EXHIBIT 10.11
SUBJECT TO SATISFACTION OF CONDITIONS PRECEDENT
[FORM OF SERVICES AND LICENSING AGREEMENT]
This Services and Licensing Agreement (the "Agreement") is made this
8th day of December 2004 by and between Advanced Aesthetics, Inc., a Delaware
corporation ("AAI"), and Xxxxx Xxxxxxx Medicine ("JH"), acting through The Xxxxx
Xxxxxxx Health System Corporation, a Maryland corporation ("JHHS") and The Xxxxx
Xxxxxxx University, a Maryland corporation ("JHU").
RECITALS
1. AAI is a company dedicated to providing a nationwide, comprehensive suite of
medical and non-medical services and products for aesthetic enhancement in
hospitality-oriented environment.
2. JHU is a university that has medical, nursing and public health schools and
JHHS is a hospital system; together, both are international leaders in the
education of physicians and medical scientists, in biomedical research, and in
the application of medical knowledge to patient care.
3. AAI has assembled leading cosmetic medical professionals to serve on its
medical board to set clinical policy and provide insight and advanced market
knowledge of clinical innovation in the field of aesthetic medicine.
4. AAI and JH previously entered into a Consulting Services Agreement dated
December 17, 2003, as amended by a First Amendment to Consulting Services
Agreement dated December 1, 2004 (the "Consulting Agreement"), pursuant to which
M and AAI agreed to collaborate to enhance the level of quality of care and
safety for cosmetic medical procedures provided by AAI to patients at AAI
facilities (the "AAI Facilities").
5. This Agreement is being signed solely to confirm the status of negotiations
between the parties. If the open points described in Sections 1 and 4 and other
Conditions Precedent (hereinafter defined) are not agreed upon by AAI and JHI by
July 31, 2005 (subject to extension by mutual agreement of the parties), this
Agreement shall be null and void.
6. Working in conjunction with JH, AAI now desires to develop a line of skin
care products with scientifically proven efficacy. As described in this
Agreement, JH has agreed to (subject to the Conditions Precedent):
(a) develop skin testing methodologies and skin care product efficacy testing
protocols,
(b) conduct all scientific testing on third party and proposed AAI produce
and
(c) place on AAI products its branded verification of the specific testing
that has been performed on the product and allow branded reference to skin
testing methodologies validated by JH.
NOW THEREFORE, in consideration of the premises, and of the mutual
covenants and conditions contained herein, JH and AAI agree as follows:
1. JH Services.
(a) JH will investigate current methods, including both protocols and
equipment for skin care parameter testing at the point of sale. Parameters to be
teste4 include hydration, tone, elasticity, wrinkling, pigmentation, dead skin
levels (squames), UV damage and sebum (the "Skin Care Parameters"). JH will
provide AAI with written reports regarding the accuracy and validity of such
existing testing methods.
(b) Where existing protocols and equipment for Skin Care Parameter testing
do not exist or are not acceptable to JH, JH will develop acceptable methods to
measure the condition of clients' skin with respect to the Skin Care Parameters.
JH will also confirm identified equipment reliability in following such JH
developed methods.
(c) JH will create a new testing methodology to validate selected skin care
product efficacy. Among other things, JH will develop the testing protocols
(using human trials, but not needing to comply with FDA/IRB standards) that will
either refute or validate specific narrow claims made by skin care providers
regarding improvement in one or more of the Skin Care Parameters. Such
methodologies and protocols developed by JH are called the "JH Testing
Standards." Skin care products referenced in this Section l include both over
the counter and prescription products.
(d) JH will oversee the ongoing testing of third party skin care products
using the JH Testing Standards. Once the JH Testing standards are established,
JH will oversee the selection of the providers and process of the testing of
third party skin care products using the human trial methodology.
(e) JH will oversee the testing of fifteen (15) AAI skin care products
using the JH Testing Standards. Once the JH Testing Standards are established,
JH will oversee the selection of the providers and process of the testing of AAI
skin care products using the human trial methodology.
In order to enable JH to provide the services described in this Section
(the "Services"), AAI will provide JH with:
(i) a list and samples of candidate equipment and technologies to
be tested pursuant to paragraph (a),
(ii) third party skin care products to be tested as described in
paragraph (d),
(iii) the AAI products to be tested as described in paragraph (e),
and
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(iv) human trial subjects that meet JH requirements for both type
and quantity that are required for testing under (d) and (e).
As a condition to undertaking any Services, AAI and JH must first agree in
writing upon the specific scope of such Services, the estimated time required
from JH faculty and other personnel, deliverables to be provided by JH and a
time schedule for such deliverables. AAI acknowledges that time of JH faculty
and other personnel may be limited due to other obligations. Until a written
agreement defining the scope of, and timing for, any JH Services has been agreed
to, JH shall not be required to make faculty or other personnel available for
any specific amount of time.
As an academic institution, JH will provide AAI with objective, scientifically
based findings. AAI acknowledges that such findings may be negative in nature
from AAI's perspective, including a conclusion that there is no valid
methodology for testing Skin Care Parameters or developing JH Testing Standards
or that skin care products tested are not effective. As one of the Conditions
Precedent (hereinafter defined), JH and AAI must agree upon parameters
distinguishing between research, with respect to which JH policies and
principles regarding research and academic freedom (including. without
limitation, publication of unfavorable results) shall apply, and work for hire,
with respect to which certain AAI confidentiality rights to be negotiated will
apply.
