Exhibit 10.29
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SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (the "Agreement") is made and entered into
this 30th day of May, 2006, by and between PARADIGM MEDICAL INDUSTRIES, INC., a
Delaware corporation (the "Company"), and XX. XXXXXX X. XXXXXXXXX ("Xxxxxxxxx")
(each of the foregoing parties are referred to singly as a "Party" and
collectively as the "Parties").
WITNESSETH:
WHEREAS, the Company has developed the Photon(TM) laser system, a laser
cataract surgery system for minimally invasive cataract treatment, which the
Company markets as the next generation of cataract removal; and
WHEREAS, improvements were made to the handpiece of the original
Photon(TM) laser system and on August 5, 1999, the Company filed patent
application No. 09/368,737 with the United States Patent and Trademark Office
for the improved handpiece; and
WHEREAS, on September 24, 2002, the Company was issued United States
Patent No. 6,454,763 for the improved handpiece by the United States Patent and
Trademark Office entitled, "Laser Surgical Handpiece with Photon Trap," with the
inventors listed on the patent as Xxxxxx X. Xxxxxx, Xxxx X. Xxxxx and Xxxxxx X.
Xxxxxx; and
WHEREAS, on March 31, 2005, Xxxxxxxxx filed a complaint against the
Company in the United Stated District Court, District of Utah (Civil No.
2:05CV00278 TS), which alleges that during the period Xxxxxxxxx was a clinical
investigator in the study for the FDA involving the Photon(TM) laser system,
Xxxxxxxxx suggested ways in which the handpiece on the Photon(TM) could be
improved but was not named as one of the inventors or a co-inventor on the
patent application and, as a result, the complaint requests a court order
declaring that Xxxxxxxxx is the inventor or co- inventor on the patent and
therefore is entitled to all or part of the royalties and profits the Company
earned or will earn from the sale of any product incorporating or using the
improved handpiece; and
WHEREAS, the Company filed an answer disputing the claims made by
Xxxxxxxxx in his complaint; and
WHEREAS, the Parties desire to settle and resolve all disputes between
them and to dismiss their claims under the lawsuit in order to avoid the expense
and inconvenience incident to further litigation;
NOW, THEREFORE, in consideration of the representations and warranties
set forth below, as well as the mutual promises, agreements and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereto agree as
follows:
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1. Exclusive Rights. The Company agrees to provide Xxxxxxxxx with the
exclusive right over a three-year period to market and sell its Photon(TM) laser
system and/or components thereof, including the inventory and the intellectual
property rights related to such equipment; the Company further agrees to work
cooperatively to support Xxxxxxxxx'x efforts, and to provide Xxxxxxxxx with a
title (if he desires), the use of Company personnel, assistance from Company
management, and Company information reasonably necessary to support his efforts.
2. Sales Commissions. The Company agrees that if Xxxxxxxxx is
successful in finding a prospective purchaser to acquire the Photon(TM) laser
system upon terms acceptable to the Company, or in any way initiating, assisting
or facilitating finding such a purchaser, or in any way initiating, assisting,
or facilitating such a purchase, at any time during the three-year period
regardless when a purchase is consummated, the Company agrees to pay Xxxxxxxxx a
commission equal to 10% of the total purchase price; the Company further agrees
to evaluate in good faith all prospective purchases in which Xxxxxxxxx plays a
role and, not to reject a prospective purchase offer unreasonably, and not to
take measures to avoid paying Xxxxxxxxx pursuant to this paragraph or Paragraph
3 below.
3. Royalty Payments. The Company agrees that if the purchase price for
the Photon(TM) laser system includes a royalty or other payment payable to the
Company on subsequent sales of components of the Photon(TM) laser system other
than the handpiece, Xxxxxxxxx will additionally receive 8% of such royalties or
other payments on such subsequent sales through the full term of the purchase
agreement; the Company will agree that if a purchase price includes a royalty or
other payment payable to the Company on subsequent sales of the handpiece
component of the Photon(TM) laser system, Xxxxxxxxx will additionally receive
15% of such royalties or other payments through the full term of the purchase
agreement.
