LICENSE AGREEMENT
THIS AGREEMENT, effective as of August 18, 1995 (EFFECTIVE DATE)
between THE GENERAL HOSPITAL CORPORATION, a not-for-profit corporation doing
business as Massachusetts General Hospital, having a place of business at Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 ("GENERAL") and Palomar Medical
Technologies, a Delaware corporation having offices at 00 Xxxxxx Xxxx Xxxxx,
Xxxxxxx, XX 00000 ("PALOMAR").
WITNESSETH
WHEREAS, under research programs funded by GENERAL and the U.S.
Government, GENERAL through research conducted by Dr. R. Rox Xxxxxxxx, has
developed an invention pertaining to the use of lasers for hair removal;
WHEREAS, GENERAL and PALOMAR have entered into a Clinical Trial
Agreement of even date, attached hereto as Exhibit A ("Clinical Trial
Agreement"), under which PALOMAR is providing funds and equipment to support
clinical trials of said invention at GENERAL;
WHEREAS, GENERAL has filed a U.S. Patent Application covering said
invention and all of the rights, title and interest of the named inventors--Dr.
R. Rox Xxxxxxxx, Dr. Xxxxxxx X. Xxxxxxxx and Xxxxxxx Xxxxxxxxx--in said
application have been assigned to GENERAL;
WHEREAS, GENERAL represents to the best of its knowledge and belief
that it is the owner of all rights, title and interest in said patent
application and has the right and ability to grant the license hereinafter
described;
WHEREAS, as a center for research and education, GENERAL is interested
in licensing PATENT RIGHTS and thus benefiting the public and GENERAL by
facilitating the dissemination of the results of its research in the form of
useful products, but is without capacity to commercially develop, manufacture,
and distribute any such product; and
WHEREAS, PALOMAR having such capacity, desires to commercially develop,
manufacture, use and distribute such products throughout the world;
NOW THEREFORE, in consideration of the premises and of the faithful
performance of the covenants herein contained, the parties hereto agree as
follows:
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1. DEFINITIONS
1.1 (a) The term "ACCOUNTING PERIOD" shall mean each six month period
ending June 30 and December 31.
(b) The term "AGREEMENT YEAR" shall mean the twelve (12) month
period beginning on August 18, 1995 and each succeeding twelve (12) month period
thereafter for the term of the Agreement. If not otherwise specified, terms
involving time periods shall be applied pro rata according to any time frame in
which less than the full specified period is involved.
1.2 The term "AFFILIATE" shall mean any corporation or other legal
entity other than PALOMAR in whatever country organized, controlling, controlled
by or under common control with PALOMAR. The term "control" means possession,
direct or indirect, of the powers to direct or cause the direction of the
management and policies of an entity, whether through the ownership of voting
securities, by contract or otherwise. The term "AFFILIATE" with respect to
GENERAL shall mean any company controlling, controlled by, or under common
control, directly or indirectly, with GENERAL.
1.3 The term "LICENSE FIELD" shall, subject to Exhibit B hereof, mean
hair reduction and/or removal.
1.4 The term "FIRST COMMERCIAL EXPLOITATION" shall mean in each country
the first exploitation by way of sale of any PRODUCT or performance of a
SERVICE, by PALOMAR, its AFFILIATES or SUBLICENSES, (a) following approval, when
such approval is necessary, for the marketing of such PRODUCT or the performance
of such SERVICE, by the appropriate governmental agency for the country in which
the exploitation is to be made, or (b) when such government approval is not
required in a country, the first sale of such PRODUCT or performance of such
SERVICE in that country.
1.5 The term "SUBLICENSEE" shall mean any non-AFFILIATE third party
licensed by PALOMAR or by an AFFILIATE to make, have made, use or sell any
PRODUCT or SERVICE.
