Exhibit 10.11
Manufacturing and Marketing License and Royalty Agreement
This Manufacturing and Marketing and Royalty Agreement (this "Agreement") is
entered into by and between RA Medical Systems, Inc., a California corporation
("RA") and Surgilight, Inc., a Florida corporation ("SRGL"), effective as of
______________, 2003.
A. SRGL has received clearances from the US Food and Drug Administration
("FDA"), denominated 510K k993328 and k020973, to market a laser device having
certain specifications, ("Specifications"). The FDA clearances referred to the
device as EX-308. SRGL desires to license to RA exclusive manufacturing rights
and exclusive marketing rights for this device, including any derivative
devices, substantially conforming to the specifications as well as the exclusive
right to use its xxxx EX-308 on devices RA intends to manufacture and market.
B. In consideration of the foregoing, RA is willing to pay SRGL certain
royalties on its Gross EX-308 Revenues during the royalty term as set forth
herein. NOW THEREFORE, the parties agree as follows:
1. CERTAIN DEFINITIONS.
(a) "Manufacturing Rights" means the exclusive and unencumbered right to
manufacture.
(b) "Marketing Rights" means the exclusive and unencumbered right to promote
and sell.
(c) "EX-308 Excimer Laser" is the name applied to any product cleared to
market by the FDA under 510k k993328 and k020973 and bearing the xxxx
"EX-308".
(d) "Specifications" includes a list of parameters measuring performance,
physical and other properties of the EX-308, including complete copies of
the 510k submissions of the EX-308 Excimer Laser. These specifications
may also include any drawings, charts, and tables sufficient to
understand the performance and characteristics of the EX-308 Excimer
Laser, but in no case shall SRGL be required to generate drawings or
other materials to facilitate the transfer to RA
(e) "Gross EX-308 Revenues" means one hundred percent (100%) of all amounts
accrued by RA, its subsidiaries and its affiliates, as revenues, under
generally accepted accounting principles consistently applied, from the
sale or lease of a EX-308 Excimer Laser, but shall not include any
amounts received for sales, use or other transaction taxes, duties or
(f) "Royalty Term" means the twelve (12) consecutive calendar quarters,
commencing with the first calendar quarter after the date of this
Agreement in which RA has operating revenues from commercial
subscriptions, advertising sales and/or consumer product royalties or, at
the election of SRGL, any calendar quarter prior thereto.
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(g) "RA Products" means products designed and manufactured by RA. If an RA
product does not bear the xxxx EX-308 and is not represented as having
been cleared under FDA 510k k993328 or k020973, sales of such RA
product will not be included in gross EX-308 Revenues regardless of
whether it was manufactured according to the specifications.
(h) "Aggregate Royalties" shall mean the total of all royalties paid by RA
to SRGL until the termination of this Agreement.
2. TRANSFER. In consideration of the agreement to pay royalties by RA as set
forth in Section 3 below, SRGL transfers to RA exclusive Manufacturing and
exclusive Marketing Rights in and to the EX-308 Excimer Laser. The
Specifications will be delivered to RA within ten (10) days of the execution of
this Agreement.
3. PAYMENT OF ROYALTIES. In consideration of the transfer made by SRGL pursuant
to the provision of Section 2 above, RA hereby agrees to pay to SRGL royalties
equal to three percent (3%) of RA's Gross EX-308 Revenues for each calendar
quarter during the Royalty Term, up to the aggregate amount of thirty seven
thousand five hundred ($37,500) dollars, after this amount has been reached, RA
agrees to pay to SRGL royalties equal to one-half percent (0.5%) of RA's Gross
EX-308 Revenues for each remaining calendar quarter during the Royalty Term. RA
shall make the payments due to SRGL hereunder with respect to Gross EX-308
Revenues for each of the calendar quarters during the Royalty Term not later
than sixty (60) days after the end of such calendar quarter. RA will not pay
royalties on any RA Products not bearing the EX-308 xxxx. RA intends to develop
laser devices having specifications substantially identical to the
Specifications which will have separate and distinct FDA clearances. RA will
notify SRGL when RA intends to conclude manufacturing and marketing of the
EX-308. On that date, RA shall return the rights to manufacture and market under
510k k993328 and k020973 to SRGL and the Agreement shall be terminated according
to Section 5.