4. Other Commissions and Royalty Payments. The Company agrees if it is
successful through its sole efforts, without any assistance from or attribution
to Xxxxxxxxx in any way or in any amount, in finding a purchaser to acquire the
Photon(TM) laser system or components thereof during the second or third year of
Xxxxxxxxx'x exclusive rights, Xxxxxxxxx will be paid a commission equal to 1.7%
of the total purchase price and of the Company's royalties or other payments on
subsequent sales of the Photon(TM) laser system or its components through the
full term of the purchase agreement; the Company further agrees that even if it
is successful through its sole efforts, without any assistance from or
attribution to Xxxxxxxxx in any way or in any amount, in finding a purchaser to
acquire the Photon(TM) laser system or components thereof during the first year
of Xxxxxxxxx'x exclusive rights, Xxxxxxxxx will be paid pursuant to Paragraphs 2
and 3 above; the Company also acknowledges that nothing in this paragraph shall
be construed in derogation of the exclusivity of Xxxxxxxxx'x rights provided in
Paragraph 1 above.
5. General Release by Xxxxxxxxx. Xxxxxxxxx hereby forever releases and
discharges the Company and each of its former and present officers, directors
and employees from any and all claims, disputes, losses, demands, actions,
causes of action, damages, compensation, costs, fees, expenses, contracts,
covenants, obligations, debts and liabilities of every kind and nature
whatsoever, presently known or unknown, which Xxxxxxxxx may, now or in the
future, claim, assert or have, in tort, contract, law, equity, or otherwise,
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against the Company arising prior to the date of this Agreement (the "Xxxxxxxxx
Claims and Liabilities"), including but not limited to any Xxxxxxxxx Claims and
Liabilities resulting from or arising in any way from United States Patent No.
6,454,743, including any obligation for an interest claimed, money owed, or the
performance or lack of performance of duties or breach of duties thereunder, but
such release shall not, however, include any claims or liability arising out of
this Agreement.
6. General Release by the Company. The Company hereby forever releases
and discharges Xxxxxxxxx from any and all claims, disputes, losses, demands,
actions, causes of action, damages, compensation, costs, fees, expenses,
contracts, covenants, obligations, debts and liabilities of every kind and
nature whatsoever, presently known or unknown, which the Company may, now or in
the future, claim, assert or have, in tort, contract, law, equity, or otherwise,
against Xxxxxxxxx arising prior to the date of this Agreement (the "Company
Claims and Liabilities"), including but not limited to any Company Claims and
Liabilities resulting from or arising in any way from United States Patent No.
6,454,763, including any obligation for money owed, or the performance or lack
of performance of duties or breach of duties thereunder, but such release shall
not, however, include any claims or liability arising out of this Agreement.
7. Default. An event of default shall occur under this Agreement if any
Party fails to perform an obligation contained in this Agreement, and does not
correct or cure such failure to perform within thirty (30) days after receipt of
written notice of such failure by the Party providing notice of such default.
8. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by courier, or
mailed by registered or certified mail (return receipt requested) or if sent by
facsimile, confirmation received, to the respective party at the following
addresses and/or facsimile numbers, with the original thereof being mailed by
registered or certified mail, return receipt requested (or at such other address
or facsimile number for the parties hereto as shall be specified by like
notice):
(a) If to the Company, to:
Paradigm Medical Industries, Inc.
0000 Xxxxx 0000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxxxx X.X. Xxxxxxxx, President and
Chief Executive Officer
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
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With a copy to:
Mackey Price Xxxxxxxx & Xxxxxx
000 Xxxxxxxx Xxxxx II
00 Xxxx 000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) If to Xxxxxxxxx, to:
Xx. Xxxxxx X. Xxxxxxxxx
000 Xxxxxxxx Xxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Pager No.: (000) 000-0000
With a copy to:
Stoel Rives LLP
000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
9. Costs. Each of the Parties to this Agreement agrees to bear its own
costs, expenses and attorney's fees incurred in connection with or relating to
this Agreement. No Party, therefore, has any claim against another Party hereto
for costs, expenses and attorney's fees incurred in connection with or relating
to the preparation and negotiation of this Agreement.
10. No Admission of Liability. This Agreement is not intended to be,
and shall not be deemed, construed or treated in any respect as an admission of
liability by any person or entity for any purpose.
11. Entire Consideration. The Parties hereto declare and agree that the
consideration specified in this Agreement is the sole and entire consideration
for this Agreement and that no Party has made any promise or offer of further
payment or satisfaction or any agreement or promise to do any act or thing not
set forth herein.
