Certain portions of this Exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked by an * and [ ], have been
submitted to the Commission with the confidential treatment request.
EXHIBIT 99.3
EXCLUSIVE DISTRIBUTION AGREEMENT
AGREEMENT made this 2nd day of June, 1997 by and between EYESYS
TECHNOLOGIES, INC., a Delaware corporation with an office at 0000 Xxxxxx Xxxx,
Xxxxxxx, Xxxxx 00000 ("EyeSys"), and MARCO OPHTHALMIC INC., a Florida
corporation with an office at 00000 Xxxxxxx Xxxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000
("Distributor").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, EyeSys manufactures corneal topography systems which combine
computer hardware and software for use by eye care professionals such as
ophthalmologists in determining, among other things, the contour and shape of a
cornea;
WHEREAS, Distributor through its Marco Technologies division desires to be
appointed as the exclusive distributor of certain EyeSys products in the United
States, and EyeSys is willing to grant such appointment on the terms and
conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS
-----------
1.1 "Products" shall mean the "System 2000" and "Handheld System" (as
--------
defined in Exhibit A attached hereto), including the hardware components
thereof, any Software included therein and any field replaceable spare parts
("Spare Parts") therefor. "Products" shall not include computers, computer
peripherals and computer furniture that EyeSys purchases from a third party and
provides to customers for their convenience as a "pass through" item.
1.2 "Software" will mean those Products which consist of EyeSys created
--------
computer software, and any EyeSys created computer software which is included in
a Product, in object code format, including accompanying documentation, and any
Software Updates, Software Upgrades, enhancements and corrections made available
to Distributor by EyeSys. "Software" shall not include third party software
included with the Product for the customer's convenience (e.g., DOS, Microsoft
Windows, etc.).
1.3 "Territory" shall mean the fifty states of the United States of
---------
America.
1.4 "Software Update" shall mean a new release of a Software Product which
---------------
is not a Software Upgrade, which includes bug fixes, error corrections and other
minor changes in features and functionality and which EyeSys makes generally
available to its
end-user customers without additional license fees (other than routine
maintenance fees).
1.5 "Software Upgrade" shall mean a new version of a Software Product
----------------
which is not a Software Update, which contains substantial improvements in
features and/or functionality, and for which EyeSys generally charges an
additional fee, as determined by EyeSys.
1.6 All references in this Agreement to the "sale" of or "selling"
Products, with respect to hardware, shall mean the sale of such hardware, and
with respect to Software, shall mean the granting of a non-exclusive license to
-------
use such Software. All references in this Agreement to the "purchase" of
Software shall mean the obtaining of a non-exclusive license to use such
-------
Software.
2. APPOINTMENT
-----------
2.1 Appointment. Subject to the terms and conditions set forth herein
-----------
(including, without limitation, Sections 2.2, 2.6, 2.7, 3 and 13 hereof): (a)
EyeSys hereby appoints Distributor as EyeSys' exclusive distributor for the
Products in the Territory, and Distributor hereby accepts such appointment, and
(b) Distributor shall have the right to purchase Products from EyeSys and to
market and distribute such Products to customers in the Territory.
2.2 Certain Limitations on Exclusivity. EyeSys's appointment of
----------------------------------
Distributor as EyeSys' exclusive distributor for the Products in the Territory
will mean that EyeSys will not promote or market the Products directly to
customers in the Territory nor appoint any third party as EyeSys' sales
representative or distributor for the Products in the Territory, except that
EyeSys reserves the right to: (a) permit third parties, such as OEMs, to sell
Products within the Territory which have been bundled with (and become an
integral part of) other hardware or software products encompassing a technology
other than corneal topography (e.g., lasers) and which "bundled products" do not
perform a corneal topography exam independent of performance of another function
such as guiding a surgical laser; and (b) establish a corporate accounts
program, to be determined by EyeSys in its sole discretion, which enables EyeSys
to sell Products within the Territory to corporations or other entities,
including the Federal Government (collectively, "corporate accounts"), where (i)
the purchasing agent of the corporate account is not the end-user or the
corporate account is not a buying group for unaffiliated persons or entities;
and (ii) the corporate account issues a purchase order or enters into a purchase
agreement with EyeSys pursuant to which the corporate account makes a binding,
non-cancelable order to purchase five or more units of the System 2000, or 20 or
more units of the Handheld System, in any twelve-month period; provided,
--------
however, that if EyeSys requests and Distributor is willing to provide
-------
installation, training and/or support services for a customer in the Territory
2
who purchases Products through the above programs, EyeSys will provide
Distributor with reasonable compensation, commensurate with its responsibilities
(in addition to payment of any commission described below); provided, further,
-------- -------
that with respect to any units of either the System 2000 or the Handheld System
sold by EyeSys to any corporate account while the exclusive appointment of
Distributor hereunder with respect to such system is in effect, EyeSys shall pay
Distributor a commission with respect to the sale of such units (within thirty
days of EyeSys' receipt of payment therefor from the corporate account)
determined in accordance with the following:
[*]
2.3 Territorial Responsibility. Distributor shall use its best efforts
--------------------------
and pursue aggressive sales policies and procedures in order to realize the
maximum sales potential for the Products in the Territory. Distributor shall
not direct any advertisement or marketing or promotional efforts with respect
to the Products outside the Territory or establish a Product repair, maintenance
or storage facility outside the Territory without the prior written consent of
EyeSys.
2.4 Software Distribution License. Subject to the terms and conditions of
-----------------------------
this Agreement (including, without limitation, Section 17.6 hereof), EyeSys
hereby grants Distributor a non-exclusive license to distribute solely to
customers in the Territory copies of the Software which are, or which are
included within, Products as purchased from EyeSys hereunder. Where the
Software is included as a component of a Product together with hardware provided
by EyeSys, Distributor shall have no right to distribute such Software
separately from the EyeSys hardware, nor shall it permit any third party to do
so. In addition to the foregoing, Distributor agrees to pass on to each
customer all documentation and materials, including the shrinkwrap license
agreement, for any third party software included as part of a Product.
2.5 End-User Licenses. Distribution of Software shall be subject to the
-----------------
execution, by Distributor's end-user customer, of EyeSys' standard end-user
license agreement ("Software License Agreement") included with each Software
Product, a current copy of which is attached hereto as Exhibit B (or such other
form as EyeSys may from time to time require). Distributor shall, prior to
delivery of any Software to an end-user customer, require such end-user customer
to complete and sign the Software License Agreement
3
included with such Software, and shall use its best efforts to return such
completed and signed copies to EyeSys within thirty (30) days following delivery
of the Software to the end-user customer. Distributor shall have no authority
to alter any terms of the Software License Agreement without EyeSys' prior
written authorization.
2.6 Conflict of Interest.
--------------------
(a) "Competing Products" shall mean any product which provides
substantial overlap of any of the functionality of any of the Products and which
a person with reasonable knowledge of topography could reasonably deem to be
competitive with any of the Products; provided, however, that "Competing
-------- -------
Products" shall not include products currently marketed, promoted or distributed
by Distributor, any upgrades thereto and any products manufactured or sold by
Nidek Company, Ltd. ("Nidek").
(b) The parties acknowledge that any efforts by Distributor to sell
Competing Products in the Territory would constitute a conflict of interest with
respect to Distributor's obligations to market the Products. Distributor shall
notify EyeSys prior to marketing, promoting or distributing any Competing
Products at least sixty (60) days prior to commencing such activity. Without
limiting anything herein, failure of Distributor to so notify EyeSys shall be
deemed to be a material breach of this Agreement by Distributor.
