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                     SEVERANCE AGREEMENT AND GENERAL RELEASE


         This SEVERANCE  AGREEMENT AND GENERAL RELEASE (the "Agreement") is made
and entered  into on this 21st day of  January,  2000,  by and between  PARADIGM
MEDICAL INDUSTRIES, INC. ("PARADIGM") and MICHAEL W. STELZER ("STELZER").

                                    RECITALS:

         WHEREAS,  STELZER has been employed by, and has served as an officer of
PARADIGM; and

         WHEREAS, the parties mutually desire to end this relationship effective
January 21, 2000, and now desire to resolve all issues amicably on the terms set
forth below; and

         WHEREAS,  STELZER has served as a Director  of PARADIGM  and desires to
resign from its Board of Directors.

         NOW,  THEREFORE,  in  consideration  of the foregoing and of the mutual
covenants and obligations herein contained, the parties agree as follows:

1.     Stelzer  Resignation.  STELZER  shall  provide  PARADIGM with a letter of
       resignation in the form attached hereto as Exhibit "A".

2.     Severance  Benefits.  STELZER will receive  20,000  shares of  restricted
       common stock of PARADIGM (the "Shares") within seven business days of the
       date of this Agreement. PARADIGM shall register the Shares within 90 days
       after  such date.  If for any  reason  the Shares are not so  registered,
       STELZER at his option may  exchange the Shares for shares of common stock
       that have been registered in the January 6, 2000 Prospectus. STELZER will
       enter into a lock up agreement  with  PARADIGM in which he will agree not
       to sell the  Shares  for a period of 90 days  following  the date of this
       Agreement.  With respect to the PARADIGM stock options STELZER  presently
       holds,  he may exercise such options at any time between the date of this
       Agreement and 18 months  following  such date.  PARADIGM will continue to
       pay STELZER his base salary  through  April 21,  2000.  STELZER's  401(k)
       benefits that would have accrued as of the date of this Agreement will be
       deemed vested.  The Board of Directors of PARADIGM shall provide  STELZER
       with a letter of reference in the form attached hereto as Exhibit "B".

3.     Cooperation  in Transition.  STELZER will provide all  passwords,  codes,
       information, documents, tangible items or other materials arising from or
       relating to his employment with or affiliation  with PARADIGM and he will
       make himself  reasonably  available for consultation,  training and other
       services  needed  in  making  a  successful   transition  of  his  former
       responsibilities to his successor(s).



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                                        3

4.     Mutual  Release.  In  consideration  of the  benefits  provided  in  this
       Agreement,  the parties release, hold harmless and forever discharge each
       other,  any  and all  other  subsidiary  or  affiliate  companies,  their
       successors,  assigns,  transferees,  past or present officers, employees,
       directors, representatives, agents, partners, owners and shareholders, of
       and  from  any  and  all  actions,   claims,  causes  of  action,  suits,
       compensation,   wages,   benefits,   debts,   contracts,   controversies,
       agreements,  promises,  rights,  damages or demands which they have,  may
       have  or  ever  will  have,  whether  known  or  unknown,   suspected  or
       unsuspected,  ;including  but not  limited  to any claim  under  state or
       federal  statutory  or  common  law,  any  claim  arising  out  of  or in
       connection with STELZER's  employment or affiliation with PARADIGM or the
       termination  thereof,  and any  claim  based  on an  express  or  implied
       contract  including  but not limited to  STELZER's  Employment  Agreement
       dated September 14, 1998 and his Change of Control Termination  Agreement
       dated September 14, 1998.

       The  parties  expressly  waive  the  benefits  of any  rule  or law  that
       provides,  in sum or substance,  that a release does not extend to claims
       which the  party  does not know or  suspect  to exist in his favor at the
       time  of  executing  the  release,  which  if  known  by him  would  have
       materially  affected this  settlement  with the other party.  The parties
       understand  and  acknowledge  that all such claims are hereby  waived and
       released.

