when that system becomes available. Under this arrangement, the
customer receives full credit for the trade in purchase price of
the Precisionist(trademark) system against the price of the new
Precisionist ThirtyThousand(trademark) Ocular Surgery
System(trademark) or Photon(trademark) laser cataract system As
of March 31, 1997, the Company has distributed approximately 51
Precisionist(trademark) systems under this provision. The gross
margin on these original sales was approximately $295,000 or 32%.
If all of these customers were to exercise their upgrade
privilege, the Company would exchange the Precisionist(trademark)
system for the Company's new Precisionist
ThirtyThousand(trademark) Ocular Surgery System(trademark) or
Photon(trademark) system and refurbish the ultrasonic
Precisionist(trademark) systems and sell them in the
international market. Any losses on the sale of the refurbished
Precisionist(trademark) systems, which is not expected to be
significant, would reduce the gross margin on the Precisionist
ThirtyThousand(trademark) Ocular Surgery System(trademark) or
Photon(trademark) system sales. The total gross margin on the
upgrade sales is estimated to be $1,677,000 or 41%. As of March
31, 1997, there have been 2 trade in sales in which the customer
has upgraded a Precisionist(trademark) system to the Precisionist
ThirtyThousand(trademark) Ocular Surgery System(trademark).
Liquidity and Capital Resources
The Company used cash in operating activities of $830,262
for the three months ended March 31, 1997 compared to $292,293
for the comparable period in 1996. The Company used cash in
investing activities of $9,569 for the three months ended March
31, 1997 compared to $11,047 for the comparable period in 1996.
The Company received cash from financing activities of $40,835
for the three months ended March 31, 1997 compared to $5,800
which the company used for financing activities in the comparable
period in 1996.
The Company currently has a $600,000 line of credit with
Key Bank related to accounts receivable and inventory financing.
The Company may seek funding to meet its working capital
requirements through collaborative arrangements and strategic
alliances, additional public offerings and/or private placements
of its securities, or bank borrowings. There can be no
assurance, however, that additional funds, if required, will be
available from any of the foregoing or other sources on favorable
terms, if at all.
At March 31, 1997, the Company had net operating loss
carryforwards (NOLs) of approximately $4,800,000 and research and
development tax credit carryforwards of approximately $47,700.
These carryforwards are available to offset future taxable
income, if any, and expire in the years 2005 through 2011.
Because the Company has yet to recognize significant revenue from
the sale of its Photon(trademark) laser cataract system, a 100%
valuation allowance has been provided for these deferred
tax assets. The Company's ability to use its NOLs to offset
future income taxes may be subject to restrictions enacted in the
United States Internal Revenue Code of 1986, as amended. These
restrictions could limit the Company's future use of its NOLs if
there is a cumulative ownership change of more than 50%, which
would include the changes of ownership related to the offering.
Effect of Inflation and Foreign Currency Exchange
The Company has not realized a reduction in the selling
price of the Precisionist phaco system as a result of domestic
inflation. Nor has the Company experienced unfavorable profit
reductions due to currency exchange fluctuations or inflation
with its foreign customers.
Impact of New Accounting Pronouncements
The Company intends to adopt the disclosure approach
provided for in Statement of Financial Accounting Standards
(SFAS) No. 123, Accounting for Stock Based Compensation, with
respect to options and warrants granted to employees. Because
the Company has only a minimal investment in long-lived assets,
the adoption of SFAS 121, Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of, and which will occur October
1, 1996, is not expected to have an impact on the Company.
In March 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128,
Earnings Per Share. This statement establishes standards for
computing and presenting earnings per share ("EPS") and applies
to entitles with publicly held common stock or potential common
stock. This statement simplifies the standards for computing EPS
and makes them comparable to international EPS standards. This
statement is effective for financial statements for both interim
and annual periods ending after December 15, 1997.
The Company has reviewed all other recently issued, but not
yet adopted, accounting standards in order to determine their
effects, if any, on the results of operations or financial
position of the Company. Based on that review, the Company
believes that none of these pronouncements will have a
significant effect on current or future earnings or operations.
Part II: Other Information
Item 1. Legal Proceedings
On March 31, 1995, the Company entered into an agreement
with an investment banking company to obtain capitalization
through a public offering. The agreement was deemed terminated
if the required capitalization was not obtained by December 31,
1995. In a complaint filed in November 1996, the investment
banking company and its principal officer requested
356,780 shares of the Company's common stock, along with monthly
payments of $3,000 for three years, as compensation under the
agreement. Shortly after the filing of the complaint, the
principal officer of the investment banking company passed away.
His estate is to be substituted as a plaintiff party. On May 9,
1997, the Company entered into an agreement with the principal
officer's estate to settle the action by the Company paying the
estate an initial payment of $5,000, plus $1,500 per month for 36
months in return for dismissal of the action with prejudice and
release of all claims. The settlement must be approved by the
United States District Court for the District of Utah. If the
settlement is not approved, the Company intends to vigorously
defend the action. Nevertheless, in the event the Company does
not prevail in its defenses, the lawsuit could have a material
adverse impact on the Company's financial condition and could
result in dilution to the Company's shareholders.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
Exhibit # Description
- --------- -----------
10.1 Engineering and Manufacturing Agreement with Sunrise
Technologies, Inc., dated January 8, 1997.