1.6 The term "NET REVENUES" shall mean the GROSS REVENUES as defined in
(b) below received by PALOMAR or any of its AFFILIATES or SUBLICENSEES for the
sale or distribution of any PRODUCT or for the performance of any SERVICE, less
(to the extent appropriately documented) the following amounts actually paid out
by PALOMAR, its AFFILIATE or SUBLICENSEES or credited against the GROSS REVENUES
received by them:
(a) (i) credits and allowances for price adjustment, rejection, or
return of PRODUCTS previously sold or SERVICES previously
performed, including reductions imposed by Medicare, Medicaid
or an HMO;
(ii) rebates and cash discounts to customers allowed and taken;
(iii) amounts for transportation, insurance, handling or shipping
charges to customers;
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(iv) taxes, duties and other governmental charges levied on or
measured by the sale of PRODUCTS or SERVICES, whether absorbed
by PALOMAR or paid by the purchaser so long as PALOMAR'S price
is reduced thereby, but not franchise or income taxes of any
kind whatsoever;
(v) for any revenues in which the United States government on the
basis of its royalty-free license pursuant to 35 USC Sec.
202(C) to any PATENT RIGHT requires that the GROSS REVENUES of
any PRODUCT or SERVICE subject to such PATENT RIGHT, be
reduced by the amount of such royalty owed GENERAL pursuant to
paragraph 3.1, the amount of such royalty.
(b) For any bone fide sale, lease, license, rental or other disposition
of a PRODUCT or bona fide performance of a SERVICE to a bona fide customer by
PALOMAR, its AFFILIATES or SUBLICENSEES, the GROSS REVENUE shall be the gross
billing price of the PRODUCT or the gross billing price for the SERVICES,
respectively.
(c) If PALOMAR or any of its AFFILIATES or SUBLICENSEES sell any
PRODUCT in a bona fide sale as a component of a combination of active functional
elements, the GROSS REVENUE of the PRODUCT shall be determined by multiplying
the GROSS REVENUE of the combination by the fraction A over A + B, in which "A"
is the GROSS REVENUE of the PRODUCT portion of the combination when sold
separately during the ACCOUNTING PERIOD in the country in which the sale was
made, and "B" is the GROSS REVENUE of the other active elements of the
combination sold separately during said ACCOUNTING PERIOD in said country. In
the event that no separate sale of either such PRODUCT or active elements of the
combination is made during said ACCOUNTING PERIOD in said country, the GROSS
REVENUE of the PRODUCT shall be determined by multiplying the GROSS REVENUE of
such combination by the fraction C over C + D, in which "C" is the standard
fully-absorbed cost of the PRODUCT portion of such combination, and "D" is the
sum of the standard fully-absorbed costs of the other active elements
component(s), such costs being arrived at using the standard accounting
procedures of PALOMAR which will be in accord with generally accepted accounting
practices.
(d) If PALOMAR, or any of its AFFILIATES or SUBLICENSEES, commercially
uses or disposes of any PRODUCT by itself (as opposed to a use or disposition of
the PRODUCT as a component of a combination of active functional elements) other
than in a bona fide sale to a bona fide customer, the GROSS SALES PRICE
hereunder shall be the price which would be then payable in an arm's length
transaction. If PALOMAR, or any of its AFFILIATES or SUBLICENSEES, commercially
uses or disposes of any PRODUCT as a component of a combination of active
functional elements other than in a bona fide sale to a bona fide customer, the
GROSS SALES PRICE of the PRODUCT
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shall be determined in accordance with paragraph (c) above, using as the GROSS
SALES PRICE of the combination that price which would be then payable in an
arm's length transaction.
(e) Transfer of a PRODUCT within PALOMAR or between PALOMAR and an
AFFILIATE for sale by the transferee shall not be considered a sale, commercial
use or disposition for the purpose of the foregoing paragraphs; in the case of
such transfer the GROSS REVENUE shall be based on sale of the PRODUCT by the
transferee.
