DESIGN, ENGINEERING AND MANUFACTURING AGREEMENT
THIS DESIGN, ENGINEERING AND MANUFACTURING AGREEMENT (the
"Agreement") is made and entered into as of this 23 day of
September, 1996 (the "Effective Date"), by and between PARADIGM
MEDICAL INDUSTRIES, INC., a Delaware corporation ("Paradigm") and
ZEVEX, INC., a Utah 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 a designer, engineer and
manufacturer of medical and health care products; and
WHEREAS, Paradigm desires to obtain design, engineering and
manufacturing services for its products and Manufacturer desires
to provide such services as an original equipment manufacturer;
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 "Systems" shall mean the Photon Laser
Phacoemulsification system as defined by Zevex Part No. Z-12669
and the Precisionist Thirty Thousand Phacoemulsification unit,
including all accessories, components, modules and packaging.
1.2 "Precisionist Thirty Thousand" shall mean the
Precisionist Thirty Thousand instrument enclosure containing
displays, pump and electrical subsystems defined by Zevex Part
No. Z-10811.
1.3 "Photon Laser Phaco" shall mean the Precisionist
Thirty Thousand with Laser Module (as defined in paragraph 1.5
below).
1.4 "Laser Handpiece" shall mean the laser surgical
handpiece, optical fiber cord and connector.
1.5 "Laser Module" means the electronic laser driver
module used in conjunction with the Laser Handpiece.
2. Development and Manufacturing. Manufacturer shall
produce and manufacture the Systems for Paradigm, except for the
Laser Module and Laser Handpiece, and be compensated for such
services as follows:
2.1 Engineering. Manufacturer agrees to use its
best efforts and allocate sufficient staff to design, develop
specifications and engineering documentation, make procurements,
and test and produce technical prototypes for the "technically
driven" accessories of the Precisionist Thirty Thousand as well
as the Photon Laser Phaco (excluding the Laser Module and Laser
Handpiece, but including laser interface hardware). Engineering,
design, and manufacturing meetings shall be held at least
bi-weekly to monitor the design and development of the Systems.
Minutes shall be kept for each meeting and a copy provided to
Paradigm. Representatives of Paradigm shall be given at least 24
hours notice of and have the right to attend all such meetings.
Representatives shall also have the right to visit Manufacturer's
facilities and meet with Manufacturer's representatives daily if
Paradigm desires. As more fully set forth in Section 9 below,
all documentation, specifications, designs, etc. relating to the
Systems shall belong to Paradigm.
2.2 Engineering Compensation. Paradigm shall pay
Manufacturer the sum of $860,000 for engineering and design
services and shall also pay an incentive bonus of $140,000 to
Manufacturer for distribution to key engineers, consultants and
other persons assisting with the design, engineering and
manufacture of the Systems, for total engineering compensation of
$1,000,000; provided that the conditions specified in the
subparagraphs of this paragraph 2.2 are satisfied within the time
frames set forth therein (each separate condition being referred
to as a "Milestone" and the payment with respect to a Milestone
being referred to as a "Milestone Payment"). Such compensation
shall not include travel expenses or off-site regulation
expenses, which expenses shall be paid by Paradigm as incurred
provided that such expenses have been pre-approved.
(a) Contract Advance. On the Effective Date of
this Agreement, contemporaneous with its signing, Paradigm shall
pay Manufacturer $100,000 as an advance retainer to begin
electrical, mechanical and software design, and component and
vendor identification for the manufacture of the Systems.
(b) Source Components. A Milestone Payment in the
amount of $20,000, which payment shall be used by Manufacturer to
purchase materials and components to build a complete bench
prototype of the System, shall be payable when the following
conditions constituting one Milestone are satisfied, which
conditions are all expected to be satisfied on or about October
1, 1996:
(1) When Paradigm has reviewed and, in its
sole discretion, approved product specifications as set forth and
defined in Manufacturer's product specification Z-12670, a
specification reference created by Manufacturer to manufacture
the Systems;
(2) When part numbers have been assigned to
all major components and key parts and Paradigm has reviewed and
approved all major components and key parts to be used in the
Systems and has approved all vendors of such components; and
(3) When any production engineering order
(hereafter "EO") is signed by Paradigm to procure components to
build a complete bench prototype of the System.