10.2 License and Manufacturing Agreement with O.B.F. Labs
Ltd., dated January 16, 1997.
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
REGISTRANT
PARADIGM MEDICAL INDUSTRIES, INC.
---------------------------------
Registrant
DATED: May 15, 1997 By: Thomas F. Motter
President and Chief Executive
Officer
(Principal Executive Officer)
DATED: May 15, 1997 By: John W. Hemmer
Treasurer and Chief Financial
Officer (Principal Financial
and Accounting Officer)
ENGINEERING AND MANUFACTURING AGREEMENT
THIS ENGINEERING AND MANUFACTURING AGREEMENT (the
"Agreement") is made and entered into as of this 8 day of
----
January, 1997 (the "Effective Date"), by and between PARADIGM
MEDICAL INDUSTRIES, INC., a Delaware corporation ("Paradigm") and
SUNRISE TECHNOLOGIES, INC., a Delaware corporation
("Manufacturer"). Paradigm and Manufacturer are also referred to
herein, individually, as "party," and collectively, as "parties."
RECITALS
WHEREAS, Paradigm is a supplier of technical products,
services and support to the medical and health care industry;
WHEREAS, Manufacturer is an engineer and manufacturer of
medical and health care products; and
WHEREAS, Paradigm desires to obtain engineering and
manufacturing services for its products and Manufacturer desires
to provide such services as an original equipment manufacturer
("OEM");
NOW, THEREFORE, in consideration of the respective
representations, warranties, covenants and agreements contained
herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Definitions. The capitalized terms in this Agreement
shall have the following meanings unless otherwise defined
herein:
1.1 "Laser Module" shall mean the Sunlase 800 8
Watt Nd:YAG packaged as a Subassembly (as defined in Paragraph
1.2 below) with remote safety interlock, keys, power cord and
modifications thereto, as well as any other medical equipment
developed for Paradigm.
1.2 "Subassembly" means the Sunlase 800 8 Watt
Nd:YAG without the standard display input/output board or panel,
the module cover which encloses the electronic components or the
wheels; but including the following component parts: a rigid pan
to hold electronic components in place, cable connections for the
Photon Laser Phacoemulsification System (the "System") and serial
interface software to control the System laser and interface with
the System.
2. Development and Manufacturing. Manufacturer shall
produce and manufacture the Laser Module for Paradigm.
2.1 Engineering. Manufacturer agrees to design,
develop specifications and engineering documentation, make
procurements, and test and produce serial interface software to
control the
RWM DWL
<PAGE>
System laser, interface with the System and replace the standard
display input/output board. As more fully set forth in Paragraph
9 below, all documentation, specifications, designs, etc.
developed during the Term or any Renewed Terms of this Agreement
(as defined in paragraph 6 below) which relate to the Laser
Module shall be jointly owned by the parties unless otherwise
agreed in writing except that any property, and the legal right
therein, developed before or independent of this Agreement shall
remain the property of the developing party.
2.2 Engineering Compensation. Paradigm shall pay
Manufacturer's reasonable engineering costs for designing and
developing the serial interface software and, if needed, revising
material components and Subassembly hardware; provided that such
costs are pre-approved in writing by Paradigm before such costs
are incurred. The specific engineering work to be performed by
Manufacturer shall be mutually agreed to by the parties following
execution of this Agreement and set forth in writing and attached
hereto as Appendix "A". When attached hereto, Appendix A shall
be incorporated herein and considered a material part of this
Agreement.
2.3 Components. Manufacturer will subcontract
production for components only, and will assemble, calibrate,
test, document and package the complete Laser Module under
Manufacturer's direct control at its own plant.
2.4 System Changes. Manufacturer will notify
Paradigm of all proposed changes to the Laser Module and will not
perform any material changes in the Laser Module after completion
of testing and delivery of prototypes without written approval by
Paradigm by means of a Manufacturer's Engineering Change Order or
other similar document. Manufacturer will supply Paradigm with
a copy of each such change order for its records. Each party
shall keep its own master engineering and medical device files.
2.5 Quality Control. Manufacturer will perform
product testing, burn-in, calibration and quality assurance
inspections for the Laser Module to comply with regulatory
standards and product performance specifications prescribed by
Paradigm. Manufacturer will keep accurate records that comply
with regulatory standards of the Food, Drug and Cosmetics Act for
each Laser Module or other product manufactured and make copies
of the same available to Paradigm for its product history and
reporting records. Paradigm shall be entitled to integrate
Manufacturer's Quality Manual or portions thereof into its own
Quality Manual.
2.6 Regulatory Approval. Paradigm shall perform or
be responsible for all clinical evaluations, testing and
documentation related to regulatory approvals as may be required
to market the Systems in the United States and abroad.
Notwithstanding the foregoing, Manufacturer will make available
to authorized representatives of the United States Food and Drug
Administration ("FDA"), all documents reasonably necessary to
demonstrate FDA Good
RGW DWL
<PAGE>
Manufacturing Practice ("GMP") requirements and will make all
reasonable efforts to comply with FDA GMP requirements.