4. AUDITED FINANCIALS, RECORDKEEPING AND INSPECTION. RA hereby agrees to provide
to SRGL unaudited financial statements for each calendar quarter in the Royalty
Term within thirty (30) days following the end of such calendar quarter. RA
hereby agrees to provide to SRGL, upon request, financial statements audited by
an accounting firm for each calendar in the Royalty Term within ninety (90) days
following the end of such calendar year. If the Gross Revenues reported on such
audited financial statements differ from the cumulative amounts shown on the
quarterly reports for such calendar year, an adjustment payment shall be made by
the party benefiting from the error to correct the error within twenty (20) days
following delivery of the applicable audited financial statement. RA shall keep
at its usual place or places of business complete records of its Gross Revenues
for each calendar quarter, for a period of not less than three (3) years
following the end of such calendar quarter, and will regularly make entries in
such records at its earliest business convenience for the purpose of showing the
amounts payable to SRGL hereunder. On not less than ten (10) days written
notice, SRGL shall have the right, not more than once during any twelve (12)
month period at mutually agreed upon times
Transfer and Royalty Agreement 2 Initials __________
during normal business hours at SRGL's expense, to examine any and all of RA's
records reflecting Gross Revenues for the sole purpose of verifying the accuracy
of RA's reports of Gross Revenues and the performance of RA's obligations to
make payments hereunder. In the event that any such examination by SRGL
discloses an error in the determination of any amounts due hereunder that is
confirmed by RA's independent auditors, an adjustment payment shall be made by
the party which benefited from the error to correct the error within twenty (20)
days following such independent auditor's confirmation of the error. In the
event that any such examination by SRGL discloses an error in the determination
of any amounts due hereunder, that is confirmed by RA's independent auditors,
such that amount previously paid to SRGL was too low, SRGL shall be entitled to
8% on any unpaid amounts and SRGL thereafter shall be entitled to examine RA's
books and records on a quarterly basis.
5. TERMINATION. This Agreement shall terminate at the end of the Royalty Term or
earlier pursuant to notification from RA under Section 3, or if no royalty
payment has been made to SRGL by RA for two consecutive quarters. Upon
termination, RA shall immediately pay to SRGL the $37,500 minus the Aggregate
Royalty. If the Aggregate Royalty exceeds $37,500, RA shall pay nothing to SRGL.
6. DISPUTE RESOLUTION. SRGL and RA agree that all disputes arising out of or
concerning the terms of this Agreement will be subject solely to binding
arbitration. The arbitrator selection and conduct of the arbitration will be
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association. The place of the arbitration shall be in Orange County, California
and judgment on the award may be entered in any court having jurisdiction
thereof. If either party believes it is necessary to undertake discovery on
asserted statutory claims, such party shall apply to the arbitrator or
arbitrators for rights to undertake discovery, and the arbitrator shall allow
discovery sufficient for either party to adequately arbitrate, vindicate, or
defend the statutory claims, including access to essential documents and
witnesses. At the conclusion of the arbitration, the arbitrator or arbitrators
shall issue a decision in writing setting forth the essential findings and
conclusions, and this decision is subject to review, confirmation, correction,
or vacation pursuant to the provisions Code of Civil Procedure 1285 through
1288.8 in effect at the time the decision is rendered.
7. CONTROLLING LAW. This Agreement is entered into and to be performed in
California, and it shall be interpreted and enforced under, and all questions
relating thereto shall be determined in accordance with the laws of the State of
California.
8. WAIVER. No waiver of any provision of this Agreement shall be deemed or shall
constitute a waiver of any other provision, whether or not similar, nor shall
any waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.
Transfer and Royalty Agreement 3 Initials __________
9. PARTIAL INVALIDITY. The illegality, invalidity or unenforceability of any
provision of this Agreement under the law of any jurisdiction shall not affect
its legality, validity or enforceability under the law of any other jurisdiction
nor the legality, validity or enforceability of any other provision.
10. ENTIRE AGREEMENT. This Agreement is intended by the parties as a final
expression of their agreement and as a complete and exclusive statement of the
terms of their agreement with respect to its subject matter. This Agreement may
not be contradicted by evidence of any prior or contemporaneous agreement, oral
or written, and this Agreement may not be explained or supplemented by evidence
of consistent additional terms. This Agreement supersedes, merges, and voids all
prior representations, statements, negotiations, understandings, proposed
agreements, and other agreements, written or oral, relating to its subject
matter.
11. AMENDMENTS. This Agreement may not be amended, modified or supplemented
except by a writing executed by both parties.
12. COUNTERPARTS. This Agreement may be signed in counterparts, each an original
but all one and the same instrument.
13. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of the
successors and assigns of SRGL and any successors and permitted assigns of RA,
and shall be binding upon the successors and assigns of SRGL and of RA.
14. FURTHER ASSURANCES. The parties hereto shall do and perform or cause to be
done and performed all such further acts and things and shall execute and
deliver all such other documents as any other party may reasonably request from
time to time in order to carry out the intent and purpose of this Agreement
contemplated hereby. Neither SRGL nor RA shall voluntarily undertake any course
of action inconsistent with satisfaction of the requirements applicable to them
set forth in this Agreement and each shall promptly do all such acts and take
all such measures as may be appropriate to enable them to perform as early as
practicable the obligations herein required to be performed by them.
15. NOTICES. Any notice or other communication required or permitted under this
Agreement shall be in writing and either personally delivered or deposited in
the first class United States mail, prepaid, certified or registered, return
receipt requested, addressed as follows:
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(a) If to SRGL:
Surgilight, Inc.
00000 Xxxxxxx Xx. Xxx. 000
Xxxxxxx, Xxxxxxx 00000
Attn: President
(b) If to RA:
RA Medical Systems, Inc.
0000 Xxxxxxx Xxxxxxx, #000-000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: President
Notice shall be deemed to have been given upon receipt. Either party may change
its address by giving written notice of such change to the other party in the
manner provided in this Section.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first above written.
RA Medical Systems, Inc. Surgilight, Inc.
By: _______________________ By: ______________________
Title: Title:
Transfer and Royalty Agreement 5 Initials __________