(c) Design Documentation. A Milestone Payment in
the amount of $250,000 shall be payable if, on or about December
1, 1996, all electrical designs are completed for the Systems and
a complete drawing package has been submitted to and approved by
Paradigm and Paradigm has signed an EO authorizing Manufacturer
to commence mechanical, enclosure and tooling design drawings.
(d) Material and Tooling First Articles. A
Milestone Payment in the amount of $120,000 shall be payable if,
on or about February 1, 1997, first articles have been received
at Manufacturer's place of business and either approved or
approved with changes by Paradigm for all molded, custom
mechanical and enclosure components and tooling, and any EO is
signed by Paradigm authorizing the purchase of such components or
tooling.
(e) First Article Prototype. A Milestone Payment
in the amount of $100,000 shall be payable if, on or about March
1, 1997, a first article prototype of the System is fully
assembled and operational (the "Prototype"), has been reviewed
and either approved or approved with changes by Paradigm and an
EO has been signed by Paradigm authorizing the production of 19
additional Systems.
(f) Delivery of Systems. A Milestone Payment in
the amount of $150,000 shall be payable if, on or about March 31,
1997, 19 Systems meeting the Z-12670 product specifications are
delivered to Paradigm fully assembled and operational, Paradigm
accepts all 19 Systems, and the Prototype meeting the Z-12670
product specifications is fully assembled and operational in
Manufacturer's possession as a bench prototype (hereinafter
referred to as the "Validation System"). (The Milestone Payment
of this paragraph 2.2(f) of the Agreement is additional
compensation over and above the purchase price of each System,
which amount is set forth in paragraph 3.1 below).
(g) Validation. A Milestone Payment in the amount
of $120,000 shall be payable if the following conditions,
constituting one Milestone, are satisfied on or before June 15,
1997:
(1) When the System has been validated
pursuant to IEC 601 standards by Paradigm; and
(2) When the System has been validated for
the European CE Xxxx by an independent agency provided by
Paradigm.
(h) Bonus. A bonus in the amount of $140,000 shall
be payable to Manufacturer for distribution to key engineers,
consultants and other persons assisting with the design,
engineering and manufacture of the Systems if the Milestone set
forth in subparagraph 2.2(f) above is, in Paradigm's sole
discretion, met and fully satisfied on or before March 31, 1997.
Such bonus shall be given to Manufacturer for distribution to the
engineers, consultants, and other personnel responsible for
designing, engineering and manufacturing the Systems as
determined by a compensation committee consisting of one member
designated by Paradigm and three members designated by
Manufacturer.
2.3 Tooling. Paradigm shall pay Manufacturer the
actual cost of tooling, plus a two percent (2%) xxxx-up above
actual cost of such tooling (the "Tooling Allocation"). All
models and other items purchased for tooling purposes shall
belong to Paradigm and shall be returned to Paradigm upon
termination or expiration of this Agreement. Tooling will not be
ordered until production components have been designed, reviewed
and approved by Paradigm. Paradigm shall pay for tooling costs
pursuant to the vendor's terms, provided that such costs are
pre-approved by Paradigm. The Tooling Allocation shall be paid
to Manufacturer when the final payment on actual tooling costs is
remitted to the tooling vendor or vendors. Paradigm understands
that adjustments may be required to tooled items and hereby
agrees to pay for such adjustments provided that the adjustments
and related charges are agreed to and pre-approved by Paradigm.
2.4 Components. Manufacturer will subcontract
production for components only, and will assemble, calibrate,
test, document and package the complete Systems under
Manufacturer's direct control at its own plant.