(c) In the event that Distributor is distributing any Competing
Products or EyeSys receives a notice from Distributor of its intention to
distribute any Competing Products, EyeSys shall have the right to terminate this
Agreement or the appointment of Distributor hereunder with respect to any or all
of the Products and/or modify its appointment of Distributor hereunder to a non-
exclusive basis with respect to any or all of the Products, upon thirty (30)
days notice thereof to Distributor without any liability to EyeSys; provided,
--------
however, that EyeSys may not exercise such right as a result of the distribution
-------
by Distributor of any Competing Products with respect to which Distributor
provided EyeSys notice pursuant to the terms of Section 2.6(b) and with respect
to which EyeSys failed to object by notice to Distributor given within forty-
five (45) days after receipt of such notice from Distributor.
2.7 Relationship with Nidek. Notwithstanding anything in this Agreement
-----------------------
to the contrary, the parties acknowledge and agree that (i) Distributor shall be
permitted to distribute and sell any and all products manufactured by Nidek or
sold by Nidek, from time to time, and (ii) EyeSys shall be permitted to license
its Products and Software to Nidek for embodiment in Nidek products, which may
be distributed worldwide; provided, however, that while EyeSys may allow Nidek
-------- -------
to appoint distributors, EyeSys shall not permit Nidek
4
to sublicense all or substantially all of its rights to EyeSys' Products and
Software.
3. TERM
----
3.1 General. Subject to the terms hereof (including, without limitation,
-------
Sections 2.6, 3.2 and 13.1), this Agreement shall become effective as of the
date hereof and continue until the later of (i) the expiration of the
appointment of Distributor hereunder as distributor of the System 2000 (as the
same may be extended by written agreement of the parties), and (ii) the
expiration of the appointment of Distributor hereunder as distributor of the
Handheld System (as the same may be extended by written agreement of the
parties).
3.2 System 2000 and Handheld System. The appointment of Distributor
-------------------------------
hereunder with respect to (i) the "System 2000" (as defined in Exhibit A hereto)
and the Products included therein shall commence on the date hereof and continue
through March 31, 1998 and (ii) the "Handheld System" (as defined in Exhibit A
hereto) and the Products included therein shall commence on the thirtieth (30th)
day following the Commercialization Date (as defined below) and continue for a
period of three years immediately following such thirtieth day (each of such
three years being a "Handheld System Year"), unless in either case earlier
terminated pursuant to the terms hereof or extended by written agreement of the
parties. As used in this Agreement, the "Commercialization Date" shall refer to
the date on which the first unit of the Handheld System suitable for commercial
sale is delivered to Distributor (provided that EyeSys can produce such unit in
commercially reasonable quantities and within commercially reasonable delivery
dates and has obtained requisite governmental and regulatory approvals with
respect thereto in compliance with Section 7.4), unless such unit is rejected by
Distributor by notice to EyeSys, given within twenty-five days thereafter,
because such unit does not conform in any material respect to the
specifications, or perform in any material respect any of the functions, of the
Handheld System set forth on Exhibit A hereto. EyeSys agrees to provide such
unit to Distributor promptly upon its availability.
4. SUPPLY OF PRODUCTS
------------------
4.1 Forecasts. Commencing in July 1997 and continuing throughout the
---------
remainder of the term of this Agreement, Distributor shall (i) provide EyeSys
with a three-month rolling forecast by the last Friday of each calendar month
which sets forth Distributor's estimated monthly requirements for shipment of
Products and (ii) comply with its payment obligations under Section 5.3 hereof
with respect to units of the System 2000 projected to be purchased by
Distributor in the third month of such forecast. Such forecasts
5
are for planning purposes only, and the Product orders projected therein will
not be binding on either party.
4.2 Orders. All purchases and sales between EyeSys and Distributor will
------
be initiated by Distributor's issuance of written purchase orders sent via mail
or facsimile (other than Distributor's non-cancelable order for sixty units
pursuant to Section 5.1 hereof). Additionally, Distributor may initiate
purchase orders verbally, provided that it confirms such orders in writing
within seven (7) days. Such orders will state unit quantities, unit
descriptions, requested delivery dates, and shipping instructions. EyeSys
agrees to use its best efforts to fulfill all purchase orders for Products
submitted by Distributor pursuant to this Agreement; provided, however, if
-------- -------
EyeSys has so utilized its best efforts EyeSys shall be entitled to reject or
delay, in whole or in part, purchase orders from Distributor to the extent that
compliance with such purchase orders would exceed EyeSys' production capacity;
provided, further, to the extent that any such rejection or delay prevents
-------- -------
Distributor from fulfilling its purchase requirements under Sections 4.7 or 5.1,
such purchase requirements shall be suspended. EyeSys will use reasonable
efforts to notify Distributor of the acceptance of a purchase order within
fifteen (15) days of receipt of the purchase order; however, no purchase order
will be binding upon EyeSys until accepted by EyeSys in writing, and no order
will be accepted unless it specifies a delivery date. Partial shipment of an
order will not constitute acceptance of an entire order.
4.3 Shipping. All Products delivered pursuant to the terms of this
--------
Agreement will be suitably packed for shipment in EyeSys' standard containers,
marked for shipment to Distributor's address set forth above or to an address
specified in Distributor's purchase order, and delivered to a carrier or
forwarding agent chosen by Distributor. Should Distributor fail to designate a
carrier, forwarding agent or type of conveyance, EyeSys will make such
designation in conformance with its standard shipping practices. Shipment will
be F.O.B. EyeSys' manufacturing facility ("Delivery Point"), at which time risk
of loss and title pass to Distributor. All freight, insurance and other
shipping expenses from the Delivery Point, as well as any special packing
expenses requested by Distributor, will be borne by Distributor.
4.4 Deferral. Distributor may defer shipments of Products currently on
--------
order, in whole or in part, by giving EyeSys written notice at least fifteen
(15) days prior to the scheduled delivery date. Deferring shipment of any
Products ordered hereunder for more than fifteen (15) days beyond the originally
requested delivery date for such Products will be deemed a cancellation of the
original order, and subject to the provisions of Section 4.5 below.
6
4.5 Cancellation. At its option, Distributor may cancel purchase orders
------------
scheduled for shipment, subject to the following cancellation fees which are
dependent upon the number of days in advance of the scheduled shipment date that
Distributor notifies EyeSys of cancellation:
Days before Ship Date Cancellation Fee
--------------------- ----------------
More than 30 days 0%
30-16 days 15%
15 days or less 25%
Notwithstanding anything to the contrary contained in this Section, no
cancellation fees shall be payable with respect to cancellation of any orders
for the sixty units of the System 2000 ordered by Distributor pursuant to
Section 5.1; provided, however, that any such cancellation by Distributor shall
-------- -------
not limit or affect Distributor's obligation to purchase sixty units of the
System 2000 pursuant to Section 5.1 hereof or impose any obligation upon EyeSys
to refund any portion of the Advance Payment made by Distributor pursuant to
such Section.
4.6 Inspection and Acceptance. Distributor will inspect all Products for
-------------------------
obvious physical damage promptly upon receipt thereof. Any Product not properly
rejected within twenty (20) days of receipt of that Product by Distributor (the
"Rejection Period") will be deemed accepted. To reject a Product, Distributor
will, within the Rejection period, notify EyeSys in writing or by fax of its
rejection and request a Returned Material Authorization ("RMA") number. EyeSys
will provide the RMA number in writing or by fax to Distributor within fifteen
(15) days of receipt of the request. Within ten (10) days of receipt of the RMA
number, Distributor will return to EyeSys the rejected Product, freight prepaid,
in its original shipping carton with the RMA number displayed on the outside of
the carton. EyeSys will reimburse Distributor for shipping charges for all
Products that were defective upon delivery by EyeSys to the Delivery Point.