12. No Assignment of Rights. Each of the Parties to this Agreement
represents, warrants and covenants that it has not assigned or transferred any
of its rights to any of the claims, demands or actions described herein and that
it is lawfully entitled to make this compromising settlement and receive the
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satisfaction described herein. Each of the Parties hereto shall indemnify and
hold harmless the other Party from and against any and all claims based upon or
arising in connection with any such assignment or transfer, or any purported
assignment or transfer of any such claim or other matter.
13. Entire Agreement. This Agreement constitutes the entire Agreement
of the Parties relating to its subject matter and is meant to integrate any
previous agreement, oral or written. No modification or amendment of this
Agreement shall be of any force or effect unless in writing and executed by the
Party against whom enforcement is sought.
14. Interpretation and Construction. This Agreement will be interpreted
and construed only by its contents, and no presumption or standard of
construction in favor of any Party will apply. The headings of this Agreement
will not be used or construed to interpret or limit the intent of the language
of this Agreement. As used in this Agreement, "purchase," "acquire," "sale" and
all like terms, in all their forms, refer to any purchase, sale, acquisition,
license, lease, or any other form of conveyance.
15. Consultation with Counsel. Each Party acknowledges and agrees that
such Party has consulted an attorney in connection with the assessment of such
Party's rights and the respective benefits and burdens of entering into this
Agreement. Based upon each Party having consulted counsel, each Party agrees
that this Agreement shall not be subject to any rules of construction that would
construe the Agreement against the drafter, and waives any such argument.
16. Assignment. This Agreement is not assignable or delegable in whole
or in part by Xxxxxxxxx without the consent of the Company. The Company shall
not unreasonably withhold such consent to Xxxxxxxxx'x assignment or delegation
to a corporation or other entity controlled by Xxxxxxxxx and/or Xxxxxxxxx'x
family. This Agreement may be assigned or delegated in whole or in part by the
Company and, in such case, the terms of this Agreement shall inure to the
benefit of, be assumed by, and be binding upon the entity to which this
Agreement is assigned.
17. Confidentiality. Each Party agrees, covenants and warrants that
such Party will not divulge to any person or entity of any kind or nature
whatsoever at any time the terms of this Agreement, except as necessary for tax
purposes or otherwise as may be required by law, including disclosure purposes
under the federal securities laws and regulations or an appropriate court order.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah.
19. Counterparts. This Agreement may be executed in counterparts and
each such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
20. Indemnification. The Company will indemnify, hold harmless, and
assume the defense of Xxxxxxxxx in any suit, dispute, claim, action, or
proceeding (a) in which the Company's Photon(TM) laser system and/or components
thereof, or the marketing or selling of the Company's Photon(TM) laser system
and/or components thereof, is alleged to be infringing, defective, or otherwise
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unlawful, including but not limited to any action for trade secret
misappropriation; or (b) brought by a purchaser or prospective purchaser of the
Company's Photon(TM) laser system and/or components thereof and arising from
anything other than cvSpadafora's negligence, gross negligence, or intentional
misconduct; or (c) concerning the ownership of or rights in the Company's
Photon(TM) laser system, components thereof, or the intellectual property rights
related to such equipment, including United States Patent No. 6,454,743 and
patent application No. 09/368,737.
21. Representation of Exclusivity. The Company represents that it has
not previously granted a third party any right to market or sell the Company's
Photon(TM) laser system and/or components thereof.
22. Payments of Commissions and Royalties. Commissions due to Xxxxxxxxx
under Paragraphs 2 and 4 shall be paid at the time of sale. Royalties or other
payments due to Xxxxxxxxx under Paragraphs 3 and 4 shall be paid quarterly, and
Xxxxxxxxx shall be allowed to inspect the Company's books and records, and to
audit the Company's books and records, for the purpose of determining whether
all royalties and commissions due to him have been paid by the Company, at his
own expense, which the Company shall reimburse if an audit determines the
Company underpaid Xxxxxxxxx by more than 10%. The Company will receive a credit
for any Photon(TM) laser system or components returned to the Company in the
amount of the commission or royalty paid on the sale of such laser system or
components. The Company agrees that any amount due to Xxxxxxxxx and not timely
paid will be subject to interest at a rate of 12% per annum.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed this Agreement effective as of the day and year first
above written.
PARADIGM MEDICAL INDUSTRIES, INC.
By: /s/ Xxxxxxx X.X. Xxxxxxxx
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Its: President and CEO
/s/ Xx. Xxxxxx X. Xxxxxxxxx
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Xx. Xxxxxx X. Xxxxxxxxx
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