5.     Release  of  Age   Discrimination   Claims.   STELZER   acknowledges  and
       understands  that he is releasing  any and all claims or causes of action
       he  has  or  may  have  under  state  and  federal  law   concerning  age
       discrimination,  including but not limited to, the Age  Discrimination in
       Employment  Act of  1967,  29  U.S.C.  Section  621 et  seq.  He  further
       acknowledges that he has been advised that this release does not apply to
       any age-based  rights or claims arising after the date of this Agreement,
       that he should seek the advice of his own independent  attorney,  that he
       has been given 21 days in which to review and consider this Agreement and
       that he has been advised that he has an  additional 7 days after he signs
       this  Agreement  to change  his mind and  rescind  this  Section  (5) and
       release of age discrimination claims without any penalty to himself. This
       Section (5) of the  Agreement  will not become  effective or  enforceable
       until after this 7 day period has  expired.  The  parties  agree that one
       month  of the  salary  continuation  provided  in  Section  (2)  above is
       allocated to STELZER's  release of age-based claims. In the event STELZER
       exercises  his  right of  rescission  of this  Section  (5),  the  salary
       continuation  will end on March 21, 2000.  All other  provisions  of this
       Agreement will remain in full force and effect.

6.     Confidentiality,  Inventions and  Non-Compete  Agreement.  STELZER agrees
       that the Confidentiality, Inventions and Non-Compete provisions (Sections
       6-9) of his Employment  Agreement dated September 14, 1998 remain in full
       force  according to their terms and he agrees to abide by and comply with
       these provisions.

7.     Confidentiality and Non-Assistance in Claims. STELZER agrees that he will
       keep   strictly   confidential   all   information   pertaining   to  the
       negotiations,  conditions  and  terms  of this  Agreement  and  will  not
       directly or  indirectly  publicize or disclose them in writing or orally,
       and  whether by himself or any  agent,  representative  or other  person.
       Notwithstanding  the  foregoing,  he may discuss this  Agreement with his
       attorneys,  accountants  or members of his immediate  family  provided he
       obtains  their  agreement to keep its terms  confidential  and he remains
       responsible for any disclosure they may make.



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       STELZER also agrees that he will not encourage, recommend, participate in
       or  voluntarily  assist  in any  legal or  administrative  claim  against
       PARADIGM  or  its  employees,  directors,  officers,  representatives  or
       affiliated  companies and will not attempt to harm their  reputations  or
       speak or write about them in a disparaging  manner.  Notwithstanding  the
       foregoing,  STELZER may testify or disclose  information  if  subpoenaed,
       required by law or in the course of an official agency investigation.

       PARADIGM will not attempt to harm STELZER's  reputation or speak or write
       about him in a disparaging manner.

8.     No admission of Liability. By entering into this Agreement, PARADIGM does
       not in any way admit or acknowledge liability for any allegation or claim
       by STELZER and it  specifically  denies any such  liability.  The parties
       agree  that  nothing  contained  in this  Agreement  shall be  treated or
       construed  as a  admission  of  liability  or  wrongdoing  of any kind by
       PARADIGM, its predecessors,  successors,  affiliates,  agents,  officers,
       directors, representatives and employees.

9.     Ownership  of Claims  and No  Liens.  STELZER  represents  that he ha not
       transferred,  assigned or encumbered any claim or portion thereof against
       PARADIGM, its officers,  directors,  employees or agents. STELZER further
       represents  and warrants  that there are no liens  against the  severance
       benefits provided under this Agreement.

10.    Disputes.  In the event any dispute  arises  between the parties which in
       any way relates to this  Agreement,  and which dispute cannot be resolved
       amicably,  the parties  agree that such dispute shall be resolved in Salt
       Lake city, Utah through binding  arbitration in accordance with the rules
       and procedures of the American  Arbitration  Association.,  Further,  the
       substantially  prevailing party shall receive reasonable  attorney's fees
       and costs.

11.    Severability. In the event any part of this Agreement is determined to be
       void or  unenforceable,  the  parties  agree  that the  remainder  of the
       Agreement may be enforced to the fullest extent permitted by law.

12.    Complete Agreement. This Agreement sets forth the terms and conditions of
       an amicable  resolution  in full accord and  satisfaction  of all issues,
       claims or controversies between STELZER and PARADIGM. This Agreement sets
       forth the  complete  agreement  between the parties.  No other  promises,
       commitments  or  representations  have  been  made  or  relied  on by the
       parties, and no other consideration is due between the parties.

       In witness whereof, the parties  acknowledge,  by their signatures below,
that they have read and  understand  the terms of this  Agreement and are freely
and voluntarily entering into it.

       MICHAEL W. STELZER                            PARADIGM MEDICAL
                                                     INDUSTRIES, INC.



 /s/ Michael W. Stelzer                     By: /s/ Thomas F. Motter
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Date signed: January 28, 1999               Its:       CFO
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