1.7 The term "PATENT RIGHT" shall mean the U.S. Patent Application
filed by Xx.Xxxxxxxx, xx.xx. on February 1, 1995 entitled "Permanent Hair
Removal Using Optical Pulses," or the equivalent of such application, including
any division, continuation or any foreign patent application or Letters Patent
or the equivalent thereof issuing thereon or reissue, reexamination or extension
thereof. Subject to Exhibit B hereof, PATENT RIGHTS shall also include those
claims in any continuation-in-part of the aforementioned patent application
which claim an invention described or claimed in said patent application. PATENT
RIGHTS shall also include GENERAL's rights assigned to GENERAL by an
Investigator under the Clinical Trial Agreement, in any patent application or
patent claiming a Study Invention as defined in the Clinical Trial Agreement and
as to which PALOMAR has notified GENERAL of PALOMAR's desire to have a patent
application filed in accordance with paragraph 2.3 of the Clinical Trial
Agreement.
1.8 The term "PRODUCT" shall mean any article, device or composition,
the manufacture, use, or sale of which
(a) absent the licenses granted herein, would infringe a VALID
CLAIM of any PATENT RIGHT, or
(b) does not infringe a VALID CLAIM of any PATENT RIGHT licensed
to PALOMAR hereunder but the discovery, development,
manufacture or use of which employs TECHNOLOGICAL INFORMATION.
1.9 The terms "SERVICE" shall mean any method or service the use,
performance of sale of which:
(a) absent the licenses granted herein, would infringe a VALID
CLAIM of any PATENT RIGHT, or
(b) does not infringe a VALID CLAIM of any PATENT RIGHT licensed
to PALOMAR hereunder but the discovery, development,
manufacture or use of which employs TECHNOLOGICAL INFORMATION.
1.10 The term "TECHNOLOGICAL INFORMATION" shall mean any research data,
designs, formulas, process information, clinical data and other information
pertaining to any invention claimed in
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PATENT RIGHT which is known to Xx. Xxxxxxxx on the EFFECTIVE DATE and disclosed
to Palomar within thirty (30) days of the date on which this Agreement is fully
executed. This term shall also include information which is disclosed to PALOMAR
by GENERAL in accordance with, and during the term of, the Clinical Trial
Agreement and which pertains to any PATENT RIGHT claiming an Invention as
defined in said Agreement.
1.11 The term "VALID CLAIM" shall mean any claim of any PATENT RIGHT
that has not been (i) finally rejected or (ii) declared invalid by a patent
office or court of competent jurisdiction in any unappealed and unappealable
decision.
2. LICENSE
2.1 GENERAL hereby grants PALOMAR, subject to the rights of the United
States Government:
(a) an exclusive, worldwide, royalty-bearing license in
the LICENSE FIELD under GENERAL's rights in PATENT
RIGHTS to make, have made, use and sell PRODUCTS and
to perform SERVICES;
(b) the right to sublicense (i) PATENT RIGHTS exclusively
licensed to PALOMAR and (ii) PATENT RIGHTS
non-exclusively licensed to PALOMAR to the extent
such a sublicense is required for a customer to use a
PRODUCT or to practice a SERVICE.
All licenses pursuant to this paragraph 2.1 are subject to the rights,
conditions and limitations imposed by U.S. law with respect to inventions made
in the performance of federally funded research.
The above licenses to sell PRODUCTS include the right to grant to the
purchaser of products from PALOMAR, its AFFILIATES, and SUBLICENSEES the right
to use such purchased PRODUCTS in a method coming within the scope of PATENT
RIGHT.
2.2 The granting of any license hereunder is subject to GENERAL's and
GENERAL's AFFILIATES' right to make and to use the subject matter described and
claimed in PATENT RIGHT for research and clinical purposes but for no other
purpose.
2.3 Within thirty (30) days of EFFECTIVE DATE, upon request by PALOMAR,
GENERAL shall disclose to PALOMAR, TECHNOLOGICAL INFORMATION which PALOMAR will
be entitled to use to the extent such use does not infringe any GENERAL patent
not licensed to PALOMAR hereunder. GENERAL represents to the best of its
knowledge after reasonable enquiry there are no GENERAL patents or applications
not licensed hereunder which would be infringed by such use.
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2.4 Subject to Exhibit B hereof, GENERAL shall have the right to
license any PATENT RIGHT to any other party for the purpose of manufacturing,
using or selling of any PRODUCT or performance of any SERVICE outside of the
LICENSE FIELD.