Manufacturer will also make available to authorized
representatives of the European CE Mark, Japanese Ministry of
Health as well as any other governmental or regulatory body which
may oversee or control the sell of the Systems, all documents
reasonably necessary to satisfy the requirements of such body and
obtain marketing approval for the Systems. Manufacturer will
also make any and all other testing records and documents
pertaining to the Laser Module or any subarrangement thereof,
available for their inspection and copying.
2.7 Service and Training. Paradigm shall be
responsible for performing field service and maintenance of the
Laser Module. Manufacturer shall train Paradigm's designated
service technicians and sales personnel as required by Paradigm
in training classes.
Training classes shall be scheduled at least two (2) weeks in
advance through Manufacturer's customer service department.
There shall be no limit to the number of students in a class.
Notwithstanding the foregoing, Paradigm shall pay Manufacturer
$500 for each class regardless of the class size. Paradigm shall
also pay any and all reasonable travel and lodging costs for
students or instructors.
3. Purchase Price of Laser Module. Paradigm will purchase
each completed Laser Module for $16,000 (the "Fixed Purchase
Price"); provided that Paradigm orders at least 80 Laser Modules
on or before December 31, 1997, for delivery on or before March
31, 1998. In the event that Paradigm does not order at least 80
Laser Modules as set forth in this paragraph 3, the following
adjusted price list shall apply to Laser Modules ordered by
Paradigm and Paradigm shall immediately remit to Manufacturer,
the difference, if any, between the Fixed Purchase Price of the
Laser Module and the appropriate adjusted price per Laser Module
(as hereinafter set forth) times the number of Laser Modules
ordered in 1997:
Number of Laser Modules Price per
Ordered in 1997 Laser Module
20 - 39 $ 18,000
40 - 59 17,000
60 - 79 16,500
80+ 16,000
Notwithstanding the foregoing, nothing in this Section 3 shall be
construed to require Paradigm to order a specific number of Laser
Modules from Manufacturer. Further, there is no limit to the
number of Laser Modules Paradigm may order in a single order
except that Manufacturer shall not be required to accept any
order for less than 20 Laser Modules and, if an order is placed
for more than 40 Laser Modules, the parties will mutually agree
to a reasonable delivery schedule. Paradigm shall pay the
purchase price of each Laser Module within thirty (30) days after
receipt of an invoice.
RWM DWL
<PAGE>
4. Warranty and Service.
4.1 Warranty. Manufacturer shall provide
replacement parts or replace defective parts or components of the
Laser Module at no cost to Paradigm or the purchaser of the Laser
Module within ten (10) days after notification for one year from
the date of purchase of the Laser Module by a Paradigm customer
or eighteen (18) months from the date of delivery of the Laser
Module to Paradigm, whichever period expires first.
Manufacturers warranties shall include the implied warranty of
merchantability, but not the implied warranty of fitness for a
particular purpose. Notwithstanding the foregoing, all
warranties shall be void if a modification is made to the Laser
Module by Paradigm or its customer which does not conform to
engineering specifications or has not been authorized by an
engineering change order from Paradigm to Manufacturer.
4.2 Field Service. Paradigm will coordinate all
customer service communications, product delivery to and from
customers, field service and service billing (post-warranty where
available).
4.3 Parts. Manufacturer will make Laser Module
parts available to Paradigm for distribution to field service
organizations and Paradigm's dealers or representatives during
the Term and any Renewed Terms of this Agreement (as defined in
paragraph 6 below) and for at least two (2) years following the
termination or expiration of this Agreement. Paradigm shall
return to Manufacturer all defective parts, components or Laser
Modules replaced pursuant to Manufacturer's warranties within
thirty (30) days after replacement. If Paradigm does not return
the defective parts, components or Laser Modules to Manufacturer
within thirty days, Paradigm shall be billed for the replacement
parts, components or Laser Modules. Notwithstanding the
foregoing, nothing in this Agreement shall be interpreted as
preventing Paradigm from returning such defective parts,
components or Laser Modules upon the agreement of the parties for
a reasonable period of time not to exceed ninety (90) days.
5. Marketing. Manufacturer shall allow Paradigm's
domestic or international dealers, representatives and/or
customers to tour Manufacturer's manufacturing facility, provided
that Paradigm reviews all such requests with the Manufacturer and
provides a complete list of all proposed visitors prior to any
final commitment by Manufacturer and such tour does not
unreasonably interfere with Manufacturer's business activities.
Paradigm will make all reasonable efforts not to allow any known
competitor of manufacturer to participate in a tour of
Manufacturer's facility.
6. Term. The term of this Agreement shall commence on
the date first above written and shall expire at midnight,
Pacific Time, December 31, 1997 (the "Term"). This Agreement
shall be renewed thereafter for successive one (1) year
additional terms (each, a "Renewed Term") by mutual, written
agreement of the
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<PAGE>
parties at least ninety (90) days prior to the expiration of the
Term or Renewed Term.
7. Covenant Not to Compete. Manufacturer hereby covenants
and agrees that during the Term and any Renewed Term of this
Agreement and for a period of two (2) years thereafter, it and
its employees will not engage in the business of retailing or
wholesaling medical lasers for cataract removal surgery and will
not develop, manufacture or provide such equipment to any other
person, business or entity during the same period of time in any
state or country in which Paradigm's products are sold or
Paradigm does business.