2.5 System Changes. Manufacturer will notify
Paradigm of all proposed changes to the Systems and will not
perform any material changes in the Systems 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.
2.6 Quality Control. Manufacturer will perform
product testing, burn-in, calibration and quality assurance
inspections for the Systems to comply with regulatory standards
as set forth in Manufacturer's Quality Manual and Product
Performance Specifications provided by Paradigm. Manufacturer
will keep accurate records that comply with regulatory standards
of the Food, Drug and Cosmetics Act for each 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 into its own Quality
Manual.
2.7 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 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 Xxxx, 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.
2.8 Service and Training. Paradigm shall be
responsible for performing field service and maintenance of the
Systems. Manufacturer shall train Paradigm's designated service
technicians and sales personnel as required by Paradigm in
training classes. A separate training class shall be conducted
on each of the following topics: (1) Basic Systems operations
(2) Common fault diagnosis; (3) Field component repair or
replacement; and (4) Manufacturer repair protocol. Training
classes may also be conducted on any other matter or matters
mutually agreed upon by the parties on the terms and conditions
set forth in this paragraph 2.8. Training classes shall be
scheduled at least two weeks in advance through Manufacturer's
customer service department. Training classes shall be six hours
in duration and shall be scheduled in two sessions: (a) 9:00 a.m.
to noon and (b) 1:00 p.m. to 4:00 p.m. There shall be no limit
to the number of students in a class. However, it is recommended
that there be no more than six students per class.
Notwithstanding the foregoing, Paradigm shall pay Manufacturer
$700 for each class regardless of the class size. Paradigm shall
also pay any and all reasonable travel and lodging costs for
students and instructors.
2.9 Independent Testing. Paradigm shall bear the
cost of all independent laboratory testing of the Systems. All
data generated from independent laboratory testing shall belong
to Paradigm and all testing must be pre-approved by Paradigm
before it is ordered by Manufacturer.
3. Purchase Price of Systems.
3.1 Purchase Price. Paradigm will purchase each
completed System (not including the Laser Handpiece and Laser
Module) for the lesser of: (1) $19,000.00 (the "Fixed Purchase
Price"); or (2) the actual cost of producing the Systems, plus
30% as set forth in Schedule A attached hereto (the "Alternative
Purchase Price"). The actual costs of producing the Systems
shall not include engineering costs, tooling costs or any other
costs paid directly by Paradigm pursuant to this Agreement.
Actual costs shall include the cost of materials, labor costs,
and fixed and variable overhead costs applied on a per system
basis as set forth in Schedule A attached hereto. All such
actual costs, including overhead, which are included in the
Alternative Purchase Price (but not the Fixed Purchase Price)
shall be adjusted annually and any changes shall be verified and
accounted for by both parties. Notwithstanding the foregoing,
the Fixed Purchase Price shall be adjusted as mutually agreed
upon by the parties if there is a material increase or decrease
in the total cost of materials. Paradigm shall pay the purchase
price of each System within thirty (30) days after receipt of an
invoice and System.
3.2 Inspection of Records. During the Term and any
Renewed Terms of this Agreement (as defined in paragraph 6 below)
and for two years following the termination or expiration of this
Agreement, Manufacturer shall maintain books and records
sufficient to determine the manufacturing costs of the Systems
and shall make such records available for inspection by Paradigm
or its agents, at Paradigm's expense, during normal business
hours, at any time upon 15 days written notice, for the purpose
of verifying the accuracy of the records and manufacturing costs
charged thereunder, provided that such inspection shall not
unreasonably interfere with Manufacturer's business activities.
4. Warranty and Service.
4.1 Warranty. Manufacturer will be responsible for
warranty and repair of the Systems for 14 months from the date of
purchase by Paradigm and shall provide replacement parts or
components for each System during such warranty period (exclusive
of the Laser Handpiece and Laser Module) at no cost to Paradigm
or the purchaser of the System within 10 days after notification
subject to the availability of materials and component parts to
replace or manufacture System parts. Manufacturer's warranties
shall include implied warranties of merchantability and fitness
for a particular purpose.