2.5 It is understood that nothing herein shall be construed to xxxxx
XXXXXXX a license express or implied under any patent owned solely or jointly by
General other than the PATENT RIGHTS expressly licensed hereunder, provided
that, in the event that GENERAL's Office of Technology Affairs ("OTA") is
notified of a patentable invention assigned or assignable to GENERAL which OTA
believes would, if patented, be infringed by the manufacture, use or sale of a
PRODUCT or SERVICE ("Dominant Invention"), and in the event that at the time OTA
is notified of said Dominant Invention, no third party has been granted
exclusive rights, or an option to exclusive rights, in said Dominant Invention,
OTA shall give PALOMAR notice of said Dominant Invention and give PALOMAR an
opportunity to negotiate an exclusive or non-exclusive license under GENERAL's
rights in said Dominant Invention, whichever is available, it being understood
that GENERAL shall have no obligation to enter into such a license with PALOMAR.
3. DUE DILIGENCE OBLIGATIONS
3.1 PALOMAR shall itself, or through its AFFILIATES or SUBLICENSEES,
use reasonable efforts to develop and make commercially available PRODUCTS for
commercial sales and distribution throughout the world in the LICENSE FIELD.
Such efforts shall consist of:
(a) Entering into the Clinical Trial Agreement with General attached
hereto as Exhibit A and providing the funding specified in said Agreement;
(b) Commencing the commercial sale of the PRODUCT or SERVICES outside
the United States within three (3) months after tests on a normal mode ruby
laser have been completed and approval has been received from the Principal
Investigator (see Clinical Trial Agreement) that such laser works acceptably;
(c) Filing with the U.S. Food and Drug Administration for a 510(k) on
any PRODUCT within three (3) months of receipt of clinical data from GENERAL
sufficient for such filing, it being understood that GENERAL is providing such
data to PALOMAR pursuant to the Clinical Trial Agreement. In the event that
GENERAL fails to provide such data, GENERAL and PALOMAR shall confer to
establish a reasonable procedure and schedule to secure approval for such
PRODUCT, and in the event that GENERAL and PALOMAR cannot agree on such
procedure and schedule they shall resolve this issue in accordance with the
dispute resolution provisions of paragraph 10.9;
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(d) Commencing the commercial sale of the PRODUCT or SERVICES within
the United States within six (6) months after FDA clearance is received.
However, GENERAL shall not unreasonably withhold its consent to any
revision in such time periods whenever requested in writing by PALOMAR and
supported by evidence of technical difficulties or delays in clinical studies or
regulatory processes that the parties could not have reasonably avoided. Failure
to achieve one or more of the above objectives within the above stated time
periods or within any extension granted by GENERAL shall result in GENERAL
having the right to cancel upon thirty (30) days notice any exclusive license
granted hereunder or convert any exclusive license to a non-exclusive license.
3.2 At intervals no longer than every six (6) months, PALOMAR shall
report in writing to GENERAL on progress made toward the foregoing objectives.
4. FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHT
4.1 GENERAL shall be responsible for the preparation, filing,
prosecution and maintenance of all patent applications and patents included in
PATENT RIGHTS. PALOMAR shall reimburse GENERAL for all reasonable costs
("Costs") incurred by GENERAL for the preparation, filing, prosecution and
maintenance of all PATENT RIGHTS as follows:
(a) Subject to paragraph 4.2, for all Costs incurred by GENERAL from
and after the EFFECTIVE DATE, PALOMAR shall pay such Costs directly to legal
counsel upon receipt of invoices from GENERAL or legal counsel;
(b) For all Costs incurred by GENERAL prior to the EFFECTIVE DATE,
PALOMAR shall reimburse GENERAL within thirty (30) days of the date on which
this Agreement is executed by the last party to sign.