8. Confidentiality; Proprietary Rights.
8.1 Definition of Confidential Information. For
purposes of this Agreement, "Confidential Information" means any
customer lists, information, materials, technical data, know-how,
or trade secrets of either party, which is disclosed to or
learned by or otherwise acquired by the other party prior to or
during the Term or any Renewed Term of this Agreement or in the
course of the business discussions contemplated hereby.
8.2 Non-Disclosure of Confidential Information. The
parties agree not to use the Confidential Information for their
own use or for any purpose except as provided for in this
Agreement. The parties agree not to disclose Confidential
Information to any third party. The parties agree that they will
protect the confidentiality of, and take all reasonable steps to
prevent unauthorized disclosure or use of, the Confidential
Information to prevent it from falling into the public domain or
the public literature or to prevent it from falling into the
possession of unauthorized persons or entities. Without limiting
the generality of the foregoing, the parties agree to take the
same steps and use the same methods to prevent the unauthorized
use or disclosure of the Confidential Information as the other
party takes to protect its secret, confidential, or proprietary
information and data, including causing their employees, agents,
consultants and representatives to agree to abide by the
conditions and promises made in this Agreement. Each party will
promptly notify the other party writing of any misappropriation
or misuse by any person or entity of the Confidential Information
that comes to either party's attention.
8.3 Return of Materials. Any Confidential
information or other information, materials, or documents of
either party that are furnished to the other party hereunder or
were derived from the Confidential Information or such
information or materials will be promptly returned to the other
party, accompanied by all copies of such Confidential Information
or such other information, materials, or documents made by the
party or in the party's possession or under the party's control,
at the earlier of the other party's request for return of the
same or the termination of this Agreement
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<PAGE>
excluding any documents required to be maintained by any
regulatory agency.
8.4 Legal Remedies. It is understood and agreed
that no failure or delay by any party in exercising any right,
power, or privilege hereunder will operate as a waiver thereof,
nor will any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other
right, power, or privilege hereunder. It is further understood
and agreed that money damages will not be a sufficient remedy for
any breach of this Section 8 by either party or any employees,
agents, consultants or representatives of that party and that the
other party will be entitled to equitable relief, including
injunctive relief and specific performance, as a remedy for any
such breach of this Agreement.
9. Inventions.
9.1 Ownership of Inventions. The parties hereby
agree that all inventions, patent applications, patents,
copyrights, trademarks, mask works, trade secrets and any
information embodying proprietary data such as technical data and
computer software first developed or generated during the
performance of this Agreement (referred to herein as the
"Invention") shall be jointly owned by the parties unless
otherwise agreed in writing. Both parties shall have the right
to use and to apply for patents, copyrights or other statutory or
common law protection for such Invention in any country.
Furthermore, each party agrees to assist the other party in every
proper way (at the other party's expense) to obtain patents,
copyrights, and other statutory common law protection for such
Inventions in any country and to enforce such rights from time to
time. Specifically, each party agrees to execute all documents
as the other party may reasonably request for use in applying for
and in obtaining or enforcing such patents, copyrights, and other
statutory or common law protection.
9.2 Disclosure of Inventions. The parties agree if
they or their employees or agents, directors, consultants or
representatives conceive, learn, make, or first reduce to
practice, either alone or jointly with others, an Invention
during the Term or any Renewed Term of this Agreement, it or they
will promptly disclose such Invention to the other party or to
any person designated by the other party, notwithstanding the
fact that it is determined that the other party has no right to
such Invention and that such Invention may be the disclosing
party's proprietary information.
9.3 Background Proprietary Property. The parties
further agree that any property and the legal right therein of
either party developed before or independent of this Agreement,
including inventions, patent applications, patents, copyrights,
trademarks, mask works, trade secrets and any information
embodying proprietary data such as technical data and computer
software shall remain the property of the developing party.
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<PAGE>
10. Miscellaneous.
10.1 Entire Agreement. This Agreement constitutes
the entire agreement and understanding of the parties with
respect to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings related to the
subject matter hereof. No representation, promise, inducement or
statement of intention has been made by either of the parties
that is not embodied in this Agreement or in the documents
referred to herein, and neither of the parties shall be bound by
or be liable for any alleged representation, promise, inducement
or statement of intention not set forth or referred to herein.
10.2 Governing Law. This Agreement shall be
governed by and construed and enforced in accordance with the
laws of the State of California.
10.3 Amendments; Waiver. This Agreement may not be
amended, modified, superseded or canceled, nor may any of the
terms, covenants, representations, warranties, conditions or
agreements herein be waived, except by a written instrument
executed by the party against whom such amendment, modification,
supersedure, cancellation or waiver is charged. The failure of
either of the parties at any time or times to require performance
of any provision hereof shall in no manner affect the right at a
later time to enforce the same. No waiver by either of the
parties of any condition, or of any breach of any term, covenant,
representation, warranty, condition or agreement contained
herein, shall be deemed to be or shall be construed to be a
waiver or continuing waiver of any such condition or breach or a
waiver of any other condition or of the breach of any other term,
covenant, representation, warranty, condition or agreement
hereof.