EyeSys reserves the right to refuse to accept any rejected Products that do not
bear an RMA number on the outside of the carton. As promptly as possible but no
later than thirty (30) working days after receipt by EyeSys of properly rejected
Products, EyeSys will, at its option and expense, either repair or replace the
Products which it determines to be covered by its warranty to Distributor under
Section 10 and return such repaired or replaced Product to Distributor at
EyeSys' expense (which repair or replacement shall be Distributor's sole remedy
relating to such Products).
4.7 Net Purchase Requirement for Handheld System. Distributor agrees to
--------------------------------------------
use its best efforts to sell the Handheld System throughout the Territory during
the first six months of the first Handheld System Year. Prior to conclusion of
the seventh month of the first Handheld System Year, the parties agree to
negotiate in good faith a minimum number of unit purchases (net of returns and
7
allowances) of the Handheld System required to be made by Distributor during the
last six months of the first Handheld System Year; provided, however, in the
-------- -------
event that the parties do not reach agreement thereon prior to the conclusion of
such seventh month, the minimum number for the last six months of the first
Handheld System Year shall be equal to 105% of the units purchased and sold or
leased by Distributor of the Handheld System during the first six months.
Within forty-five days after commencement of each of the second and third
Handheld System Years, the parties agree to negotiate in good faith an increase
in the minimum number of unit purchases (net of returns and allowances) of the
Handheld System required to be made by Distributor in that Handheld System Year;
provided, however, in the event that the parties do not reach an agreement by
-------- -------
the end of such forty-five days, the minimum number for the such Handheld System
Year shall be deemed to be 105% of the of the unit purchases by Distributor for
the prior Handheld System Year. In the event that Distributor fails to meet its
purchase requirement hereunder for any Handheld System Year (or six-month period
in the case of the first Handheld System Year), EyeSys may modify the
appointment of Distributor hereunder with respect to the Handheld System and the
Products included therein from an exclusive basis to a non-exclusive basis by
notice to Distributor to such effect given within 90 days after the end of the
Handheld System Year, subject to Section 5.2.
5. PAYMENTS
--------
5.1 Advance Order Payment for System 2000.
-------------------------------------
[*]
(b) Simultaneously with the execution and delivery hereof by the
parties, EyeSys agrees to execute in favor of Distributor as the secured party a
UCC-1 financing statement and a security agreement in the form attached hereto
as Exhibit D (the "Security Agreement") which evidence a security interest of
Distributor in EyeSys' assets to secure repayment to Distributor of
8
prepaid orders (including, without limitation, the Advance Payment) in the event
and to the extent that such prepaid orders are not delivered to Distributor when
and as required under this Agreement time being of the essence, which security
interest will be subordinate to the security interest held by Silicon Valley
Bank in the assets of EyeSys (and any other security interests disclosed on
Exhibit A to the Security Agreement or to the extent provided by applicable
law). A breach by EyeSys under the Security Agreement will at Distributor's
election constitute a breach under this Agreement.
(c) In the event that Distributor does not sell all such 60 units
prior to March 31, 1998, the parties agree that Distributor may return up to a
maximum of 10 of such unsold units (if undamaged) for a full refund of the
Purchase Price thereof; provided, however, that in the event that (i) the
-------- -------
Commercialization Date does not occur on or prior to Xxxxx 00, 0000, (xx) the
appointment of Distributor hereunder with respect to the System 2000 is modified
by EyeSys to a non-exclusive basis, or pursuant to any right of modification or
termination afforded EyeSys under this Agreement such appointment is terminated
by EyeSys, on or prior to Xxxxx 00, 0000 xx (xxx) this Agreement is terminated
by Distributor pursuant to Section 13.1 as a result of the uncured breach hereof
by EyeSys on or prior to March 31, 1998, Distributor may return all unsold units
(if undamaged) of the System 2000 purchased hereunder for a full refund of the
Purchase Price thereof.
5.2 Exclusive Distribution Fee for Handheld System. In consideration of
----------------------------------------------
the appointment by EyeSys of Distributor hereunder as exclusive distributor of
the Handheld System, Distributor shall pay EyeSys the following amounts
(collectively, the "Exclusive Distribution Fee") at the times indicated: (a)
$100,000 simultaneously with the execution and delivery of this Agreement; and
(b) an additional $100,000 on the date on which clinical validation (as defined
in the next sentence) of the Handheld System occurs (of which date EyeSys shall
promptly provide notice to Distributor). For purposes of the previous sentence,
"clinical validation" shall mean the satisfactory operation (as reasonably
determined by EyeSys) of the Handheld System in a clinical setting by an eye
care professional. In the event that EyeSys modifies the appointment of
Distributor hereunder from an exclusive to a non-exclusive basis with respect to
the Handheld System pursuant to this Agreement or terminates such appointment,
EyeSys shall be required to refund a pro rata portion of the Exclusive
Distribution Fee actually received by EyeSys calculated based upon the portion
of the three-year period described in Section 3.2 which has then elapsed. In
the event that the Commercialization Date shall not have occurred on or prior to
March 31, 1998, EyeSys shall repay to Distributor, on or before April 5, 1998,
the entire Exclusive Distribution Fee actually received by EyeSys.
9
5.3 Payments with Forecasts. Through December 31, 1997, Distributor shall
-----------------------
make payment with each forecast submitted to EyeSys in accordance with Section
4.1 (or by the end of the month in which such forecast is due) of the Purchase
Price of the System 2000 units projected to be purchased in the third month of
such forecast. Such payments shall be applied towards purchases of such units
by Distributor in such third month and EyeSys shall reflect such payments
accordingly in invoices sent pursuant to Section 5.5 below.
[*]
5.5 Payment of Purchase Price. EyeSys shall issue invoices to Distributor
-------------------------
upon shipment of the Products to Distributor. Distributor shall pay such
invoices within thirty (30) days of the date of such invoice (except as
otherwise provided in Section 5.1(a)). EyeSys reserves the right to change
credit terms provided herein when, in EyeSys' sole opinion, the financial
condition and past payment history of Distributor so warrant such a change.
Late payments will accrue interest at the rate of one and one half percent
(1.5%) a month, or the highest interest rate allowable by law, whichever is
lower, and Distributor will pay all of EyeSys' costs and expenses (including
reasonable attorneys' fees) to enforce and preserve EyeSys' rights under this
Section 5.5. In addition, in the event that Distributor becomes delinquent in
the payment of any sum due hereunder, without limiting any other right or remedy
(including, without limitation, pursuant to Section 13.1 hereof), EyeSys shall
have the right to suspend performance until such delinquency is corrected. All
amounts due hereunder are payable in full to EyeSys without deduction and are
net of sales and use taxes.
10
5.6 Adjustment of Purchase Prices.
-----------------------------
[*]
(c) EyeSys agrees not to raise the Purchase Price of the System 2000
prior to March 31, 1998 or of the Handheld System prior to the conclusion of the
first Handheld System Year. Notwithstanding anything in this Agreement to the
contrary, no price increase shall affect any prepaid orders.
11
(d) EyeSys has the right to decrease its List Price for ancillary
components of and accessories for the System 2000 and Handheld System upon
fifteen (15) days advance written notice to Distributor, and to increase its
List Price upon sixty (60) days advance written notice to Distributor. Such
List Price decreases will apply to all accepted but unshipped orders and such
increases will apply to all purchase orders received after the effective date of
the revision.