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 System 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 years following the
termination or expiration of this Agreement subject to the
availability of parts and components to manufacture such System
parts.
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 three years from that
date (the "Term") unless sooner terminated as provided in
paragraph 10 below. If not terminated, this Agreement shall
automatically be renewed thereafter for successive one year
additional terms (each, a "Renewed Term") unless either party
notifies the other party in writing at least 180 days prior to
the expiration of the Term or Renewed Term of its desire not to
renew this Agreement.
7. Covenant Not to Compete.
7.1 Covenant. Manufacturer covenants and agrees
that during the Term or any Renewed Term of this Agreement, and
for two years thereafter, that it, and its officers and directors
will not own, manage, operate, join, control or participate in
the ownership, operation or control of a business engaged in the
distribution or sale of invasive ophthalmic medical lasers, nor
develop or manufacture invasive ophthalmic medical lasers in
competition with Paradigm in the state of Utah, and each other
state in the United States, and each foreign country, in which
Paradigm or its subsidiaries do or may hereafter do business.
7.2 Injunctive and Equitable Relief. Manufacturer
covenants and agrees that Paradigm's remedy at law for any breach
or violation of the provisions of this Section 7 are inadequate
and that, in the event any such breach or violation, Paradigm
shall be entitled to injunctive relief in addition to any other
remedy, at law or in equity, to which it may be entitled.
7.3 Acknowledgment of Reasonableness and
Restrictions. Manufacturer specifically acknowledges and agrees
that the two-year post-Agreement limitation upon its and its
employees, agents, consultants and representatives activities as
specified above, together with the geographical limitations set
forth above, are reasonable limitations as to time and place upon
their post-Agreement activities, and that the restrictions are
necessary to preserve, promote and protect the business, accounts
and good-will of Paradigm and impose no greater restraint than is
reasonably necessary to secure such protection.
7.4 Limitation on Scope or Duration. In the event
that any provision of this Section 7 shall be held invalid or
unenforceable by a court of competent jurisdiction by reason of
the geographic or business scope or the duration thereof, such
invalidity or unenforceability shall attach only to the scope or
duration of such provision and shall not affect or render invalid
or unenforceable any other provision of this Section 7 and, to
the fullest extent permitted by law, this Section shall be
construed as if the geographic or business scope or the duration
of such provision had been more narrowly drafted so as not to be
invalid or unenforceable but rather to provide the broadest
protection to Paradigm permitted by law.
8. Confidentiality; Proprietary Rights.
8.1 Definition of Paradigm's Confidential
Information. For purposes of this Agreement, Paradigm's
"Confidential Information" means any customer lists, information,
materials, technical data, know-how, or trade secrets of
Paradigm, which is disclosed to Manufacturer. Paradigm's
"Confidential Information" shall not include information that
Manufacturer can demonstrate through its records, was or became
public knowledge through no fault of Manufacturer or was known to
Manufacturer prior to the date of disclosure, or was disclosed to
Manufacturer by a third party who had a lawful right to disclose
it.
8.2 Definition of Manufacturer's Confidential
Information. For purposes of this Agreement, Manufacturer's
"Confidential Information" means any information, data, designs,
concepts, ideas, processes, methods, models, computer aided
drafting and software tools, techniques, specifications,
formulae, know-how, trade secrets, and improvements relating to
the research, development, manufacturing or marketing activities
of Manufacturer together with analyses, compilations, studies,
and other documents that contain or otherwise reflect any of the
foregoing, including, without limitation, Manufacturer's
technology and manufacturing processes, its proprietary
technology and know-how and assembly and manufacturing processes
and technology and know-how, and its technology and know-how
concerning laser phaco or phacoemulsification technology that is
disclosed by Manufacturer to Paradigm. Manufacturer's
"Confidential Information" shall not include information that
Paradigm can demonstrate through its records, was or became
public knowledge through no fault of Paradigm or was known to
Paradigm prior to the date of disclosure, or was disclosed to
Paradigm by a third party who had a lawful right to disclose it.