10.4 Headings; Construction. The captions and
headings contained herein are for convenience of reference only,
and shall not in any way affect the meaning or interpretation of
this Agreement. Notwithstanding any rule or maxim of construction
to the contrary, any ambiguity or uncertainty in this Agreement
shall not be construed against either of the parties based upon
authorship of any of the provisions hereof.
10.5 Counterparts. This Agreement may be executed
by facsimile and may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which, when
taken together, shall constitute one and the same instrument.
10.6 Attorneys' Fees. In the event either of the
parties shall bring an action in connection with the performance,
breach or interpretation of this Agreement, or in any action
related to the subject matter hereof, the prevailing party in
such action shall be entitled to recover from the non-prevailing
party in such action all reasonable costs and expenses of such
action, including, without limitation, attorneys' fees, costs of
investigation, accounting and other costs reasonably incurred or
RWM DWL
<PAGE>
related to such action, in such amount as may be determined in
the discretion of the arbitrator(s).
10.7 Severability. In the event any provision hereof
is determined to be illegal or unenforceable for any reason
whatsoever, such determination shall not affect the validity or
enforceability of the remaining provisions hereof, all of which
shall remain in full force and effect.
10.8 Further Assurances. The parties each hereby
covenant and agree that, from time to time, after the date
hereof, at the reasonable request of either party, and without
further consideration, they will execute and deliver such other
documents and instruments and take such other action as may be
reasonably required to carry out in all respects the subject
matter hereof and the intent of this Agreement.
10.9 Notices. All notices, demands and other
communications required or permitted to be given hereunder shall
be in writing and shall be deemed to have been duly given and
received (a) immediately if delivered personally, (b) seventy-two
(72) hours after deposit in the United States Mail, first class,
postage prepaid, registered or certified mail, return receipt
requested, if so mailed, (c) upon completed transmission, if
faxed, or (d) the following business day, if sent by overnight
courier. All such notices shall be addressed to the parties at
the addresses and/or fax numbers listed below. Either party may
change the address and/or the fax number to which communications
are to be directed by giving written notice to the other party in
the manner provided herein.
TO PARADIGM: PARADIGM MEDICAL INDUSTRIES, INC.
1772 West 2300 South
Salt Lake City, Utah 84119
Attn: Thomas F. Motter, President
Fax No. (801) 977-8973
With a copy to: Randall A. Mackey, Esq.
Mackey Price & Williams
900 First Interstate Plaza
170 South Main Street
Salt Lake City, Utah 84101-1655
Fax No. (801) 575-5006
TO MANUFACTURER: SUNRISE TECHNOLOGIES, INC.
47257 Freemont Boulevard
Freemont, California 94538
Attn: David W. Light, President
Fax No. (510) 623-9163
With a copy to: Jay L. Margulies, Esq.
Thelan, Marrin, Johnson & Bridges LLP
17th Floor
333 West San Carlos Street
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<PAGE>
San Jose, California 95110-2701
Fax No. (408) 287-8040
10.10 No Third-Party Beneficiaries. Nothing in this
Agreement, whether express or implied, is intended to confer any
rights or remedies under or by reason of this Agreement on any
person other than the parties and their respective successors or
permitted assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third
person to either of the parties, nor shall any provision hereof
give any third person any right of subrogation or action over or
against either of the parties.
10.11 Force Majeure. Neither party shall be
responsible or liable to the other hereunder for failure or delay
in performance of the Agreement due to any war, fire, accident or
other casualty, or any labor disturbance or act of God or the
public enemy, or any other contingency beyond such party's
reasonable control. In addition, in the event of the
applicability of this Section 11.11, the party failing or
delaying performance shall use its best efforts to expeditiously
eliminate, cure and overcome any of such causes and resume
performance of its obligations.
10.12 Relationship of the Parties. Notwithstanding
any provision hereof, for all purposes of this Agreement, each
party shall be and act as an independent contractor and not as a
partner, joint venturer or agent of the other party and shall not
bind nor attempt to bind the other party to any contract or
agreement.
10.13 Successors and Assigns. This agreement shall
be binding on all successors and assigns of the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the day and year first above written.
PARADIGM MEDICAL INDUSTRIES, INC.,
a Delaware corporation
By: Robert W. Millar
Title: Vice President
SUNRISE TECHNOLOGIES, INC.,
a Delaware corporation
By: David W. Light
Title: Chairman & CEO
DWL
<PAGE>
LICENSE AND MANUFACTURING AGREEMENT
THIS LICENSE AND MANUFACTURING AGREEMENT (the "Agreement")
is made and entered into as of this 16 day of January, 1997 (the
----
"Effective Date"), by and between PARADIGM MEDICAL INDUSTRIES,
INC., a Delaware corporation ("Paradigm") and O.B.F. LABS, LTD.,
a United Kingdom corporation ("Manufacturer"). Paradigm and
Manufacturer are also referred to herein, individually, as
"party," and collectively, as "parties."