6. CERTAIN OBLIGATIONS OF DISTRIBUTOR
----------------------------------
6.1 Promotion of the Products. Distributor shall, at its own expense, use
-------------------------
its best efforts to promote the distribution of the Products in order to achieve
maximum sales potential within the Territory. Such promotion (at Distributor's
expense, except as provided herein) shall include but not be limited to:
(a) advertising the Products in trade publications and participating
in trade shows as the parties mutually agree upon (it being acknowledged that
the parties agree to share evenly the costs of such advertising and trade
shows);
(b) directly soliciting orders from customers for the Products within
the Territory;
(c) utilizing and demonstrating the Products at appropriate seminars
presented by Distributor. Additionally, Distributor agrees that EyeSys'
Products and products embodying EyeSys' Software shall be the only corneal
topography systems taught, discussed and marketed at seminars sponsored by
Distributor;
(d) providing adequate contact with existing and potential customers
within the Territory on a regular basis, consistent with good business practice;
and
(e) assisting EyeSys in assessing customer requirements for the
Products, including modifications and improvements thereto, in terms of quality,
design, functional capability, and other features.
Distributor agrees not to use any advertisement (which contains any
representation or claim, with respect to any Product, not previously approved by
EyeSys hereunder) or issue any press release with respect to any of the Products
without the prior approval of EyeSys with respect thereto.
6.2 Reports. Distributor shall:
-------
(a) provide EyeSys with updated sales and inventory reports, in a form
reasonably acceptable to EyeSys detailing Distributor's sales activities for
Products, within thirty (30)
12
days of the end of each calendar quarter. Such reports shall include, at a
minimum, date sold, quantity of each type of Products sold, serial number, and
the buyers' names and addresses;
(b) keep EyeSys advised of Distributor's marketing and sales promotion
activities relative to the Products, orally and through quarterly written
reports, which shall include, without limitation, information regarding:
(1) formal training of sales personnel;
(2) formal training of technical personnel; and
(3) trade shows participated in which featured the Products.
6.3 Personnel. Distributor shall equip its sales and support personnel
---------
with adequate training, marketing and technical, sales and technical literature
with respect to the Products, including such materials as may be made available
by EyeSys.
6.4 Representations. Distributor shall limit its claims and
---------------
representations concerning the Products to those made by EyeSys in its published
product literature, and not make any claims or representations in excess of such
claims of EyeSys.
6.5 Inventory Stocking. Distributor shall carry in stock sufficient
------------------
quantities of Products so as to enable Distributor to properly discharge its
obligations under this Agreement and to effectively demonstrate Products to
prospective customers, subject to EyeSys' timely compliance hereunder with
purchase orders made pursuant to Section 4.
6.6 Collection Responsibilities. Distributor shall be solely responsible
---------------------------
for all collection efforts with respect to the sales of Products made by
Distributor pursuant to the terms hereof and the failure of any customer to
timely pay Distributor for such Products shall not relieve Distributor of its
obligations to EyeSys hereunder.
6.7 Standard of Business Practices. Distributor shall establish and
------------------------------
maintain a high standard of ethical business practices in connection with its
distribution of the Products in the Territory. Distributor shall at all times
conduct its efforts hereunder with the highest commercial standards and in
strict accordance with all applicable federal, state, local and other
governmental laws, rules, directives and regulations ("Laws"). Distributor
shall not knowingly solicit, nor shall EyeSys knowingly accept, any orders for
Products whose end use would be in violation of any Laws.
13
7. CERTAIN OBLIGATIONS OF EYESYS
-----------------------------
7.1 Marketing Materials. EyeSys shall provide Distributor with reasonable
-------------------
quantities of promotional materials currently used by EyeSys in the United
States (which Distributor may modify, upon the prior written approval of EyeSys,
at Distributor's expense).
7.2 Response to Inquiries. EyeSys shall use its best efforts to promptly
---------------------
respond to all inquiries from Distributor concerning matters pertaining to this
Agreement.
7.3 Regional Sales Managers. EyeSys shall use its best efforts to employ
-----------------------
three Regional Sales Managers in the United States through March 31, 1998 to
help train Distributor's sales and support personnel and offer general sales
support. Unless other wise agreed, the training will take place at EyeSys'
address set forth above, other EyeSys offices or any other site designated by
EyeSys. Distributor shall pay all travel, food, lodging and other expenses for
its personnel to attend such training.
7.4 Regulatory Filings. EyeSys shall be solely responsible for compliance
------------------
with all requirements imposed (with respect to the manufacture and sale of the
Products in the United States) by the Food and Drug Administration or other
governmental entity or regulatory body having jurisdiction (including, without
limitation, all 510k filings), except as otherwise required by applicable law.
To the knowledge of EyeSys, no filings by Distributor are required by the Food
and Drug Administration or other such governmental entity or regulatory body
with respect to the Products.
8. INSTALLATION, SERVICE AND SUPPORT
---------------------------------
8.1 Installation and In-Service Duties. Distributor shall be responsible
----------------------------------
for the installation of Products sold by Distributor and shall perform all in-
service duties related to such sales. This responsibility shall include, among
other things, the unpacking, assembly, minor servicing, adjustment and customer
instruction on the proper use of the Product. Distributor shall also return to
EyeSys the standard EyeSys warranty card and a completed in-service checklist
(as well as the Software License Agreement as provided in Section 2). Without
limiting anything herein, failure of Distributor to perform its obligations
under this Section 8 (other than the failure to return the Software License
within the time period prescribed in Section 2 or the warranty card or in-
service checklist pursuant to this Section) shall be deemed a material breach of
this Agreement by Distributor.
8.2 Customer Service/Support. Distributor shall use its best efforts to
------------------------
provide its customers with support and after-sales service for the Products
equivalent to that which EyeSys has provided to its own customers. Distributor
shall maintain on-site staff support personnel sufficiently knowledgeable with
respect to
14
the Products to answer questions regarding the use, operation, service and
repair of the Products. Distributor shall ensure that all questions regarding
the use, operation, service, and repair of the Products marketed by Distributor
are initially addressed to and answered by Distributor. During normal business
hours, EyeSys will provide telephone consultation to Distributor with respect to
any customer questions which Distributor cannot adequately answer. Distributor
and EyeSys shall each designate one (1) technical representative, mutually
agreeable to both Distributor and EyeSys, to act as the single point of contact.
8.3 Repair Service on System 2000. EyeSys shall use its best efforts to
-----------------------------
provide (or cause to be provided) hardware and software warranty and non-
warranty repair for the System 2000. To fulfill such obligations, EyeSys shall
employ a sufficient number of Technical Support persons and field Product
Specialists and (through March 31, 1998) the hardware services of Digital
Equipment Corporation. Distributor acknowledges and agrees that EyeSys may sell
service contracts for the System 2000 to Distributor's customers; provided,
--------
however, that EyeSys shall pay Distributor a commission with respect to each
-------
one-year service contract sold to Distributor's customers of the System 2000 of
$50 per hardware-only service contract, $50 per software-only service contract
and $75 per combined hardware/software service contract.
8.4 Repair Service on Handheld System. Warranty and non-warranty hardware
---------------------------------
and software repair for the Handheld System will be provided as follows:
(a) Distributor will respond to service requests from customers of the
Handheld System and where necessary arrange to make an on-site diagnostic
inspection of the subject Handheld System. If Distributor is unable to resolve
the problem with an adjustment or other simple field corrections, then
Distributor shall attempt to determine which components are defective and if so
successful remove the defective component(s). Distributor, in such event, shall
at Distributor's expense ship the defective component(s) to EyeSys. If,
however, Distributor is unable to isolate the defective component(s), then
Distributor shall ship the subject Handheld System to EyeSys at Distributor's
expense.