JH will perform the Services in good faith and through the reasonable
exercise of the professional judgment of its faculty and staff who are engaged
to provide the Services. JH DISCLAIMS ALL OTHER WARRANTIES, EITHER EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
2. Permitted Name Reference.
(a) Subject to the prior written approval of JH, JH agrees that AAI,
and to the extent provided below Sephora ("Sephora"), may make a factual
statement that: (1) certain Skin Care Parameter testing methodologies have been
developed by fl or found by JH to be effective pursuant to Sections 1(a) and
1(b) above, which statement may be used within AAI Facilities and retail outlets
of Sephora (so long as the conditions set forth below are satisfied) and on
their respective websites arid in other media as mutually agreed upon by JH and
AAI, and (ii) certain skin care products have been found to be effective based
on the JH Testing Standards pursuant to Sections 1(d) and 1(e) above, which
statement may be used by placing it on the product in question (collectively,
the "Permitted Statement of Fact"). Hypothetical examples of permissible ways in
which the Permitted Statement of Fact may be made are set forth on EXHIBIT 1 to
this Agreement. JH reserves the right to approve the specific context in which
any Permitted Statement of Fact is used including the prominence and frequency
of usage and juxtaposition with other content. Specifically, but without
limitation: (i) any skin care product bearing Permitted Statement of Fact may be
sold only in an AAI Facility, a retail outlet of Sephora oz through such other
outlets as are mutually agreed upon by JH and AAI, and (ii) a Permitted
Statement of Fact regarding Skin Care Parameter testing methodologies may be
made only within an AAI Facility or Sephora outlet that in fact adheres to such
methodologies. With respect to Sephora, Permitted Statements of Fact may be used
only so long as Sephora continues to (i) be a wholly-owned subsidiary of LVMH,
and (ii) market its retail outlets in a high quality
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manner to a sophisticated customer base with each outlet staffed by highly
trained skin experts and supported by reliable and accurate skin diagnostics,
and (iii) comply with the restrictions on usage of Permitted Statements of Fact
and the Xxxx as set forth in this Agreement. At or prior to execution of this
Agreement, AAI will provide JH with a commitment from Sephora to comply with
such restrictions. Lu addition, to the extent any retail outlet of AAI and
Sephora indicates that it adheres to testing for Skin Care Parameters developed
or validated by JH, JH reserves the right, at AAI's expense, to make periodic
inspections of such retail outlet to confirm that it is appropriately utilizing
such testing standards. Such inspections shall occur with such frequency as is
determined by JH to be necessary in its reasonable discretion. Any reference to
JH that is not consistent with the, examples on Exhibit 1 or any other use of
the Xxxx (hereinafter defined), except as otherwise provided in the Consulting
Agreement, shall be subject to the prior written approval of JH, which may be
granted or denied in its sole discretion. The Xxxxx Xxxxxxx name, any
derivatives of such name, and any logos or symbols of JH or any of its
affiliates are herein collectively called the "Xxxx".
(b) Any usage of a Permitted Statement of Fact not previously
approved in writing by XX xxxx be subject to consultation with and the final
approval of JH as described above, with appropriate lead time in each case.
Unless otherwise agreed in writing by JH, requests for approval of a Permitted
Statement of Fact shall be submitted at least fourteen (14) days in advance. The
director of the Health Publishing Business Group of the School of Medicine's
Office of Corporate Communications (currently Xx. Xxxxx Xxxxxxxx) will serve as
JH's first source of review and the sole contact with media. No JH faculty,
staff, student or administrator or any other person associated with JH will be
made available to the media unless it is with the express, written consent of
the director of the Health Publishing Business Group of the School of Medicine's
Office of Corporate Communications.
3. Intellectual Property. If JH develops, in whole or in part, any unique
(i.e. not available in the public domain or brought to JH by AAI) intellectual
property as a result of providing the Services, such intellectual property shall
belong solely to JH, JHHS or JHU and, as such, can be used by them without
restriction or limitation or any compensation to AAI. AAI shall have a
perpetual, non-exclusive license to use Skin Care Parameter testing
methodologies and JH Testing Standards developed by JH pursuant to this
Agreement. However, AAI may make a Permitted Statement of Fact or other
reference to JH in connection with such methodologies or JH Testing Standards
only as permitted in, and during the Term of (hereinafter defined), this
Agreement.
4. Consideration. The consideration for the Services and the limited use
by AAI of the Permitted Statement of Fact shall be as follows:
(a) AAI will pay faculty of the JHU School of Medicine fees in the
amount $5,000 per day (or $700 per hour) to perform the Services outlined in
Section 1 of this Agreement subject to normal inflation increases occurring
during the Term (hereinafter defined) of this Agreement. Payment will be made
within thirty (30) days after invoicing by JH
(b) In addition to the compensation for Services, AAI, in
consideration for the limited use of the Permitted Statement of Fact as provided
in this Agreement, will provide JH
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with substantial additional compensation to be negotiated. Such additional
compensation will include guaranteed annual fees, plus a royalty plus equity.