4.2 With respect to any PATENT RIGHT, each document or a draft thereof
pertaining to the filing, prosecution, or maintenance of such PATENT RIGHT,
including but not limited to each patent application, office action, response to
office action, request for terminal disclaimer, and request for reissue or
reexamination of any patent issuing from such application shall be provided to
PALOMAR as follows. Documents received from any patent office or counsel's
analysis thereof shall be provided promptly after receipt. For a document to be
filed in any patent office, a draft of such document shall be provided
sufficiently prior to its filing, to allow for review and comment by the other
party. If as a result of the review of any such document, PALOMAR shall elect
not to pay or continue to pay the Costs for such PATENT RIGHT, PALOMAR shall so
notify GENERAL within thirty (30) days of
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PALOMAR's receipt of such document and PALOMAR shall thereafter be relieved of
the obligation to pay any additional Costs regarding such PATENT RIGHT incurred
after the receipt of such notice by GENERAL. Such U.S. or foreign patent
application or patent shall thereupon cease to be a PATENT RIGHT hereunder and
GENERAL shall be free to license its rights to that particular U.S. or foreign
patent application or patent to any other party on any terms. PALOMAR shall also
have the right to provide comments and recommendations on any action proposed to
be taken by GENERAL and GENERAL agrees to take into account PALOMAR's
recommendations. Where a course of action is followed on a PATENT RIGHT which is
both contrary to PALOMAR's recommendations and which increases costs over such
recommendation, PALOMAR shall only be responsible for costs which would have
been incurred had its recommendation been followed.
5. ROYALTIES; LICENSE FEES
5.1 (a) PALOMAR shall pay GENERAL a license issue fee of Two Hundred
and Fifty Thousand Dollars ($250,000) as follows:
(i) Within thirty (30) days of the date of the execution of this
Agreement by the last party to sign hereunder, PALOMAR shall pay
GENERAL Fifty Thousand Dollars ($50,000), one half of which shall be
creditable against future royalties paid pursuant to paragraphs 5.1 (b)
hereunder;
(ii) On or before January 10, 1996, PALOMAR shall pay GENERAL Two
Hundred Thousand Dollars ($200,000) no portion of which shall be
creditable against future royalties.
(b) Beginning with the FIRST COMMERCIAL EXPLOITATION in any
country, on all sales of PRODUCTS anywhere in the world by PALOMAR, its
AFFILIATES or SUBLICENSEES, PALOMAR shall pay GENERAL royalties in accordance
with the following schedule, subject to Exhibit B hereof, such undertaking and
schedule having been agreed to for the purpose of reflecting and advancing the
mutual convenience of the parties.
(i) For: (A) each PRODUCT sold by PALOMAR or its AFFILIATES
and SUBLICENSEES consisting of (1) a ruby laser or (2) any
other laser sold solely for hair removal, or (3) any non-laser
equipment/disposables used for the practice of a SERVICE, and
(B) any non-laser equipment/disposable sold by PALOMAR or
AFFILIATES and SUBLICENSEES which are not PRODUCTS hereunder
but which are used for the practice of a SERVICE,
(I) Five percent (5%) of NET REVENUES so long as the
PRODUCT, its manufacture, use or sale is
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covered by a VALID CLAIM of any PATENT RIGHT licensed
exclusively to PALOMAR in the country in question;
(II) Two and one-half percent (2-1/2%) of the NET
REVENUES whenever the PRODUCT, its manufacture, use
or sale is covered by a VALID CLAIM of any PATENT
RIGHT licensed non-exclusively to PALOMAR in the
country in question;
(III) During each of the eight (8) years next
following the FIRST COMMERCIAL EXPLOITATION anywhere
in the world by PALOMAR, its AFFILIATES or LICENSEES,
One and one quarter percent ( 1-1/4%) of the NET
REVENUES of PRODUCT on which no royalty is payable
under paragraph 5.1(a) or 5.1(b) above.
Paragraph 1.6(c) notwithstanding, it is understood that for
purposes of calculating the above royalty, the royalty on any
PRODUCT which constitutes a laser which is produced or
manufactured such that it incorporates, is combined with, or
is designed to incorporate or be combined with, accessories
that are used for hair removal ("Modified Laser") shall be
based on the NET REVENUES for such Modified Laser, and the
royalty on any PRODUCT which constitutes accessories used in
modifying a laser but which is sold independently of the laser
("Modification Kits") shall be based on the NET REVENUES for
such Modification Kits.