(b) Upon receipt by EyeSys of defective components and/or defective
Handheld Systems EyeSys shall, at its election, either replace the same with
functioning component(s) or a functioning Handheld System or effect necessary
repairs using best efforts to accomplish same as soon as possible. Upon
completion of the requisite repairs or accomplishing the replacements, EyeSys
shall ship the same either to Distributor or directly to the respective
customer, whichever Distributor shall elect. The cost of such shipment shall be
borne by EyeSys during applicable warranty periods, but by Distributor after
expiration of same. The cost to Distributor for repairs or replacement after
expiration of
15
applicable warranty periods (and for non-warranty repairs) shall be as
determined by EyeSys, from time to time, upon reasonable notice to Distributor,
but in no event shall exceed reasonable charges for such services. The
performance of EyeSys' obligations under this subsection (b) shall be the only
expense borne by EyeSys under this Section 8.4.
(c) Distributor shall effect any required reinstallation of the
repaired or replaced components or Handheld Systems.
(d) Distributor shall arrange with EyeSys, at Distributor's expense,
for at least two (2) qualified employees of Distributor to attend EyeSys'
training program in the use and operation of the Products. One (1) qualified
employee of Distributor who has training in electronics or a computer related
field, or equivalent must attend EyeSys' training program in the service and
repair of the Handheld System. EyeSys shall provide Distributor with EyeSys'
diagnostic and service information with respect to the Handheld System for use
by Distributor only in the performance of its obligations under this Section
(and which information shall be deemed Confidential Information subject to the
terms of Section 14.1 hereof). Distributors expense does not include any
tuition or other fee imposed by EyeSys for conducting the training.
8.5 Advanced Training. Through March 31, 1998, EyeSys agrees to provide
-----------------
at its expense one day of advanced training to purchasers of the System 2000
System at a location and date (within four to eight weeks after initial
installation of the system) which are mutually acceptable to EyeSys and the
purchaser. Distributor shall provide at its expense advanced training to
purchasers of the Handheld System.
8.6 Advanced Equipment. Distributor may obtain the services of the EyeSys
------------------
field Product Specialists at a rate of $400 per day (plus expenses) for the
installation and training of Distributor's advanced diagnostic equipment sold to
customers of the Products.
8.7 Software Updates and Upgrades. EyeSys shall make available Software
-----------------------------
Updates to customers of the Products during the initial warranty period offered
by EyeSys. Software Upgrades shall not be made so available, but rather EyeSys
shall be entitled to sell Software Upgrades directly to Distributor's customers
as new Software Products (provided that EyeSys shall pay Distributor a
commission, within thirty days of EyeSys' receipt of payment from the customer,
equal to thirty percent of the EyeSys's list price of the Software Upgrade on
sales of the Software Upgrade to Distributor's customers which purchased the
Product to which the Software Upgrade relates). Distributor shall also be
entitled to purchase Software Upgrades from EyeSys at EyeSys' list price
therefor less a thirty percent discount and resell such Software Upgrades to its
customers.
16
8.8 Inspections by EyeSys. Distributor shall, upon thirty days' notice,
---------------------
permit EyeSys personnel reasonable access to the Distributor's facilities to
conduct audits of Distributor's maintenance, support and training activities
relating to the Products. Any Confidential Information of Distributor obtained
by EyeSys pursuant thereto shall be subject to the provisions of Section 14.1
hereof.
8.9 Audits by Distributor; Late Payments. EyeSys shall, upon thirty days'
------------------------------------
notice, permit Distributor's accountant(s) reasonable access to the books and
records of EyeSys relating to the calculation, and payment by EyeSys, of
commissions to Distributor under Sections 2.2, 8.3 and 8.7 for purposes of
confirming the full payment by EyeSys of such commissions in the prior calendar
year. If (and only if) such audit reveals that EyeSys has failed to pay
Distributor at least 90% of the commissions payable to Distributor under this
Agreement in the prior calendar year, EyeSys shall reimburse Distributor for the
reasonable out-of-pocket fees and expenses of Distributor's accountant(s) paid
by Distributor in connection with such audit. Any Confidential Information of
EyeSys obtained by Distributor (including its accountants) pursuant thereto
shall be subject to the provisions of Section 14.1 hereof. Late payments by
EyeSys of commissions hereunder will accrue interest at the rate of one and one
half percent (1.5%) a month, or the highest interest rate allowable by law,
whichever is lower, and EyeSys will pay all of Distributor's costs and expenses
(including reasonable attorneys' fees) to enforce and preserve Distributor's
rights under this Section 8.9.
9. PRODUCT CHANGES
---------------
9.1 Additional Products. EyeSys may, from time to time, amend Exhibit A
-------------------
to add such other products as EyeSys, during the term of this Agreement, offers
for sale to its other distributors upon terms and conditions agreed upon by the
parties hereto.
9.2 Design Modifications. The making of a design modification by EyeSys
--------------------
to any of the Products shall not impose upon EyeSys an obligation to make such
modification to any of the Products previously sold. EyeSys shall not make any
material design changes to any of the Products while the exclusive appointment
of Distributor hereunder is in effect with respect to such Product, without the
prior written approval of Distributor.
9.3 Deletion of Products. EyeSys may delete any Product from Exhibit A,
--------------------
effective ninety (90) days after written notice to Distributor of such deletion,
provided that such deletion does not render the System 2000 or Handheld System
unmarketable while the exclusive appointment of Distributor hereunder with
respect to such system is in effect.
17
10. WARRANTY
--------
10.1 Limited Warranty.
----------------
(a) Hardware. Subject to Sections 8.4 and 10.1(b), EyeSys hereby
--------
warrants to Distributor that Products purchased hereunder will be free from
defects in material and workmanship for a period of the lesser of (i) fifteen
(15) months from the date of receipt of such Product by Distributor, (ii) twelve
(12) months from the date of delivery by Distributor to a customer, or, (iii)
with respect to any repaired, reconditioned or replaced Product, ninety (90)
days from the date of shipment of repaired, reconditioned or replaced Product to
Distributor or until the original warranty for the Product expires, whichever
period is longer. Distributor's sole and exclusive remedy, and EyeSys' sole and
exclusive liability, under this warranty will be to repair or replace the
defective Product or, where such can not be accomplished, EyeSys may, at its
option, refund the purchase price paid therefor.
(b) Software. EyeSys warrants that the media on which the Software is
--------
recorded will be free from defects in materials and workmanship under normal use
for a period of ninety (90) days from the date of shipment to Distributor of
such Software. Distributor's sole and exclusive remedy, and EyeSys' sole and
exclusive liability, under this warranty will be EyeSys' replacement of the
media.
10.2 Customer Warranty. Distributor shall pass on to its customers EyeSys'
-----------------
current standard limited warranty for the Products (and, subject to the
reasonable approval by Distributor, any different warranty offered by EyeSys in
the future), including the limitations set forth in the following paragraphs.
Pursuant to such warranty Distributor shall return any alleged defective Product
to EyeSys, subject to Distributor's obligations under Section 8.4 hereof.
Distributor shall have no authority to accept any returned products which it
desires to return to EyeSys without prior authorization from EyeSys as provided
herein.
10.3 Exclusions. The express warranties set forth in Section 10.1 above
----------
will not apply to defects in a Product: (i) caused through no fault of EyeSys
during shipment to or from Distributor, (ii) caused by software other than the
Software, (iii) caused by the use or operation of Products in an application or
environment other than that intended or recommended by EyeSys, (iv) caused by
modifications or alterations made to the Products by any party other than EyeSys
(other than servicing and repair of the Products by Distributor in accordance
with its obligations under this Agreement), (v) caused by the unauthorized use
of the Products by Distributor or any third party, (vi) caused by failure of
Distributor to comply with any of the return procedures specified
18
in this Agreement, or (vii) which are the result of the Products being subjected
to unusual physical or electrical stress.