5. Term: Conditions Precedent.
(a) This Agreement shall be in effect through November 30, 2009 (the
"Term"). Thereafter, this Agreement shall renew for additional five-year periods
unless either party shall provide written notice of termination to the other
party no later than 120 days prior to the then current expiration date. As one
of the Conditions Precedent, JH and AAI must agree upon formula to appropriately
compensate JH for the value created by it pursuant to this Agreement in the
event the Term is not extended beyond such initial five (5) year period. This
may include for example, an ending cash payment to JH or issuance of additional
stock.
(b) JH and AAI have agreed to enter into this Agreement to reflect
the current stage of their negotiations. However, the Term shall not commence,
and neither JH nor AAI shall have any legally binding obligation under this
Agreement, until all of the Conditions Precedent have been satisfied. If all of
the Conditions Precedent have not been satisfied by July 31, 2005 (as such date
maybe extended by mutual agreement of the parties), either party may elect by
written notice to the other to terminate this Agreement. The "Conditions
Precedent" include:
(i) written agreement by JH and AAI on: (A) the parameters for
research and academic freedom as opposed to work for hire as noted in Section 1
of this Agreement; (B) the amount of royalty fees, guaranteed annual fees and
equity as noted in Section 4(a) of this Agreement; (C) the buyout or additional
&tock to be provided JH at the end of the Term as noted in Section 5 of this
Agreement; and (D) an appropriate scope of coverage for product and/or
contractual liability insurance to be maintained by AAI;
(ii) final approval by internal JH committees for the
Permitted Statement of Fact (AAI acknowledges that, notwithstanding anything to
the contrary in this Agreement, such approvals have not yet been obtained); and
(iii) documentation of the matters described in the preceding
paragraphs (i) and (ii) by an amendment to this Agreement acceptable in form s
content to, and signed by, JH and AAI.
Neither JH nor AAI shall have any legal obligation of any nature to
proceed with the transactions described in this Agreement until all of the
Conditions Precedent have been satisfied in the sole discretion of each party.
No implied obligations of any nature, whether to negotiate in good faith or
otherwise, shall arise by virtue of the execution of this Agreement.
6. Representations and Warranties of JH. JH represents and warrants to AAI
follows:
6.1. Authorization; Validity of Agreement; No Violation.
(a) JH has the requisite power and authority to (i) perform
this Agreement and each other document to be performed pursuant to this
Agreement (collectively
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with this Agreement, the "JH Documents") to which JH is a party, and (ii)
consummate the transactions contemplated hereby and thereby.
(b) JH has duly authorized, executed and delivered this
Agreement and each of the other JH Documents to which it is or will be a party.
(c) This Agreement and each other JH Document are valid and
binding obligations of JH, enforceable against JH in accordance with their terms
and do not violate any law or agreement applicable to JH.
6.2. Investment Undertaking. JH acknowledges that the Preferred
Shares to be issued pursuant to Section 4(a) of this Agreement and the shares of
common stock, par value $.01 per share, of AAI issuable upon conversion of the
Preferred Shares will be "restricted securities" within the meaning of Rule 144
of the General Rules and Regulations under the Securities Act of 1933 ("Rule
144"). JH is acquiring the Preferred Shares for its own account and not with a
view to their distribution within the meaning of Section 2(11) of the Securities
Act of 1933. JHHS and JHU are "accredited investors," as defined in Rule 501 of
Regulation D under the Securities Act of 1933. JH understands that Rule 144
requires that the Preferred Shares and the shares of common stock issuable upon
conversion may not be disposed of for a period of at least one year. JH
understands that it must bear the economic risk of the investment in the
Preferred Shares and the shares of common stock issuable upon conversion of the
Preferred Shares indefinitely because such shares may not be sold, hypothecated
or otherwise disposed of unless subsequently registered under the Securities Act
of 1933 and applicable state securities laws, or an exemption from registration
is available.
7. Representations and Warranties of AAI. AAI represents and warrants to
JH as follows:
7.1. Authorization; Validity of Agreement; No Violation.
(a) AAI has the requisite capacity and authority to perform
this Agreement and each other document to be performed pursuant to this
Agreement (collectively, with this Agreement, the "AAI Agreements") to which it
is a party and to consummate the transactions contemplated hereby and thereby.
(b) AAI has duly authorized, executed and delivered this and
each of the other AAI Agreements.
(c) This Agreement and each other AAI Agreement is a valid
binding obligation of AAI, enforceable against it in accordance with their
respective terms do not violate any law or agreement applicable to AAI.
7.2. Shares Duly Authorized. The Preferred Shares and Common
issuable upon conversion thereof have been duly authorized and upon issuance in
with their terms will be duly and validly issued and non-assessable.
8. Other Agreements of the Parties. In addition to the other provisions of
this Agreement, the parties agree as follows:
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8.1. Licenses; Professional Insurance. AAI will cause (i) all AAI
Facilities to be fully licensed by all appropriate agencies, and (ii) each such
AAI Facility to carry all required liability and professional insurance. In any
event, AAI shall at a minimum maintain the insurance coverages set forth on
EXHIBIT 2 to this Agreement. Such insurance shall name JHHS, JHU and their
affiliates as additional insureds and provide that JH will receive thirty (30)
day advance written notice of any change in, or cancellation of, coverage. AAI
shall provide certificates evidencing such insurance to JH within fifteen (15)
days after request.
8.2. General Conduct of Business. AAI will conduct its business in
accordance with all applicable laws and the provisions of the Consulting
Agreement.
