EXHIBIT 99.16
[OIS LETTERHEAD]
March 5, 1999
VIA FACSIMILE (000) 000-0000
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Premier Laser Systems, Inc.
0 Xxxxxx
Xxxxxx, XX 00000
Ladies and Gentlemen:
I am writing to confirm the following understanding between Premier
Laser Systems, Inc. ("Premier") and Ophthalmic Imaging Systems ("OIS"):
1. Manufacturing by Premier
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. Premier will manufacture OIS's products ("OIS Products") listed on
Exhibit A hereto, at the prices as set forth in Exhibit A. This
pricing is based on OIS's and Premier's estimated cost of goods sold
according to GAAP, including without limitation labor, material,
manufacturing overhead and anticipated warranty-related costs
("COGS"). The pricing on Exhibit A will be adjusted from time to time
based on Premier's actual COGS, including, but not limited to, the
impact of engineering change orders mutually agreed by OIS and
Premier. For a period of six (6) months from the date of this letter,
Premier will not: (i) increase any prices set forth in Exhibit A; or
(ii) charge a profit margin to OIS. After six (6) months from the date
of this letter, Premier and OIS shall readdress the basis of the
pricing, when to include such margin, and the amount of such margin.
Premier will notify OIS, in writing, sixty (60) days in advance of the
effective date of any price increase.
The foregoing notwithstanding, at the end of 90 days from the date of
first delivery from Premier of an OIS Product ordered by OIS from
Premier, OIS and Premier agree to readdress the basis of the pricing
in Exhibit A solely with respect to the component thereof comprised of
anticipated warranty-related costs, and that any mutually agreed
adjustment resulting therefrom will be effected as soon as practicable
on a prospective basis. Such adjustment may include a change in the
warranty portion of COGS and/or the party to be designated with
control over or responsibility for satisfaction of warranty claims.
With respect to purchases from Premier by OIS of products and services
not included in Exhibit A, the pricing and other terms for such
purchases will be subject to the terms and conditions of the
individual transactions and such purchases are not contemplated under
this agreement.
. OIS will place firm, non-cancelable purchase orders ("P.O.") to
Premier at least thirty (30) days in advance of OIS' desired delivery
date of OIS Products, which P.O. will stipulate, among other things,
the required delivery method and destination of the OIS Products
ordered. Premier will commence the ordering of materials and
manufacture of the OIS Products after receipt of payment in full for
an order. Payments may be made in cash and/or applicable raw
materials. To the extent that inventory is supplied by OIS to Premier,
credit for the value of said inventory, as mutually agreed, will be
applied against amounts charged by Premier to OIS for OIS Products
ordered by OIS from Premier. Upon receipt of such payment or extension
of credit, Premier will: (i) provide OIS with the estimated delivery
date for the OIS Products ordered; and (ii) manufacture the requested
products as soon as commercially practical.
. Premier agrees to pay to OIS all reasonable incidental expenses
(excluding salaries and related) incurred by OIS, including additional
airfares, lodging, subsistence, contractor fees and expenses and other
installation-related expenditures, resulting from Premier's failure to
meet its estimated delivery date, provided, however, that: (i) no such
payment shall be required if Premier provides to OIS ten (10) day
prior written notification that the estimated delivery date will not
be met; and (ii) Premier shall not be liable under any circumstances
for consequential or indirect damages including without limitation
loss of profits.
. For a period of not less than sixty (60) days from the date of this
letter, Premier agrees to pay all incidental expenses (excluding
salaries and related) incurred by OIS to train and/or otherwise assist
Premier personnel in the manufacture of OIS Products, including
airfare, lodging, subsistence, contractor fees and expenses, if
applicable, and other travel-related expenses, as mutually agreed.
. Premier agrees to manufacture the OIS Products in compliance with GMP,
QSR and all other pertinent federal, state and international agency
standards, including, but not limited to, CE compliance.
. Shipment of the completed OIS Products shall be made F.O.B. Irvine.
Except for OIS Products shipped freight and related insurance charges
and taxes collect, which amounts are paid to the commercial carrier
directly by a party other than OIS or Premier, OIS shall pay shipping
and related insurance costs, except that Premier small pay expediting
and other related charges in excess of the cost of the delivery method
stipulated in the P.O. for delivery via methods other than as
specified in the P.O.
. Premier shall be responsible for all warranties concerning the OIS
Products for a period of not less than sixteen (13) months from the
date of shipment from Premier, including airfares, lodging,
subsistence and other reasonable incidental expenses (excluding
salaries and related) incurred by OIS with respect to its installers,
field technicians or third party service providers unless the warranty
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claim is a result of: (i) an OIS design problem; or (ii) damage
following delivery, including damage resulting from installation by
OIS.
Premier agrees to make its best efforts to comply with current OIS
service and support practices, including: (i) to effect in-plant in-
warranty repairs within forty eight (48) hours of receipt of products
to be repaired by Premier's facility; and (ii) to ship in-warranty
replacement component parts on the date requested, provided, however,
that requests received after 3:00 PM local time will be filled the
next business day.
. Premier shall carry product liability insurance concerning the OIS
Products manufactured by Premier. Such policy shall name OIS as an
additional insured with respect to such OIS Products.
2. Entire Agreement
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This document sets forth the entire agreement and understanding
relating to the subject matters hereof, and supersedes all prior discussions,
agreements, understandings, representations and any oral agreements as may have
been entered into or made between Premier and OIS relating to such subject
matters.
3. Arbitration
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Any dispute between the parties, whether relating to this letter
agreement or otherwise, shall be resolved by binding arbitration in Orange
County pursuant to the Rules of the American Arbitration Association.
4. Confidentiality
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Each party agrees that except as otherwise provided herein, it shall
not disclose to any third party any information concerning the trade secrets,
methods, concepts, processes, procedures, or customers, or any other
confidential, financial, or business information of the other party which it
learns during the course of its performance of this Agreement, without the prior
written consent of the other party. This obligation of confidentiality shall
not apply to any information which (i) was known to the receiving party at the
time of receipt; (ii) was in the public domain at the time of receipt; and (iii)
becomes public through no fault of the party obligated to keep it confidential;
or (iv) is required by applicable law to be divulged.
This provision shall survive the termination or expiration of this
Agreement.
5. Termination
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This Agreement shall only be terminated: (a) upon material breach by
either party, which breach is not cured within thirty (30) days of receipt of
written notice thereof; (b) upon ninety (90) day written notice by OIS to
Premier; (c) upon one hundred eighty (180) days written notice by Premier to
OIS; and or (d) by mutual written agreement of the parties. Upon
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any such termination: (i) OIS shall purchase (at Premier's actual direct
material cost) all inventory maintained by Premier, including inventory procured
under non-cancelable purchase orders but not yet received, in connection with
open P.O.'s for OIS Products; and (ii) Premier shall delivery to OIS said
inventory, together with all documentation related to OIS Products, including
schematic drawings, vendor lists, parts lists and bills of material.
Assuming that this letter is consistent with your understanding of our
agreement, please execute this letter in the space provided below to reflect
your acceptance of the terms set forth above.
Sincerely,
/s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
Ophthalmic Imaging Systems
The terms set forth in this letter are
accepted by Premier Laser Systems, Inc.
this 7th day of March, 1999.
By: /s/ Xxxxxxxx Xxxxxx
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Name: Xxxxxxxx Xxxxxx
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Title: Chief Executive Officer
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