10.4 Warranty Procedures. Distributor will send Products with defects
-------------------
covered by the foregoing warranty to the repair facility designated by EyeSys,
subject to Distributor's obligations under Section 8.4 hereof. Distributor will
request authorization from EyeSys prior to the return of each defective Product
for repair or replacement by EyeSys. Upon such request, EyeSys will provide Dis
tributor with a RMA tracer number to be prominently displayed on the shipping
container for the defective Product. Once EyeSys authorizes the return of any
defective Product, Distributor will ship such Product to the repair facility
within ten (10) days, freight prepaid, in its original shipping container or in
a container of equivalent protective constitution. If such defective Product
is received by EyeSys during the applicable warranty period, EyeSys will, at its
sole option and expense, repair or replace such Product, employing at its option
new or used Products to make such repair or replacement, and will ship the
repaired or replaced Product to Distributor at EyeSys' expense. If a returned
Product is determined by EyeSys not to be covered by the warranty, at the
request of Distributor, EyeSys shall return such Product to Distributor at
Distributor's expense. The foregoing states the sole liability and obligation
of EyeSys arising out of this warranty.
10.5 Stored Data. Distributor will be responsible for saving or backing up
-----------
data contained in any Product returned to EyeSys for in warranty or out of
warranty repairs or service. EYESYS WILL HAVE NO RESPONSIBILITY FOR SUCH DATA
AND WILL HAVE NO LIABILITY ARISING OUT OF ANY DAMAGE TO OR LOSS OF SUCH DATA
WHILE THE PRODUCT IS IN EYESYS' POSSESSION.
10.6 Spare Parts Procedures. Parts removed from Products and Spare Parts
----------------------
returned to EyeSys for repair or replacement will be treated as Products subject
to Sections 10.1 through 10.5 above. Parts removed from Products and Spare
Parts returned to EyeSys for repair or replacement must be accompanied by a
removable tag or label bearing the following information: (i) the model number
and serial number of the Product the defective part was removed from, if
applicable, (ii) identification of the part and (iii) the defect for which the
part or Spare Part is being returned. Subject to EyeSys' compliance with
Section 11.2, Distributor shall only use Spare Parts obtained from or approved
by EyeSys in the servicing of Products (and use such Spare Parts only for their
intended use).
10.7 Disclaimer. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS
----------
AGREEMENT ABOVE, EYESYS MAKES AND DISTRIBUTOR RECEIVES NO WARRANTIES OR
REPRESENTATIONS, EXPRESS, IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS
AGREEMENT OR COMMUNICATION WITH DISTRIBUTOR, AND EYESYS SPECIFICALLY DISCLAIMS
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
19
11. OUT OF WARRANTY REPAIR
----------------------
11.1 Hardware. EyeSys agrees to make available to Distributor repair
--------
services at a repair facility designated by EyeSys to repair and recondition
hardware components of Products (other than the Handheld System) sold pursuant
to this Agreement for a period of four (4) years following the earlier of EyeSys
discontinuing such Product or the termination of appointment of Distributor
hereunder with respect to such Product. The cost of repairing or reconditioning
a Product will be subject to EyeSys' standard out of warranty costs, terms and
conditions in effect at the time of shipment back to Distributor of repaired or
reconditioned Products. All Products returned for out of warranty repairs will
be sent and delivered F.O.B. EyeSys' repair facility, and Distributor will bear
all shipping expenses to and from such facility.
11.2 Spare Parts. EyeSys agrees to sell to Distributor Spare Parts for
-----------
Products during the term of Distributor's appointment hereunder with respect to
such Products and for a period of four (4) years thereafter.
12. INTELLECTUAL PROPERTY INFRINGEMENT AND PRODUCTS LIABILITY INDEMNITY
-------------------------------------------------------------------
12.1 Indemnity. EyeSys agrees to defend and hold Distributor harmless
---------
against any loss, liability or expense (including reason able attorneys' fees)
paid to third parties arising from any action or claim brought or threatened
against Distributor alleging any manufacturer's or producer's liability relating
to the Products or that the Products, under normal use, infringe any third
party's United States patent, copyright, trademark, trade secret or other
intellectual property right. Distributor agrees to provide EyeSys with (i)
prompt written notice of such claim or action, (ii) sole control and authority
over the defense or settlement of such claim or action and (iii) proper and full
information and reasonable assistance to defend and/or settle any such claim or
action. During the term of this Agreement, EyeSys agrees to cause Distributor
to be named as an additional insured on EyeSys' products liability insurance.
Such insurance policy shall be in a minimum coverage amount of $10,000,000.00
per occurrence and have a maximum deductible of $5,000.00 per occurrence.
EyeSys shall provide Distributor with proof of such coverage (and the naming of
Distributor as an additional insured) within fourteen days after the date hereof
and thereafter at least thirty days prior to expiration.
12.2 Representation. Without limiting Section 12.1, EyeSys represents to
--------------
its best knowledge, that the Products are free of any rightful third party claim
of direct infringement by the Products.
12.3 Remedy. In the event that any Product is held, or in EyeSys' sole
------
opinion, may be held to constitute such an infringe-
20
ment, EyeSys may, at its option and expense, (i) obtain for Distributor the
right to continue to use such Product as intended, (ii) modify such Product so
that it becomes non-infringing, but without materially altering the
functionality of the Product or (iii) replace such Product with a functionally
equivalent non-infringing Product. During any period which EyeSys is unable to
provide Distributor with any Product as a result of an infringement claim,
distributor's term as the exclusive distributor will be extended, and the
minimum purchase requirements hereunder with respect to such Product shall be
suspended and any prepaid purchase orders from Distributor with respect to such
Product shall be refunded to Distributor. If such suspension of delivery
continues for more than 6 consecutive months EyeSys will at the election of
Distributor be in default under this agreement.
12.4 Limitations. Notwithstanding the provisions of Section 12.1 above,
-----------
EyeSys assumes no liability for infringement or product liability claims arising
from (i) combination of Products with other products not provided by EyeSys
(unless intended by EyeSys for use with the Products), which claims do not cover
such Products standing alone, (ii) the modification of such Products unless such
modification was made or authorized by EyeSys, where such infringement would not
have occurred but for such modifications, (iii) EyeSys' compliance with
specifications provided by Distributor, or (iv) any marking or branding placed
on the Products by, or at the request of, Distributor.
12.5 DISCLAIMER. THE FOREGOING STATES THE ENTIRE LIABILITY AND OBLIGATIONS
----------
OF EYESYS AND THE EXCLUSIVE REMEDY OF DISTRIBUTOR, WITH RESPECT TO ANY ALLEGED
OR ACTUAL INFRINGEMENT OF PATENTS, COPYRIGHTS, TRADE SECRETS, TRADEMARKS OR
OTHER INTELLECTUAL PROPERTY RIGHTS BY THE PRODUCTS.
13. TERMINATION
-----------
13.1 Termination or Modification of Appointment. This Agreement may be
------------------------------------------
terminated by either party upon notice if (i) the other party materially
breaches this Agreement, subject to the provisions of Section 13.2 hereof; (ii)
the other party becomes the subject of any voluntary or involuntary proceeding
under the U.S. Bankruptcy Code or state insolvency proceeding and such
proceeding is not terminated within sixty (60) days of its commencement; or
(iii) the other party ceases to be actively engaged in business. Without
limiting any other right or remedy available to EyeSys, in the event that EyeSys
shall have the right to terminate this Agreement, EyeSys shall have the option
in lieu of exercising such right to modify the appointment of Distributor
hereunder from an exclusive to a non-exclusive basis with respect to any or all
of the Products or to terminate such appointment with respect to less than all
Products.