8.3. Financing Reporting. AAI shall provide to JH:
(a) As soon as available, and in any event within thirty (30)
days after the end of each calendar quarter, copies of a balance sheet,
operating statement and cash flow statement for AAI as of the close of such
period, in each case setting forth in comparative form the figures for the
corresponding period of the preceding year, all in reasonable detail and
certified as complete and correct, subject to changes resulting from year-end
adjustments, by the chief financial officer of AAI, which shall be accompanied
by: (i) a letter from such chief financial officer certifying that AAI has paid
all sums due to JH pursuant to this Agreement and (ii) a breakdown, in form and
detail reasonably acceptable to JH, of royalty fees due JH; and
(b) As soon as available, and in any event within one hundred
twenty (120) days after the close of each of its fiscal years, copies of: (i) an
audited balance sheet of AAI as of the close of such fiscal year, and (ii) for
each such fiscal year, audited operating and cash flow statements, in each case
setting forth in comparative form the figures for the preceding fiscal year, all
in reasonable detail. Audited financial statements shall be accompanied by an
opinion thereon of a firm of independent certified public accountants of
recognized standing reasonably acceptable to JH to the effect that such
financial statements have been prepared in accordance with generally accepted
accounting principles consistently maintained (except for changes in which such
accountants concur) and present fairly the financial condition of AAI. Such firm
of independent certified public accountants shall contemporaneously provide JH
with a letter stating that, based on the results of its audit, AAI has paid JH
all sums due pursuant o this Agreement; and
(c) Such information regarding its business and financial
affairs as may reasonably request within fifteen (15) days after any such
request and also make its principal officers and independent accountants and
attorneys available to discuss such affairs with JH.
8.4. Non-Disclosure of Confidential Information.
(a) Each party shall not, and each party shall cause its
officers directors, employees, agents, accountants and counsel not to,
communicate or use to the detriment of the other party or for the benefit of any
other person any Confidential Information (hereinafter defined) relating to the
other party. Prior to satisfaction of the Conditions Precedent, the existence of
this Agreement and the transactions described in this Agreement shall be
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considered Confidential information and shall not be disclosed by AAI to any
third party without the prior written consent of JH.
(b) For purposes of this Agreement:
(i) "Confidential Information" shall mean: Any data or
information pertaining to the arrangement between the parties contemplated by
this Agreement that is specifically designated as "CONFIDENTIAL". To the extent
consistent with the foregoing, Confidential Information includes, without
limitation, JH Testing Standards and methodologies developed by JH for testing
Skin Care Parameters, contracts and contractual relations with customers and
suppliers, computer software programs (including object code arid source code),
database technologies, systems, structures and architectures, business
acquisition plans and new personnel acquisition plans. "Confidential
information" shall not include any information that: (i) is or becomes publicly
known other than as a result of a breach by Recipient Party (hereinafter
defined) or its representatives of this Agreement; (ii) has been or shall be
otherwise independently acquired by or developed by Recipient Party without
violating the terms of this Agreement; or (iii) is known by Recipient Party or
its representatives prior to its disclosure to Recipient Party by Disclosing
Party (hereinafter defined).
(ii) "Disclosing Party" shall mean the party disclosing
Confidential Information to the other party. "Recipient Party" shall mean the
party receiving Confidential information from the other party.
(c) In the event Recipient Party receives a court order or other
governmental or administrative decree of appropriate arid sufficient
jurisdiction requiring disclosure of Disclosing Party's Confidential
information, Recipient Party shall give Disclosing Party reasonable written
notice prior to such disclosure in order to permit Disclosing Party, at Its
expense, to seek a protective order. Recipient Party Shall also cooperate with
Disclosing Party in seeking a protective order, arid release only so much of
Disclosing Party's Confidential Information as is required by such order.
8.5. Stockholders Agreement. Concurrently with the issuance of an
additional equity to JH, the parties will enter into a stockholders agreement
(the "Stockholders Agreement") relating to the transfer of the shares of AAI to
be received by JH in substantially the same form as the Stockholders Agreement
attached to the Consulting Agreement.
8.6. Registration Rights Agreement. Concurrently with the issuance
of any additional equity to JH, the parties will enter into a registration
rights agreement (the "Registration Rights Agreement") which provides JH with
the right to register the shares Common Stock underlying the Preferred Shares in
substantially the same form as the Registration Rights Agreement attached to the
Consulting Agreement.
8.7. Late Payments. Any payment due pursuant to this Agreement that
is not made by AAI within fifteen (15) days of the date due shall: (1) be
subject to a 3% late charge which is intended to cover in part the
administrative expense incurred by JH in handling a late payment, and (ii)
accrue interest from the date due until paid in full at the rate of 10% per
annum.
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8.8. Audit Right. JH shall have the right to audit (including making
copies of) the books and records of AAI at any time to, among other things,
confirm royalty fees due JH. AAI agrees to cooperate in such audit and make
available to JH, or the person designated by JH to conduct the audit, all such
books and records and personnel of AAI (including its internal and independent
accountants) to respond to questions and discuss such matters as JH may desire.