(ii) For each PRODUCT sold by PALOMAR consisting of a laser (other than
the ruby laser, the sales of which shall in any event be subject to the
5% royalty described is subparagraph 5(b)(i) above) sold for hair
removal as well as other uses, the parties agree to negotiate in good
faith a commercially reasonable royalty to be paid to GENERAL in
accordance with the formula provided for in paragraph 1.6 (c),
provided, that in no event shall said royalty be less than two and a
half percent (2-1/2%) of NET REVENUES received by PALOMAR, its
AFFILIATES or SUBLICENSEES.
(iii) (A) (1) For any SERVICE performed by (a) PALOMAR or its
AFFILIATES or SUBLICENSEES or (b) any other third party by virtue of
any right or license granted by PALOMAR or its AFFILIATES or
SUBLICENSEES, and
(2) For any commercial disposition (other than sale) of any
PRODUCT by PALOMAR or its AFFILIATES or SUBLICENSEES,
PALOMAR shall pay GENERAL a commercially reasonable percentage of the
NET REVENUES received by PALOMAR or its AFFILIATES or SUBLICENSEES, the
percentage to be established by the parties
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at such time as PALOMAR has knowledge of the method by which NET
REVENUES for said SERVICES or PRODUCTS will be calculated and paid, and
in no event later than the FIRST COMMERCIAL EXPLOITATION of such
PRODUCT or SERVICES by said method, and said percentage shall remain in
effect for so long as the SERVICE or PRODUCT is marketed in accordance
with said method. In order to aid the parties in establishing said
percentage, PALOMAR shall provide GENERAL with complete information
relevant thereto, including projected NET REVENUES and PALOMAR's
projected net profit margins.
(B) The payments to be made to GENERAL pursuant to paragraph
5(b)(iii) for PRODUCTS and SERVICES covered by a VALID CLAIM of any
PATENT RIGHT, shall be a commercially reasonable royalty rate targeted
to be in the range of three to five percent (3-5%) of NET REVENUES
received by PALOMAR its AFFILIATES or SUBLICENSEES (which royalty rate
the parties anticipate will fall within the range of twenty to thirty
percent (20-30%) of PALOMAR's estimated profit margin on said PRODUCTS
or SERVICES).
(C) The payments to be made to GENERAL pursuant to 5(b)(iii)
for PRODUCTS and SERVICES not covered by a VALID CLAIM of any PATENT
RIGHT, shall be made for eight (8) years following FIRST COMMERCIAL
EXPLOITATION of such PRODUCT or SERVICE, and shall be a commercially
reasonable rate targeted to be in the range of seventy-five hundredths
of one percent to one and one quarter percent (.75%-1-1/4%) of NET
REVENUES received by PALOMAR, its AFFILIATES or SUBLICENSEES, which the
parties anticipate will fall within the range of five to six and one
quarter percent (5-6 1/4%) of PALOMAR's estimated profit margin on said
PRODUCTS or SERVICES.
(D) Annual minimum royalties:
(1) PALOMAR shall pay GENERAL an annual minimum royalty due
and payable no later than the end of the AGREEMENT YEAR during
which the FDA grants 510K approval (actual or deemed), or
comparable approval, of any PRODUCT or SERVICE ("First 510K"),
and at the end of each AGREEMENT YEAR thereafter, provided
that no such payment shall be due in the event that the amount
of royalties paid to GENERAL hereunder in an AGREEMENT YEAR
are equal to or greater than the annual minimum royalty due
and payable for said AGREEMENT YEAR.
(2) The parties agree to establish the annual amounts of such
minimum royalties due for all Agreement Years within sixty
(60) days of PALOMAR's receipt of notice of the First 510K.
The parties intend that the annual minimum royalty shall be an
amount established by the following
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formula: Multiply one-tenth the royalty rate due hereunder for
PRODUCTS and SERVICES (or, in the event that more than one
royalty rate is anticipated to be due hereunder, a royalty
rate which reflects a reasonable weighted averaged of the
anticipated royalty rates) times PALOMAR's projected NET
REVENUES for each Agreement Year.