21
13.2 Notice and Opportunity to Cure. No act or omission by any party
------------------------------
otherwise constituting a breach of this Agreement shall constitute a breach
hereof unless the other party gives notice of such act or omission in accordance
with Section 17.8 hereof, and if the party receiving such notice effects a cure
(i) of any monetary breach within ten days of such notice; or (ii) of any non-
monetary breach within thirty days of such notice (or if cure of such non-
monetary breach cannot reasonably be effected within such thirty days then
commences to effect such cure within such thirty days and continuously and
diligently prosecutes such cure until completion) then such act or omission
shall not be deemed a breach of this Agreement notwithstanding any provision to
the contrary.
13.3 Effect of Termination or Expiration. In the event of a termination or
-----------------------------------
expiration of this Agreement, EyeSys will have the right to terminate all
outstanding purchase orders. Those purchase orders not terminated will remain
subject to the provisions of this Agreement. Termination or expiration of this
Agreement will not, however, release Distributor from making payments which it
owes to EyeSys under the terms of this Agreement or relieve EyeSys of its
obligations to provide Spare Parts under Section 11.2. Upon the termination or
expiration of this Agreement, EyeSys will refund any prepaid purchase orders
made by Distributor and return a pro-rata portion of the Exclusive Distribution
Fee to the extent that all three Handheld System Years have not elapsed.
13.4 No Liability For Expiration or Termination. Neither EyeSys nor
------------------------------------------
Distributor shall, by reason of the expiration hereof or termination of this
Agreement pursuant to the terms hereof (except to the extent resulting from any
breach of this Agreement by such party continuing beyond any applicable grace
periods), be liable to the other for compensation, reimbursement or damages on
account of any loss of prospective profits or anticipated sales or on account of
expenditures, investments, leases, or commitments made in connection with this
Agreement or the anticipation of extended performance hereunder.
13.5 Repurchase of Inventory. In the event this Agreement is terminated or
-----------------------
expires, EyeSys or new distributors designated by EyeSys will, during the sixty
(60) day period following termination, purchase all Products in Distributor's
inventory (subject to Section 5.1) which were purchased by Distributor within
sixty (60) days prior to the notice of termination, so long as (i) the product
is still being sold by EyeSys (e.g. is not obsolete), (ii) the product is in
salable (e.g. new) condition, (iii) the purchase price will be the purchase
price Distributor paid, and (iv) Distributor pays shipping charges to return the
Products to EyeSys. Notwithstanding the foregoing, in the event that this
Agreement is terminated due to EyeSys' breach hereof, EyeSys shall be obligated
to repurchase all Products in Distributor's inventory upon the foregoing terms
(except that EyeSys shall also be obligated to pay such shipping charges and
22
purchase obsolete Products). In the event this Agreement is terminated by
EyeSys due to breach by Distributor, Distributor will be assessed a fifteen (15)
percent restocking fee. All payments due to EyeSys will remain subject to the
provisions of Section 5.5 of this Agreement.
13.6 Non-Competition. In the event of the termination of this Agreement by
---------------
EyeSys as a result of a material breach of this Agreement by Distributor,
Distributor shall not, directly or indirectly, market, promote or distribute any
Competing Products (as such term is defined in Section 2.6) for a period of
eighteen (18) months immediately following the effective date of such
termination.
13.7 Survival Provisions. The provisions of Sections 4.5, 5, 10, 11, 12,
-------------------
13, 14, 15, 16 and 17 will survive the termination of this Agreement for any
reason.
14. PROPRIETARY RIGHTS
------------------
14.1 Confidential Information. The parties acknowledge that by reason of
------------------------
their relationship to each other hereunder each will have access to certain
information and materials concerning the other's business, plans, customers,
technology, and/or products that is confidential and of substantial value to
that party, which value would be impaired if such information were disclosed to
third parties ("Confidential Information"). Each party agrees that it will not
use in any way for its own account (other than in connection with support and
sales of the Products), or the account of any third party, nor disclose to any
third party (other than its accountants and attorneys who shall hold such
Confidential Information in confidence), any such Confidential Information
revealed to it by the other party. Each party will take every reasonable
precaution to protect the confidentiality of such Confidential Information.
Upon request by the receiving party, the disclosing party will advise whether or
not it considers any particular information or materials to be Confidential
Information. Distributor will not publish any technical description of the Prod
ucts beyond the description published by EyeSys. The receiving party
acknowledges that the disclosing party's Confidential Information is unique
property of extreme value of the disclosing party, and that unauthorized use or
disclosure thereof would cause the other party irreparable harm that could not
be compensated by monetary damages. Accordingly, each party agrees that the
other will be entitled to injunctive and preliminary relief to remedy any actual
or threatened unauthorized use or disclose of such party's Confidential
Information.
14.2 Notices. All proprietary notices incorporated in, marked on, or fixed
-------
to the Products by EyeSys will not be removed or obliterated by Distributor.
23
14.3 Ownership. Distributor agrees that EyeSys owns all right, title,
---------
and interest in the product lines that include the Products and in all of
EyeSys' patents, trademarks, trade names, inventions, copyrights, know-how, and
trade secrets relating to the design, manufacture, operation or service of the
Products. The use by Distributor of any of these property rights is authorized
only for the purposes herein set forth, and upon termination of this Agreement
for any reason such authorization shall cease.
14.4 No Right to Manufacture or Copy. The Products are sold and the
-------------------------------
Software is licensed by EyeSys subject, in every case, to the condition that
such sale and license does not convey any license, expressly or by implication,
to manufacture, duplicate, or otherwise copy or reproduce the Products or
Software, through reverse engineering or any other means. Distributor agrees to
take appropriate steps with its customers, as EyeSys may request, to inform them
of and assure their compliance with the restrictions contained in this Section
14.4. Distributor agrees that it shall not, nor shall it permit any third party
to, decompile, reverse engineer, prepare derivative works of or otherwise alter
the source code or object code of the Software.
15. TRADEMARKS
----------
15.1 Use. During the term of this Agreement, Distributor shall have the
---
right to indicate to the public that it is an authorized distributor of EyeSys'
Products and to advertise (within the Territory) such Products under the
trademarks and marks listed in Exhibit C attached hereto ("Trademarks").
Distributor shall not alter or remove any Trademarks applied at the factory to
the Products or other materials contained therein. Nothing herein shall grant
to Distributor any right (other than the limited license to use the Trademarks
in accordance with the first sentence of this Section), title or interest in the
Trademarks. At no time during or after the term of this Agreement shall
Distributor challenge or assist others to challenge the Trademarks or the
registration thereof or attempt to register any trademarks, marks or trade names
confusingly similar to the Trademarks.
15.2 Approval of Representations. All representations of the Trademarks
---------------------------
that Distributor intends to use shall first be submitted to EyeSys for approval
(which shall not be unreasonably withheld) of design, color, and other details
or shall be exact copies of those used by EyeSys. If any of the Trademarks are
to be used in conjunction with another trademark on or in relation to the Prod
ucts, then EyeSys' xxxx shall be presented equally legibly, equally prominently,
and of greater size than the other but nevertheless separated from the other so
that each appears to be a xxxx in its own right, distinct from the other xxxx.
The parties acknowledge and agree that the Handheld System, as sold to the end-
user customer, will bear both the name of EyeSys and Distributor.