Any appropriate reconciliation in payment based on the results of such audit
shall be made within thirty (30) days after the completion of the audit. Should
an audit disclose an underpayment of the royalty fees of more than 5%, AAI shall
pay to JH: (i) all costs of the audit, and (ii) interest on the amount underpaid
from the date it should have been paid until the date received, by JH at the
rate of ten percent (10%) per annum. In addition to any other remedy provided to
JH in this Agreement, JH may assess an administrative penalty of US $1,000 for
any failure of AAI to provide information, or make personnel available for
discussion, as described in this Section and in Section 8.3.
9. Control of Xxxx.
(a) The rights granted to make the Permitted Statement of Fact by
this Agreement are non-divisible and shall not be transferred or sub-licensed,
except to Sephora to the extent provided in this Agreement, in whole or in part
without the prior written consent of SB, which consent may be granted or denied
in its sole discretion.
(b) Notwithstanding anything to the contrary contained in this
Agreement, AAI may not use the Permitted Statement of Fact in any manner that
JH, in its sole discretion, deems to be illegal, vulgar, obscene, in bad taste
or inconsistent with the professional image and reputation of JH.
(c) AAI recognizes the substantial value and goodwill associated
with the Xxxx and that the Xxxx has acquired a secondary meaning as being
synonymous with medical services and education of the highest quality and
pioneering health and medical research. AAI agrees that it will conduct its
businesses in accordance with such standards of quality and professionalism and
in compliance with all applicable laws, so as to protect the goodwill embodied
in the Xxxx and the reputation of JH, JHHS and JHU. All marketing and promotion
of AAI services using the Permitted Statement of Pact shall be: (i) limited as
defined in this Agreement, and (ii) done in a dignified, tasteful and
professional manner in keeping with the standards of JH.
(d) JH shall have the right, but not the obligation, to request at
any tin samples of then current usage of the Permitted Statement of Fact for
quality control purpose JH shall advise AAI in writing of any use which is
inconsistent with this Agreement (a "Inconsistent Use Notice"), and AAI shall
immediately cease such use. Notwithstanding the foregoing, JH shall riot have
the right to send an Inconsistent Use Notice with respect to any us previously
approved by JH pursuant to this Agreement.
(e) In addition to any other rights or remedies of JH set forth in
this Agreement. AAI shall pay JH the sum of $10,000 for each instance of an
intentional and controllable misuse of the Xxxx. Such fee represents an
administrative charge to defray costs and expenses of JH in monitoring use of
the Xxxx and Permitted Statement of Fact. It does not
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constitute a license for such misuse nor does it in any manner affect JH's right
to seek injunctive relief or damages.
10. Protection of the Xxxx.
(a) AAI agrees that, except for the rights granted expressly in this
Agreement to make a Permitted Statement of Fact and rights granted pursuant to
the Consulting Agreement, AAI shall have no right, title or interest in the
Xxxx, and that the Xxxx is the sole property of JH and its affiliated entities.
AAI shall not challenge, or cause a third party to challenge, the validity and
ownership by JH and its affiliated entities of the Xxxx, or seek to register,
defend, compromise or dispute any rights in and to the Xxxx.
(b) AAI shall advise JH of any apparent infringement of the Xxxx of
which it becomes aware and will cooperate with JH in the prosecution of any
action brought to protect the Xxxx. JH shall have the sole and exclusive right
to xxx for an alleged infringement of the Xxxx and to retain all recoveries and
any other revenues deriving therefrom.
(c) Each party agrees to give the other prompt written notice of any
claim or legal proceeding which is threatened or actually instituted against
such party by any third party involving the rights to the Xxxx and to cooperate
in good faith in the resolution of the matter.
(d) AAI shall execute any additional documents and provide any
information and consents as are reasonably necessary in order to effect the
protection of the Xxxx as licensed under this Agreement.
11. Indemnification.
(a) AAI agrees to indemnify, defend and hold harmless JH and its
respective employees, officers, directors, physicians, agents, s all related and
affiliated entities (including JHHS and JHU) (collectively, the "Xxxxxxx
Parties") for any losses, claims, damages r liabilities, including, without
limitation, attorneys' fees and court costs (collectively, the "Claims"),
arising out of or with respect to (i) any injury or damage caused by any
services or goods sold or otherwise provided by AAI including medical diagnosis
and treatment, or (ii) any negligent action or negligent omission of AAI, or
(iii) any breach by AAI of this Agreement, or (iv) any use of the Permitted
Statement of Fact or Xxxx in connection with the business of AAI; provided that,
such indemnification obligation shall be reduced in an equitable manner to the
extent any Claim arises in part from a negligent act or omission by JH or its
affiliates or material breach by JH or its affiliates of this Agreement. In the
event any claim, action or proceeding is brought against any of the Xxxxxxx
Parties, which is subject to indemnification under this Section, AAI, upon
written notice from the Xxxxxxx Parties, shall defend or settle the same at
AAI's sole cost and expense with legal counsel reasonably satisfactory to the
Xxxxxxx Parties. If AAI fails to assume the defense of any matter subject hereto
within a reasonable period of time after such written notice, the Xxxxxxx
Parties may proceed to defend or settle the matter with legal counsel of their
own selection at AAI cost and expense. The Xxxxxxx Parties shall cooperate with
AAI in the defense or settlement of any claim subject to indemnification under
this Section. All compromises and settlements shall require the prior written
consent of the Xxxxxxx Parties, which consent shall not be unreasonably
withheld.