RECITALS
WHEREAS, Paradigm is a company engaged in the production,
distribution, and sale of ophthalmic products throughout the
world and is capable of supplying technical products, services
and support to the medical and health care industry;
WHEREAS, Manufacturer is an engineer and manufacturer of
medical and health care products, including an ophthalmic
tonometer (the "Tonometer"); and
WHEREAS, Paradigm desires to obtain from Manufacturer, and
Manufacturer desires to grant to Paradigm, the right to repackage
the Tonometer as well as an exclusive license to sell the
repackaged tonometer in the United States under Paradigm's
tradenames and trademarks and a nonexclusive license to sell the
repackaged tonometer worldwide also under Paradigm's tradenames
and trademarks;
NOW, THEREFORE, in consideration of the respective
representations, warranties, covenants and agreements contained
herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Definitions. The capitalized terms in this Agreement
shall have the following meanings unless otherwise defined
herein:
1.1 "System" shall mean the Tonometer packaged as
a subassembly without the module cover which encloses the
electronic components, but including the tonometer probe, power
cord and modifications thereto.
1.2 "Disposable Tip" shall mean the plastic
membrane tip attached to the Tonometer probe and packaged as a
single unit in a sealed, single-use pack.
1.3 "Repackaged System" shall mean the System
repackaged in a cover designed by or for Paradigm and marketed
under tradenames and trademarks selected by Paradigm.
RWM ADM
<PAGE>
2. Right to Repackage. Manufacturer hereby grants to
Paradigm, the right to repackage the System and sell the
Repackaged System under tradenames and trademarks selected by
Paradigm.
3. Ownership of Design and Mark. Manufacturer hereby
acknowledges and agrees that the cover designed by or for
Paradigm in which the System will be repackaged as well as the
tradenames and/or trademarks selected by Paradigm to market the
Repackaged System shall be the exclusive property of Paradigm and
Manufacturer shall have no rights to, nor ownership interest in
such property.
4. Exclusive License. Manufacturer hereby grants
Paradigm the exclusive license to sell the Repackaged System in
the United States during the Term or any Renewed Term of this
Agreement (as defined in paragraph 13 below). Manufacturer shall
not grant any other person or entity the right to repackage the
System and sell such repackaged System in the United States.
Notwithstanding the foregoing, Manufacturer shall be entitled to
sell the Tonometer directly or indirectly in the United States
during the Term or any Renewed Term of this Agreement under its
own tradenames and trademarks. Further, Manufacturer shall be
entitled to license other persons or entities to repackage the
System for marketing in any country other than the United States
and its territories provided that such persons or entities are
expressly restricted from selling such repackaged Systems
directly or indirectly in the United States.
5. Non-exclusive Right. Manufacturer hereby grants to
Paradigm, the non-exclusive right to sell the Repackaged System
throughout the world in any country during the Term or any
Renewed Term of this Agreement (as defined in paragraph 13
below).
6. Development and Manufacturing. Manufacturer shall
manufacture and produce the System so that Paradigm can repackage
the System in a cover. Manufacturer shall bear the reasonable
expenses, if any, of packaging the System as subassembly.
Manufacturer shall notify Paradigm of all changes from time to
time made to the System and shall supply Paradigm with written
notice and information concerning such changes. Each party shall
keep its own master engineering and medical device files.
7. Quality Control. Manufacturer will perform product
testing, burn-in, calibration and quality assurance inspections
for the System to comply with regulatory standards and product
performance specifications prescribed by Paradigm. Manufacturer
will keep accurate records that comply with regulatory standards
of the Food, Drug and Cosmetics Act for each System or other
product manufactured and make copies of the same available to
Paradigm for its product history and reporting records. Paradigm
shall be entitled to integrate Manufacturer's Quality Manual or
portions thereof into its own Quality Manual.
RWM ADM
<PAGE>
8. Regulatory Approval. Paradigm shall perform or be
responsible for all clinical evaluations, testing and
documentation related to regulatory approvals as may be required
to market the Repackaged System in the United States.
Notwithstanding the foregoing, Manufacturer will make available
to authorized representatives of the United States Food and Drug
Administration ("FDA"), all documents reasonably necessary to
demonstrate FDA Good Manufacturing Practice ("GMP") requirements
and will make all reasonable efforts to comply with FDA GMP
requirements. Paradigm shall also be permitted to seek
regulatory approval from authorized representatives of any other
governmental or regulatory body which may oversee or control the
sell of the Repackaged System. Manufacturer shall make available
all documents reasonably necessary to satisfy the requirements of
such body and obtain marketing approval for the Repackaged
System. Manufacturer will also make any and all other testing
records and documents pertaining to the System or any
subarrangement thereof, available for their inspection and
copying.
9. Service and Training. Paradigm shall be responsible
for performing field service and maintenance of the Repackaged
System. Manufacturer shall train Paradigm's designated service
technicians and sales personnel in training classes at Paradigm's
offices in Salt Lake City, Utah and pursuant to terms mutually
agreed to by both parties.
10. Price & Purchase Requirements.
10.1 Systems. For a period of one year from the
date Paradigm shall purchase at least 12 Systems by January 31,
1998; an additional 24 Systems by January 31, 1999; and an
additional 24 Systems by January 31, 2000. Notwithstanding the
foregoing, there is no limit to the number of Systems Paradigm
may purchase. Paradigm shall purchase each completed System for
$4,700 (the "Fixed Purchase Price"). Paradigm shall pay the
Fixed Purchase Price of each System within thirty (30) days after
receipt of an invoice.