(3) PALOMAR shall owe GENERAL minimum royalties pursuant to
this paragraph until the expiration of the last AGREEMENT YEAR
in which PALOMAR holds an exclusive license to PATENT RIGHTS
hereunder.
(iv) In the event that the parties fail to agree on the payments or
annual minimum royalties due and payable under paragraphs 5(b)(ii) or
5(b)(iii), the parties agree to resolve this issue in accordance with
the dispute resolution provisions set forth in paragraph 10.9 below.
5.2 (a) In the event that more than one royalty rate under paragraph
5.1 is applicable to a PRODUCT or SERVICE, the highest of the applicable
royalties shall apply.
(b) Only one royalty under paragraph 5.1 shall be due and payable to
GENERAL by PALOMAR for any PRODUCT or SERVICE regardless of the number of PATENT
RIGHTS covering such PRODUCT or SERVICE.
5.3 If any license granted pursuant to Section 2 shall be or become
non-exclusive and GENERAL shall license any PATENT RIGHT to another licensee for
the purpose of making, using, practicing or selling PRODUCTS and/or SERVICES in
the LICENSE FIELD and accept financial terms which, taken as a whole, are more
favorable to such licensee than herein provided for PALOMAR, GENERAL shall give
written notice thereof to PALOMAR and PALOMAR shall have the option, upon
PALOMAR's written notice to GENERAL, to revise its license hereunder to such
more favorable terms, effective as of the effective date of GENERAL's license to
said other licensee.
5.4 In addition to the royalties provided for above, PALOMAR shall pay
GENERAL ten percent (10%) of any and all income, other than a royalty or other
payment made pursuant to paragraphs 5.1, above, including, by way of example,
license issue fees and milestone payments received by PALOMAR from its
AFFILIATES and SUBLICENSEES, in consideration for the sublicensing of any right
or license granted to PALOMAR hereunder.
5.5 In addition to the payments provided for in paragraphs 5.1 through
5.4, PALOMAR shall pay GENERAL the following amounts upon the occurrence of the
following events, one half of which payments shall be creditable against future
royalties paid pursuant to paragraphs 5.1(b) hereof:
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$20,000 upon FDA allowance of the first Investigational
Device Exemption with respect to a PRODUCT
incorporating or combined with a ruby, alexandrite
and diode laser.
$35,000 upon FDA approval (actual or deemed), by the FDA of
the first 510(k) or comparable application with
respect to each PRODUCT incorporating or combined
with a ruby, alexandrite laser and diode laser.
$75,000 upon first issuance in the United States of a PATENT
RIGHT with claims that covers a PRODUCT or SERVICE.
5.6 In the event that the royalty paid to GENERAL is a significant
factor in the return realized by PALOMAR so as to diminish PALOMAR's capability
to respond to competitive pressures in the market, GENERAL agrees to consider a
reasonable reduction in the royalty paid to GENERAL as to each such PRODUCT and
SERVICE for the period during which such market condition exists. Factors
determining the size of the reduction will include profit margin on PRODUCT and
SERVICES and on analogous products, prices of competitive products and services,
total prior sales by PALOMAR, and PALOMAR's expenditures in PRODUCT and SERVICE
development.
5.7 The payments due under this Agreement shall, if overdue, bear
interest until payment at a per annum rate equal to one percent (1%) above the
prime rate in effect at the Bank of Boston on the due date, not to exceed the
maximum permitted by law. The payment of such interest shall not preclude
GENERAL from exercising any other rights it may have as a consequence of the
lateness of any payment.
5.8 PALOMAR shall provide GENERAL at least twice each AGREEMENT YEAR
with reports setting forth PALOMAR's marketing plans (including the financial
terms on which PRODUCTS and SERVICES will be made available to SUBLICENSEES and
end-users) and market projections (including projected NET REVENUES) for any
PRODUCT or SERVICE on which payments to GENERAL have not been determined
hereunder and which PALOMAR contemplates marketing within said AGREEMENT YEAR or
the following AGREEMENT YEAR.