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(b) JH agrees to indemnify, defend and hold harmless AAI and its
respective employees, officers, directors, agents, and affiliated entities
(collectively, the "AAI Parties") for any Claims arising out of or with respect
to: (i) any allegation that the use of the Permitted Statement of Fact as
permitted under this Agreement infringes the proprietary rights of any third
party, (ii) any negligent acts or negligent omissions of JH, or its affiliated
entities, or their employees, consultants, physicians, agents or
representatives, or (iii) any breach by JH or its affiliates of this Agreement;
provided that, such indemnification obligation shall be reduced in an equitable
manner to the extent any Claim arises in part from a negligent act or omission
by AAI or a breach by AAI of this Agreement. In the event any claim, action or
proceeding is brought against the AAI Parties which is subject to
indemnification under this Section, JH, upon written notice from the AAI
Parties, shall defend or settle the same at JH's sole cost and expense with
legal counsel reasonably satisfactory to the AAI Parties. If JH fails to assume
the defense of any matter subject hereto within a reasonable period of time
after such written notice, the AAI Parties may proceed to defend or settle the
matter with legal counsel of their own selection at JH's cost arid expense. The
AAI Parties shall cooperate with JH in the defense or settlement of any claim
subject to indemnification under this Section. All compromises and settlements
shall require the prior written consent of the AAI Parties, which consent shall
not be unreasonably withheld.
(c) These indemnification provisions shall survive termination of
this Agreement for any reason.
12. Termination of Right to Use the Permitted Statement of Fact.
JH shall have the right to require AAI to cease any reference to or
use of the Permitted Statement of Fact: (a) if an Event of Default by AAI occurs
and continues beyond any applicable notice and cure period set forth in Section
13 of this Agreement, or (b) in the event JH determines in good faith that AAI
is not operating its business in conformance with protocols and quality
standards acceptable to JH, or (c) in the event JH determines in good faith that
AAI or Sephora, respectively, has conducted its business in a manner that
materially and. adversely reflects on the image and reputation of JH. IHHS or
JFIIJ because of the use of the Permitted Statement of Fact. JH shall not
exercise Its rights pursuant to the previous clauses (b) and (c) without first
providing to AAI a sixty (60) day period in which to explain the situation and
state how it intends to remedy it. If not satisfied at the end of such sixty
(60) day period, JH, at its option, may prohibit further use of the Permitted
Statement of Fact. Upon exercise of the right to terminate use of the Permitted
Statement of Fact as described above or upon termination of this Agreement for
any reason, AAI shall have no further right to use the Permitted Statement of
Fact and shall immediately cease use of the Permitted Statement of Fact. oAAI
consents to injunctive relief in the event of any misuse or unauthorized use of
the Xxxx.
13. Default Termination.
(a) Termination by AAI. AAI shall have the right to terminate this
Agreement upon the occurrence of any of the following events provided that such
intent to terminate is expressly stated in any Notice (hereinafter defined) of
default described below:
(i) If JH fails to perform any material term, condition, or
provision contained in this Agreement and such default continues for sixty (60)
days after Notice to
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remedy same from AAI; provided that, in the event such default on the part of JH
cannot be remedied within sixty (60) days and JH has promptly and diligently
proceeded with action to remedy such default, then JH shall be allowed such
additional time as shall be reasonable to remedy the default;
(ii) If JH files a voluntary bankruptcy or goes into
liquidation voluntarily or enters into any composition or arrangement with or
for the benefit of creditors of JH, or allows any final, non-appealable judgment
or involuntary bankruptcy filed against JH to remain unsatisfied or not
dismissed for a period of sixty (60) days;
(iii) If any representation or warranty of JH in this
Agreement proves to be false or misleading in any material respect; or
(iv) If JH defaults under the Consulting Agreement and such
default continues uncured beyond any applicable notice and cure period.
(b) Termination by JH. JH shall have the right to terminate this
Agreement upon the occurrence of any of the following events provided that such
intent to terminate is expressly stated in any Notice of default described
below:
(i) If AAI fails to make any payment to JH when due pursuant.
to this Agreement and such failure continues uncured for fifteen. (15) days
after Notice from JH; provided that, AAI shall be entitled to notice of a
monetary default only once during each Contract Year (the term Contract Year
meaning each consecutive twelve (12) month period from the date of this
Agreement), with JH having a right to terminate immediately upon Notice an with
no cure period upon a second monetary default within a Contract Year;
(ii) If AAI misuses the Xxxx and such misuse continues for
five (5) days after Notice from JH; provided that AAI shall only be entitled to
one (1) Notice for a specific misuse of the Xxxx and, in the event of a
reoccurrence of such misuse for which Notice has been given, JH may terminate
this Agreement immediately upon Notice and with no further cure period;
(iii) If AAI fails to perform any other material term,
condition, o provision contained in this Agreement (exclusive of those described
in paragraphs (i) and (ii above) and such default continues for sixty (60) days
after Notice to remedy same from JH; provided that, in the event such default on
the part of AAI cannot be remedied within sixty (60), days and AAI has proceeded
promptly and diligently with action to remedy such default, then AAI shall be
allowed such additional time as shall be reasonable to remedy the default (such
extended cure period shall apply only to this subparagraph (iii) and not to any
other defaults set forth in this Section (b);
(iv) If AAI files a voluntary bankruptcy or goes into
liquidation voluntarily, or enters into any composition or arrangement with or
for the benefit of creditors of AAI, or allows any final, non-appealable
judgment or involuntary bankruptcy filed against AAI to remain unsatisfied or
not dismissed for a period of sixty (60) days;
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(v) If any representation or warranty of AAI in this Agreement
proves to be false or misleading in any material respect;
(vi) if AAI defaults under the Stockholders Agreement or
Registration Rights Agreement and such default continues uncured beyond any
applicable notice and cure period; or
(vii) If AAI defaults under the Consulting Agreement and such
default continues uncured beyond any applicable notice and cure period.