10.2 Beta Tonometers. Paradigm shall purchase two
(2) Tonometers within thirty (30) days from the Effective Date of
this Agreement for evaluation and engineering and design
purposes. Manufacturer shall sell the two Tonometers, including
the tonometer probes, all accessories, manuals and four (4) cases
of Disposable Tips, to Paradigm for $13,200.
11. Disposable Tip Resales. Manufacturer hereby grants
Paradigm a license to sell the Disposable Tip in any country
throughout the world and agrees to sell the Disposable Tip to
Paradigm at Manufacturer's usual and customary, wholesale prices
during the Term and any Renewed Terms of this Agreement (as
defined in paragraph 13 below) and for at least two (2) years
following the termination or expiration of this Agreement.
Manufacturer further agrees not sell the Disposable Tip to
purchasers or owners of the Repackaged System and to restrict any
and all licensees from
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<PAGE>
selling the Disposable Tip to purchasers or owners of the
Repackaged System.
12. Warranty and Service.
12.1 Warranty. For a period of one year from the
date of purchase of the Repackaged System by a Paradigm customer,
Manufacturer shall provide replacement parts or replace defective
parts or components of the System only at no cost to Paradigm or
the purchaser of the Repackaged System within ten (10) days after
notification by Paradigm. Manufacturer's warranties shall
include the implied warranty of merchantability and fitness for
a particular purpose.
12.2 Field Service. Paradigm will coordinate all
customer service communications, product delivery to and from
customers, field service and service billing (post-warranty where
available).
12.3 Parts. Manufacturer will make System parts
available to Paradigm at Manufacturer's usual and customary,
wholesale prices for distribution to field service organizations
and Paradigm's dealers or representatives during the Term and any
Renewed Terms of this Agreement (as defined in paragraph 13
below) and for at least two (2) years following the termination
or expiration of this Agreement.
13. Term. The term of this Agreement shall commence on
the date first above written and shall expire at midnight, United
States Mountain Daylight Time, December 31, 2000 (the "Term").
This Agreement shall be automatically renewed thereafter for
successive one (1) year additional terms (each, a "Renewed Term")
unless either party gives written notice to the other party at
least ninety (90) days prior to the expiration of the Term or
Renewed Term that the Agreement shall not be renewed.
14. Confidentiality; Proprietary Rights.
14.1 Definition of Confidential Information. For
purposes of this Agreement, "Confidential Information" means any
customer lists, information, materials, technical data, know-how,
or trade secrets of either party, which is disclosed to or
learned by or otherwise acquired by the other party prior to or
during the Term or any Renewed Term of this Agreement or in the
course of the business discussions contemplated hereby.
14.2 Non-Disclosure of Confidential Information.
The parties agree not to use the Confidential Information for
their own use or for any purpose except as provided for in this
Agreement. The parties agree not to disclose Confidential
Information to any third party. The parties agree that they will
protect the confidentiality of, and take all reasonable steps to
prevent unauthorized disclosure or use of, the Confidential
Information to prevent it from falling into the public domain or
the public
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<PAGE>
literature or to prevent it from falling into the possession of
unauthorized persons or entities. Without limiting the
generality of the foregoing, the parties agree to take the same
steps and use the same methods to prevent the unauthorized use or
disclosure of the Confidential Information as the other party
takes to protect its secret, confidential, or proprietary
information and data, including causing their employees, agents,
consultants and representatives to agree to abide by the
conditions and promises made in this Agreement. Each party will
promptly notify the other party in writing of any
misappropriation or misuse by any person or entity of the
Confidential Information that comes to either party's attention.
14.3 Return of Materials. Any Confidential
information or other information, materials, or documents of
either party that are furnished to the other party hereunder or
were derived from the Confidential Information or such
information or materials will be promptly returned to the other
party, accompanied by all copies of such Confidential Information
or such other information, materials, or documents made by the
party or in the party's possession or under the party's control,
at the earlier of the other party's request for return of the
same or the termination of this Agreement excluding any documents
required to be maintained by any regulatory agency.
14.4 Legal Remedies. It is understood and agreed
that no failure or delay by any party in exercising any right,
power, or privilege hereunder will operate as a waiver thereof,
nor will any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other
right, power, or privilege hereunder. It is further understood
and agreed that money damages will not be a sufficient remedy for
any breach of this Section 13 by either party or any employees,
agents, consultants or representatives of that party and that the
other party will be entitled to equitable relief, including
injunctive relief and specific performance, as a remedy for any
such breach of this Agreement.
15. Miscellaneous.
15.1 Entire Agreement. This Agreement constitutes
the entire agreement and understanding of the parties with
respect to the subject matter hereof, and supersedes all prior
agreements, arrangements and understandings related to the
subject matter hereof. No representation, promise, inducement or
statement of intention has been made by either of the parties
that is not embodied in this Agreement or in the documents
referred to herein, and neither of the parties shall be bound by
or be liable for any alleged representation, promise, inducement
or statement of intention not set forth or referred to herein.