8.3 Non-Disclosure of Confidential Information.
Neither party shall use or disclose the Confidential Information
of the other party for its own use or for any purpose except as
provided for in this Agreement. Each party agrees that it 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, each party agrees to take the
same steps and use the same methods to prevent the unauthorized
use or disclosure of the Confidential Information as the other
takes to protect its secret, confidential, or proprietary
information and data, including causing its 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 in writing of any misappropriation or
misuse by any person or entity of any Confidential Information
that comes to their attention.
8.4 Return of Materials. Any Confidential
information or other information, materials, or documents that
are furnished hereunder or were derived from the Confidential
Information or such information or materials will be promptly
returned, accompanied by all copies of such Confidential
Information or such other information, materials, or documents
made, at the earlier of one 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.
8.5 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 of its
employees, agents, consultants or representatives and that the
non-breaching 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 Disclosure of Inventions. Manufacturer hereby
agrees that if it or its employees or agents, directors,
consultants or representatives conceive, learn, make, or first
reduce to practice, either alone or jointly with others, any
inventions, improvements, original works of authorship, formulas,
processes, computer programs, techniques, know-how, or data
relating to the Systems (referred to herein as the
"Developments") while Manufacturer is under contract with
Paradigm, it or they will promptly disclose such Developments to
Paradigm or to any person designated by Paradigm.
Notwithstanding the fact that Manufacturer may determine that
Paradigm has no right to such inventions and that such inventions
may be Manufacturer's proprietary information, it shall
nevertheless promptly disclose any such inventions to Paradigm or
to any person designated by Paradigm upon reasonable request.
9.2 Ownership, Assignment, and Assistance. All
Developments related to the Systems shall be the sole and
exclusive property of Paradigm, and Paradigm shall have the right
to use and to apply for patents, copyrights or other statutory or
common law protection for such Developments in any country.
Furthermore, Manufacturer agrees to assist Paradigm in every
proper way at Paradigm's expense to obtain patents, copyrights,
and other statutory common law protection for such Developments
in any country and to enforce such rights from time to time.
Specifically, Manufacturer agrees to execute all documents as
Paradigm may reasonably request for use in applying for and in
obtaining or enforcing such patents, copyrights, and other
statutory or common law protection, together with any assignments
thereof, to Paradigm or to any person designated by Paradigm.
9.3 Patent or Copyright Infringement. Nothing in
this Agreement is intended to grant Manufacturer any rights under
any patent, trademark, tradename or copyright of Paradigm with
respect to the Systems.
10. Termination.
10.1 Termination by Paradigm. Paradigm shall have
the right to terminate this Agreement on written notice to
Manufacturer (a) pursuant to Section 10.3(b) below, if
Manufacturer fails for two consecutive quarters to timely fulfill
Paradigm's purchase orders (subject, however, to the Force
Majeure provisions of Section 11.11); (b) in the event Paradigm
is unable to obtain governmental or regulatory approvals,
including FDA Approval that may be required with respect to the
Systems or any component thereof; (c) in the further event that
any governmental or regulatory approvals are withdrawn, altered
or modified during the term of this Agreement in a manner which,
in Paradigm's good faith judgment, is material and adverse to
Paradigm or which prohibits or interferes with the manufacture or
sale of the System or renders the sale of the System
unprofitable; or (d) if an event of Force Majeure preventing or
delaying Manufacturer's performance hereunder continues for more
than 60 days.
10.2 Termination by Manufacturer. Manufacturer
shall have the right to terminate this Agreement on written
notice to Paradigm if (a) Paradigm has failed to timely make any
payments required by this Agreement and (b) Paradigm does not pay
all delinquent sums in full within 20 business days after written
notice from Manufacturer demanding payment.