(c) Upon termination of this Agreement pursuant to this Section 13,
all obligations of the parties shall terminate except those under Section 8.4
and Section 11.
(d) JH and AAI agree that the occurrence of a default under this
Agreement which continues beyond any applicable notice and cure period shall, at
the option of the non-defaulting party, also constitute a default by the
defaulting party under the Consulting Agreement.
14. Damages.
(a) EXCEPT. TO THE EXTENT ENCOMPASSED WITHIN A THIRD PARTY CLAIM
INDEMNIFIED AGAINST PURSUANT TO SECTION 11, NOTWITHSTANDING ANYTHING CONTAINED
IN THIS AGREEMENT TO THE CONTRARY, JH, JHU, JHHS AND AAI SHALL NOT BE LIABLE IN
ANY MANNER FOR ANY SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES. EACH PARTY
IRREVOCABLY WAIVES ITS RIGHT TO SEEK CONSEQUENTIAL OR INCIDENTAL DAMAGES AND
ACKNOWLEDGES SUCH WAIVER IS A MATERIAL INDUCEMENT FOR THE OTHER PARTY ENTER INTO
THIS AGREEMENT.
(b) AAI AGREES THAT NO XXXXXXX PARTY (INCLUDING WITHOUT LIMITATION,
JH, JHU, JHHS) SHALL BE LIABLE TO AAI ANY ACTIONS, DAMAGES, CLAIMS, LIABILITIES,
COSTS, EXPENSES OR LOS IN ANY WAY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR SERVICES PERFORM HEREUNDER FOR AN AGGREGATE AMOUNT EXCESS OF THE GREATER OF:
(A) $250,000, OR (B) THE SUMS ACTUALLY PAID TO JH PURSUANT TO THIS AGREEMENT.
15. Miscellaneous.
15.1. Force Majeure. Neither JH nor AAI shall be liable for any
delays resulting from circumstances or causes beyond its reasonable control,
including, without limitation, fire or other casualty, act of God strike or
labor dispute, war, terrorism or other violence, or any law, order or
requirement of any governmental agency or authority. Nothing contained in this
Section, though, shall excuse payment of a monetary obligation.
15.2. Independent. Each party to this Agreement is an independent
contractor. None of the provisions of this Agreement is intended to create, nor
shall be deemed or construed to create, any employer-employee partnership, joint
venture, or other relationship between such parties.
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15.3. No Third-Party Beneficiaries. The obligations of each party to
this Agreement shall inure solely to the benefit of the other party, and no
person or entity shall be a third party beneficiary of this Agreement.
15.4. Preparation. Each party arid its respective legal counsel have
cooperated in the drafting of this Agreement. This Agreement shall be deemed,
therefore, to be their joint work product and shall not be construed against any
party on the basis of its preparation.
15.5. Survival of Representations and Warranties. Each party has the
right to rely upon the representations and warranties of the other contained
herein and the documents referred to herein all of which shall continue in full
force and effect after the closing hereunder.
15.6. Transaction Fees and Expenses. Each party hereto shall bear
all costs incurred by it in connection with this Agreement arid the transactions
contemplated hereby. Notwithstanding the foregoing, AAI shall reimburse IH for
all reasonable and necessary travel and other business related expenses incurred
by JH in connection with the performance of JH's agreements hereunder, provided
that such expenses shall be subject to prior approval by AAI which approval will
not be unreasonably withheld or delayed. Such expenses shall be reimbursed
within thirty (30) days after the submission by fl of appropriate documentation
with respect thereto. Reimbursable expenses include, without limitation,
business class airfare (unless otherwise mutually agreed), lodging in hotels of
mutually acceptable quality, meals, ground transportation, gratuities and
mutually agreed upon hotel expenses.
15.7. Notices. All notices or other communications to be given
hereunder ("Notice") shall be in writing and sent by (i) messenger or a
recognized national overnight courier service for next day delivery with receipt
therefor, (ii) certified or registered mail postage paid, return receipt
requested, (iii) facsimile transmission with a written copy thereof sent on the
same day by postage paid first-class mail or (iv) by personal delivery to such
party a the following address:
To AAI:
000 Xxxxx Xxxxxxx Xxxxx, Xxxxx 000X
Xxxx Xxxx Xxxxx, XX 00000
Attention: President
Telecopier No.: (000) 000-0000
with a copy to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
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To JH:
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Telecopier No: (000) 000-0000
with copies to:
The Xxxxx Xxxxxxx Health System Corporation
000 X. Xxxxx Xxxxxx, Xxxxxxxxxxxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Telecopier No.: (000) 000-0000
The Xxxxx Xxxxxxx University
0000 X. Xxxxxxx Xxxxxx, 000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telecopier No.: (000) 000-0000
or such other address as either party hereto may at any time, or from time to
time, direct by Notice given to the other party in accordance with this Section
15.7.