15.2 Governing Law. This Agreement shall be
governed by and construed and enforced in accordance with the
laws of the United States and the state of Utah.
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<PAGE>
15.3 Amendments; Waiver. This Agreement may not be
amended, modified, superseded or canceled, nor may any of the
terms, covenants, representations, warranties, conditions or
agreements herein be waived, except by a written instrument
executed by the party against whom such amendment, modification,
supersedure, cancellation or waiver is charged. The failure of
either of the parties at any time or times to require performance
of any provision hereof shall in no manner affect the right at a
later time to enforce the same. No waiver by either of the
parties of any condition, or of any breach of any term, covenant,
representation, warranty, condition or agreement contained
herein, shall be deemed to be or shall be construed to be a
waiver or continuing waiver of any such condition or breach or a
waiver of any other condition or of the breach of any other term,
covenant, representation, warranty, condition or agreement
hereof.
15.4 Headings; Construction. The captions and
headings contained herein are for convenience of reference only,
and shall not in any way affect the meaning or interpretation of
this Agreement. Notwithstanding any rule or maxim of construction
to the contrary, any ambiguity or uncertainty in this Agreement
shall not be construed against either of the parties based upon
authorship of any of the provisions hereof.
15.5 Counterparts. This Agreement may be executed
by facsimile and may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which, when
taken together, shall constitute one and the same instrument.
15.6 Attorneys' Fees. In the event either of the
parties shall bring an action in connection with the performance,
breach or interpretation of this Agreement, or in any action
related to the subject matter hereof, the prevailing party in
such action shall be entitled to recover from the non-prevailing
party in such action all reasonable costs and expenses of such
action, including, without limitation, attorneys' fees, costs of
investigation, accounting and other costs reasonably incurred or
related to such action, in such amount as may be determined in
the discretion of the arbitrator(s).
15.7 Severability. In the event any provision
hereof is determined to be illegal or unenforceable for any
reason whatsoever, such determination shall not affect the
validity or enforceability of the remaining provisions hereof,
all of which shall remain in full force and effect.
15.8 Further Assurances. The parties each hereby
covenant and agree that, from time to time, after the date
hereof, at the reasonable request of either party, and without
further consideration, they will execute and deliver such other
documents and instruments and take such other action as may be
reasonably required to carry out in all respects the subject
matter hereof and the intent of this Agreement.
RWM ADM
<PAGE>
15.9 Notices. All notices, demands and other
communications required or permitted to be given hereunder shall
be in writing and shall be deemed to have been duly given and
received (a) immediately if delivered personally, (b) upon
completed transmission, if faxed, (c) the following business day,
if sent by overnight courier, or (d) upon receipt if mailed. All
such notices shall be addressed to the parties at the addresses
and/or fax numbers listed below. Either party may change the
address and/or the fax number to which communications are to be
directed by giving written notice to the other party in the
manner provided herein.
TO PARADIGM: PARADIGM MEDICAL INDUSTRIES, INC.
1772 West 2300 South
Salt Lake City, Utah 84119
Attn: Thomas F. Motter, President
Fax No. (801) 977-8973
With a copy to: Randall A. Mackey, Esq.
Mackey Price & Williams
900 First Interstate Plaza
170 South Main Street
Salt Lake City, Utah 84101-1655
Fax No. (801) 575-5006
TO MANUFACTURER: David Massey, Director
O.B.F. Labs (UF) Ltd.
Unit 6, Malmesbury Business Park
Beutlel Way
Malmesbury, Wiltshire SN165JU ENGLAND
Fax No. 44 (0) 1666 823763
15.10 No Third-Party Beneficiaries. Nothing in this
Agreement, whether express or implied, is intended to confer any
rights or remedies under or by reason of this Agreement on any
person other than the parties and their respective successors or
permitted assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third
person to either of the parties, nor shall any provision hereof
give any third person any right of subrogation or action over or
against either of the parties.
15.11 Force Majeure. Neither party shall be
responsible or liable to the other hereunder for failure or delay
in performance of the Agreement due to any war, fire, accident or
other casualty, or any labor disturbance or act of God or the
public enemy, or any other contingency beyond such party's
reasonable control. In addition, in the event of the
applicability of this Section 14.11, the party failing or
delaying performance shall use its best efforts to expeditiously
eliminate, cure and overcome any of such causes and resume
performance of its obligations.
RWM ADM
<PAGE>
15.12 Relationship of the Parties. Notwithstanding
any provision hereof, for all purposes of this Agreement, each
party shall be and act as an independent contractor and not as a
partner, joint venturer or agent of the other party and shall not
bind nor attempt to bind the other party to any contract or
agreement.
15.13 Successors and Assigns. This agreement shall
be binding on all successors and assigns of the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the day and year first above written.
PARADIGM MEDICAL INDUSTRIES, INC.,
a Delaware corporation
By: Robert W. Millar
Title: Vice President
O.B.F. LABS, LTD., a United Kingdom
corporation
By: A. D. Massey
Title: Director_
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET OF PARADIGM MEDICAL INDUSTRIES, INC. AS OF
MARCH 31, 1996, AND THE RELATED STATEMENTS OF OPERATIONS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
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