10.3 Termination By Either Party. In addition to
their respective rights set forth in Sections 10.1 and 10.2,
either party shall have the right to terminate this Agreement on
written notice to the other party under the following
circumstances:
(a) by mutual agreement;
(b) if the other party materially defaults in the
performance of any material obligation hereunder (including
failing to meet a milestone on a timely basis as set forth in
subparagraphs 2.2(c) through 2.2(g)) and such default continues
for more than 20 business days after receiving written notice
from the other party of such default; provided, however, there
shall be no default under this provision if the defaulting party
has cured the default within 20 business days after the giving of
notice;
(c) in the event that the other party is declared
insolvent, or bankrupt by a court of competent jurisdiction, or
a voluntary petition of bankruptcy is filed in any court of
competent jurisdiction by such other party, or such other party
shall make or execute an assignment for the benefit of creditors,
or a receiver is appointed by a court of competent jurisdiction
over all or a substantial portion of the other party's assets and
such receivership is not dismissed within 30 days of appointment;
or
(d) in the event of the issuance of a final order,
decree or other action by any competent judicial authority or
governmental agency which restrains, enjoins or prohibits the
sale or introduction into interstate commerce of the System and
such restraint, injunction or prohibition is not vacated within
30 days thereafter.
10.4 Survival. The termination or expiration of
this Agreement shall be without prejudice (a) to the rights of
any party to receive upon its request all payments accrued and
unpaid, or all documents, data and deliverables not delivered, as
of the date of such expiration or termination; (b) the rights and
remedies of either party with respect to any previous breach or
default under any representation, warranty or covenant herein
contained; and (c) rights under any other provision of this
Agreement which expressly and necessarily calls for performance
after expiration or termination.
11. Miscellaneous.
11.1 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.
The above Recitals and the Schedules referred to herein and
attached hereto are deemed to be incorporated herein.
11.2 Governing Law. This Agreement shall be
governed by and construed and enforced in accordance with the
laws of the State of Utah.
11.3 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.
11.4 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.
11.5 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.
11.6 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).
11.7 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.
11.8 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.
11.9 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) 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.
0000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Fax No. (000) 000-0000
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Mackey Price & Xxxxxxxx
000 Xxxxx Xxxxxxxxxx Xxxxx
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Fax No. (000) 000-0000
TO MANUFACTURER: ZEVEX, INC.
0000 Xxxxxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000 XXX
Fax No. (000) 000-0000
With a Copy to: X. Xxxxxxx Weeks, Esq.
Weeks Law Firm
000 Xxxxxx Xxxxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Fax No. (000) 000-0000
11.10 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.
11.11 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.
11.12 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.
11.13 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: Xxxxxx X. Xxxxxx
Title: Vice President
ZEVEX, INC.,
a Utah corporation
By: Xxxxxxx XxXxxxxx
Title: CFO Sec/Treas.
SCHEDULE A
Alternative Purchase Price
The following is the formula for determining the Alternative
Purchase Price:
Direct labor (assembly & test) x $31/hour
(fully burdened, no profit) _____
Current average labor rate $ 8.50
Direct overhead (current 1996 rate) x 242%
Subtotal $20.57
G & A overhead (current 1996 rate) x 151%
Total labor rate $31.06
Parts costs x 1.69 (fully burdened, no profit,
excluding laser)
Parts costs
Direct overhead (current 1996 rate) x 112%
Subtotal G & A overhead x 151% +_____
Subtotal =_____
x .3
Profit margin 30% added to subtotal +_____
Laser cost x 1.04 (modified direct
overhead only) +_____
Direct engineering support(1) (based on 50 units
per year) +_____
Total =_____
--------------------
(1) This amount may change based on the number of systems sold.
It is etimated this amount shall not decrease to below
$250 per system.