15.8. Amendment. Except as otherwise provided herein, no amendment
of this Agreement shall be valid or effective unless in writing and signed by or
on behalf of the party against whom the same is sought to be enforced.
15.9. Governing Law, Jurisdiction Jury Trial. This Agreement shall
be governed by, and interpreted and enforced in accordance with, the laws of the
State of Maryland. Each of the parties hereto hereby irrevocably consents and
submits to the exclusive jurisdiction of the United states District Court for
the Northern Division of the State of Maryland in connection with any proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby, waives any objection to venue in such Court (unless such Court lacks
jurisdiction with respect to such proceeding, in which case, each of the parties
hereto irrevocably consents to the jurisdiction of the courts of Xxxxxx County
in the State of Maryland in connection with such proceeding and waives any
objection to venue in the courts x Xxxxxx County) and agrees that service of any
summons, complaint, notice or other process relating to such proceeding may be
effected in the manner provided by Section 15.7. EACH PARTY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN CONNECTION WITH THIS
AGREEMENT OR ANY MATTER OR CONTROVERSY ARISING OUT OF, OR IN CONNECTION WITH,
THIS AGREEMENT OR THE TRANSACTIONS DESCRIBED HEREIN. THIS WAIVER IS MADE
KNOWINGLY AND VOLUNTARILY AFTER CONSULTATION WITH COUNSEL.
15.10. Remedies. In the event of any actual or prospective breach or
default by any party hereto, the other party shall be entitled to equitable
relief, including remedies in the nature of injunction and specific performance.
Nothing contained herein and no election of any
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particular remedy shall be deemed to prohibit or limit any party from pursuing,
or be deemed a waiver of the right to pursue, any other remedy or relief
available now or hereafter existing at law or in equity (whether by statute or
otherwise) for such actual or prospective breach or default, including the
recovery of damages.
15.11. Severability. The provisions hereof are severable and if any
provision of this Agreement shall be determined to be legally invalid,
inoperative or unenforceable in any respect by a court of competent
jurisdiction, then the remaining provisions hereof shall not be affected, but
shall, subject to the discretion of such court, remain in full force and effect,
and any such invalid, inoperative or unenforceable provision shall be deemed,
without any further action on the part of the parties hereto, amended and
limited to the extent necessary to render such provision valid, operative and
enforceable.
15.12. Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
successors (whether by operation of law or otherwise) and including a purchaser
of the business, stock or assets of a party hereto; provided that, IN may elect,
in its sole discretion, to terminate this Agreement if Control (hereinafter
defined) of AAI is acquired by a pharmaceutical company or by a manufacturer or
distributor of alcohol, weapons or pornography or by any other person or entity
whose ownership of AAI would impair the image and reputation of JB as determined
by JH in its sole discretion. "Control" means either: (a) ownership, directly or
indirectly, of more than fifty percent (50%) of the stock or voting interests in
A.AJ, or (b) the right, directly or indirectly, to direct the executive decision
making of AAI by contract or otherwise, including, without limitation, by
ability to appoint a controlling number of the members of the board of directors
of AAI. In addition, JH may assign this Agreement at any time to a wholly-owned
subsidiary of JHU and JHHS and, in such event, shall have no further obligation
or liability under is Agreement from and after the date of such assignment.
Except as aforesaid, no party shall assign any rights or delegate any
obligations hereunder. AAI acknowledges. however, that JHHS and JHU may
subcontract with other affiliates for performance of certain of the Services.
Such subcontracting shall not create any direct liability of other affiliates to
AAI.
15.13. Entire Agreement. This Agreement, together with the Exhibits
and other documents referred to herein, required to be delivered pursuant to the
terms hereof or delivered simultaneously herewith, contains the terms of the
entire agreement among the parties respect to the subject matter hereof and
supersedes any and all prior agreements, commitments, understandings,
discussions, negotiations or arrangements of any nature relating thereto.
15.14. Sole Discretion. Wherever in this Agreement JH has the right
to make decision in its "sole discretion," AAI acknowledges and agrees that the
decision of JH shall not be subject to question or challenge in any manner by
AAL AAI waives any right it may otherwise have, if any, to question or challenge
any such decision of JH.
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SUBJECT TO SATISFACTION OF CONDITIONS PRECEDENT
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first listed above.
ADVANCED AESTHETICS, INC.
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxxx
Chairman
XXXXX XXXXXXX MEDICINE
ACTING THROUGH
THE XXXXX XXXXXXX HEALTH SYSTEM CORPORATION
BY: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx
THE XXXXX XXXXXXX UNIVERSITY
BY: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxx
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EXHIBIT LIST
Exhibit 1 -- Examples of Permitted Statements of Fact
Exhibit 2 -- Insurance
S-2
EXHIBIT 1
EXAM OF PERMITTED STATEMENTS OF FACT TO BE APPROVED BY JH
S-3
EXB 2: MINIMUM INSURANCE COVERAGES FOR AAI
o General liability ($1 million/$3 million)
o D&O and Employee Practices Liability ($3 million)
o Umbrella coverage ($4 million)
Specific scope of coverage to be approved by JH
S-4