24
16. LIMITATION OF LIABILITY. WITHOUT LIMITING SECTIONS 12, 13 OR 17.13 HEREOF
-----------------------
OR THE RIGHT OF EYESYS TO MODIFY OR TERMINATE THE APPOINTMENT OF DISTRIBUTOR
PURSUANT TO SECTIONS 2.6 OR 4.7 HEREOF, AND EXCEPT WITH RESPECT TO ANY CLAIMS
ARISING FROM ITS WILLFUL MISCONDUCT, GROSS NEGLIGENCE OR FRAUD OR CLAIMS OF
THIRD PARTIES:
(A) EYESYS' LIABILITY UNDER THIS AGREEMENT WILL NOT EXCEED THE SUM OF (1)
THE REASONABLE FEES AND EXPENSES OF COUNSEL TO DISTRIBUTOR IN CONNECTION WITH
THE CLAIM UPON WHICH THE LIABILITY OF EYESYS IS BEING DETERMINED AND (2) THE
LESSER OF THE AMOUNTS RECEIVED BY EYESYS FROM DISTRIBUTOR UNDER THIS AGREEMENT
IN THE MOST RECENT TWELVE (12) MONTH PERIOD (INCLUDING ANY PREPAID PURCHASE
ORDERS AND FEES) AND $100,000; AND
(B) DISTRIBUTOR'S LIABILITY UNDER THIS AGREEMENT WILL NOT EXCEED THE TOTAL
OF (1) THE REASONABLE FEES AND EXPENSES OF COUNSEL TO EYESYS IN CONNECTION WITH
THE CLAIM UPON WHICH THE LIABILITY OF DISTRIBUTOR IS BEING DETERMINED, (2) THE
UNPAID PURCHASE PRICE OF ORDERS FOR PRODUCTS MADE BY DISTRIBUTOR AND (3)
$100,000.
IN NO EVENT WILL EITHER PARTY HAVE ANY LIABILITY TO THE OTHER PARTY FOR ANY
SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES INCLUDING, WITHOUT LIMITATION,
DAMAGES FOR LOST PROFITS, LOSS OF DATA OR COSTS OF PROCUREMENT OF SUBSTITUTE
GOODS OR SERVICES, ARISING IN ANY WAY OUT OF THIS AGREEMENT UNDER ANY CAUSE OF
ACTION, WHETHER OR NOT THE FIRST PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES; PROVIDED, HOWEVER, EYESYS WILL BE LIABLE TO DISTRIBUTOR FOR
DISTRIBUTOR'S LOST PROFITS AND MARKETING EXPENSES UP TO THE LIMITS SPECIFIED
ABOVE UPON DEFAULT BY EYESYS UNDER THIS AGREEMENT. THESE LIMITATIONS WILL APPLY
NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
17. MISCELLANEOUS.
-------------
17.1 Governing Law. The rights and obligations of the parties under this
-------------
Agreement will be governed by and construed under the laws of the State of
Florida, including its Uniform Commercial Code, without reference to conflict of
laws principles.
17.2 Arbitration. Any dispute or claim arising out of or in connection
-----------
with this Agreement will be finally settled by binding arbitration in Houston,
Texas under the Commercial Arbitration Rules of the American Arbitration
Association by one arbitrator appointed in accordance with said rules. The
prevailing party (as determined by the arbitrator), if any, shall be entitled to
reimbursement from the other party for such of its costs and expenses (including
reasonable attorneys' fees) incurred in connection with such arbitration as the
arbitrator shall award. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. Notwithstanding the
foregoing, the parties may apply to any court of competent
25
jurisdiction for injunctive relief without breach of this arbitration provision.
17.3 Indemnification. Subject to Section 16 hereof:
---------------
(a) Distributor agrees to indemnify EyeSys against any and all claims,
damages, costs (including reasonable attorneys' fees and costs), expenses or
other liabilities arising from claims by any other party resulting from
Distributor's representation of the Products in a manner inconsistent with
EyeSys' Product descriptions and warranties or any other breach by Distributor
of this Agreement; and.
(a) EyeSys agrees to indemnify Distributor against any and all claims,
damages, costs (including reasonable attorneys' fees and costs), expenses or
other liabilities arising from any breach by EyeSys of this Agreement.
17.4 Entire Agreement; Enforcement of Rights. This Agreement sets forth
---------------------------------------
the entire agreement and understanding of the parties relating to the subject
matter hereof and merges all prior discussions between them with respect
thereto. No modification of or amendment to this Agreement, nor any waiver of
any rights under this Agreement, will be effective unless in writing signed by
the party to be charged. The failure by either party to enforce any rights
hereunder will not be construed as a waiver of any rights of such party.
17.5 Independent Contractors. The relationship of EyeSys and Distributor
-----------------------
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement will be construed (i) to give either party the power
to direct or control the day-to-day activities of the other or (ii) to
constitute the parties as partners, joint venturers, co-owners or otherwise as
participants in a joint or common undertaking. All sales and other agreements
between Distributor and its customers are Distributor's exclusive responsibility
and will not affect EyeSys' obligations under this Agreement. Distributor will
be solely responsible for, and will indemnify, defend and hold EyeSys harmless
against all claims, damages, costs (including attorney fees), expenses and other
liabilities arising from the acts and omissions of Distributor, its employees,
servants, agents or any of them.
17.6 Assignment. The rights and liabilities of the parties hereto will
----------
bind and inure to the benefit of their successors and assigns; provided,
--------
however, that neither party may assign or delegate this Agreement or any of its
-------
licenses, rights or duties under this Agreement, whether by operation of law or
otherwise, without the prior written consent of the other party, except to a
person or entity into which it has merged or which has otherwise succeeded to
all or substantially all of its business and assets to which this Agreement
pertains, by merger, reorganization or other-
26
wise, and which has assumed in writing or by operation of law its obligations
under this Agreement. Any attempted assignment in violation of the provisions
of this Section 17.6 will be void.
17.7 Severability. In the event that any provision of this Agreement
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becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement will continue in full force and effect
without said provision; provided that no such severability will be effective if
it materially changes the economic benefit of this Agreement to either EyeSys or
Distributor.
17.8 Notices. Any required notices hereunder will be given in writing by
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certified mail (return receipt requested) to the address of each party set forth
above or by facsimile (with facsimile confirmation report generated) followed by
first class mail to the Distributor at (000) 000-0000 or EyeSys at (713) 465-
2418, or to such other address or facsimile number as either party may
substitute by written notice to the other in the manner contemplated herein, and
will be deemed served when delivered or, if delivery is not accomplished by
reason of some fault of the addressee (other than the failure of a facsimile
machine to function), when tendered. All such notices will be addressed to the
President of the recipient party and copies of notices to the Distributor shall
also be given in the same manner to Xxxxx Xxxxxxxxx, Esq., Ansbacher & Xxxxxxxxx
P.A., 0000 Xxxxxxxxxx Xxxx., Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxx 00000 (fax: 904-
000-0000).
17.9 Force Majeure. Neither party will be liable to the other for any
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default (other than failure to pay money) hereunder if such default is caused by
an event beyond such party's control, including without limitation acts or
failures to act of the other party, strikes or labor disputes, component
shortages, unavailability of transportation, floods, fires, governmental
requirements and acts of God. In the event of threatened or actual non-
performance as a result of any of the above causes, the non-performing party
will exercise commercially reasonable efforts to avoid and cure such non-
performance.
17.10 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
17.11 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which will be deemed an original and all of which together
will constitute one instrument.
17.12 No Third Party Beneficiary. EyeSys and Distributor intend that only
--------------------------
EyeSys and Distributor will benefit from, and are entitled to enforce the
provisions of, this Agreement, and that no third party beneficiary is intended
under this Agreement.
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17.13 Attorney's Fees. Wherever provision is made in this Agreement for
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award of attorney's fees, the same shall include attorney's and paralegal's fees
incurred (i) after default in anticipation of litigation or arbitration; (ii) in
mediation; (iii) in arbitration; (iv) in bankruptcy proceedings; (v) at trial;
(vi) on appeal; and (vii) in establishing entitlement to the amount of
attorney's fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
EYESYS TECHNOLOGIES, INC. MARCO OPHTHALMIC INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
---------------------- ------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxxx
Title: President & CEO Title: Controller
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