6. REPORTS AND PAYMENTS
6.1 PALOMAR shall keep, and shall cause each of its AFFILIATES and
SUBLICENSEES, if any, to keep full and accurate books of accounts containing all
particulars that may be necessary for the purpose of calculating all royalties
payable to GENERAL. Such books of account shall be kept at their principal place
of business and, with all necessary supporting data shall, during all reasonable
times for the three (3) years next following the end of the calendar year to
which each shall pertain be open for inspection at reasonable times and on
reasonable notice by GENERAL
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or its designee at GENERAL's expense for the
purpose of verifying royalty statements or compliance with this Agreement. Such
inspections shall be conducted no more than twice during any twelve (12) month
period.
6.2 In each year the amount of royalty due shall be calculated
semiannually as of the end of each ACCOUNTING PERIOD and shall be paid
semiannually within the sixty (60) days next following such date, every such
payment to be supported by the accounting prescribed in paragraph 6.3 and to be
made in United States currency. Whenever conversion from any foreign currency
shall be required, such conversion shall be at the rate of exchange thereafter
published in the Wall Street Journal for the business day closest to the end of
the applicable ACCOUNTING PERIOD.
6.3 With each semiannual payment, PALOMAR shall deliver to GENERAL a
full and accurate accounting to include at least the following information to
the extent necessary to determine royalties:
(a) Quantity of each PRODUCT sold or leased (by country)
by PALOMAR, and its AFFILIATES or SUBLICENSEES;
(b) Total xxxxxxxx for each PRODUCT (by country);
(c) Quantities of each PRODUCT used by PALOMAR and its
AFFILIATES or SUBLICENSEES;
(d) Revenues from SERVICES paid to PALOMAR and its
AFFILIATES OR SUBLICENSEES;
(e) Names and addresses of all SUBLICENSEES of PALOMAR;
and
(f) Total royalties payable to GENERAL.
7. INFRINGEMENT
7.1 GENERAL will protect its PATENT RIGHTS from infringement and
prosecute infringers when, in its sole judgement, such action may be reasonably
necessary, proper and justified.
7.2 If PALOMAR shall have supplied GENERAL with written evidence
demonstrating to GENERAL's reasonable satisfaction prima facie infringement of a
claim of a PATENT RIGHT by a third party, PALOMAR may by notice request GENERAL
to take steps to protect the PATENT RIGHT. GENERAL shall notify PALOMAR within
sixty (60) days of the receipt of such notice whether GENERAL intends to
prosecute the alleged infringement. If GENERAL notifies PALOMAR that it intends
to so prosecute, GENERAL shall, within three (3) months of its notice to PALOMAR
either (i) cause infringement to terminate or
13
(ii) initiate legal proceedings against the infringer. In the event GENERAL
notifies PALOMAR that GENERAL does not intend to prosecute said infringement
PALOMAR may, upon notice to GENERAL, initiate legal proceedings against the
infringer at PALOMAR's expense and in GENERAL's name if so required by law. No
settlement, consent judgment or other voluntary final disposition of the suit
which invalidates or restricts the claims of such PATENT RIGHTS may be entered
into without the consent of GENERAL, which consent shall not be unreasonably
withheld, and shall not be withheld unless GENERAL assumes responsibility for
future expenses in litigation. PALOMAR shall indemnify GENERAL against any order
for payment that may be made against GENERAL in such proceedings. During the
period of any such proceedings initiated by PALOMAR, PALOMAR shall have the
right to escrow fifty percent (50%) of the royalties which would otherwise be
paid under this Agreement and to use such escrowed funds to offset fifty percent
(50%) of the expenses of the proceedings. On the termination of the proceedings,
and the payment of (50%) of all expenses in connection therewith, any funds
remaining in the escrow will be promptly paid to GENERAL.
7.3 In the event one party shall initiate or carry on legal proceedings
to enforce any PATENT RIGHT against any alleged infringer, the other party shall
fully cooperate with and supply all assistance reasonably requested by the party
initiating or carrying on such proceedings. The party which institutes any suit
to protect or enforce a PATENT RIGHT shall have sole control of that suit and
shall bear the reasonable expenses (excluding legal fees) incurred by said other
party in providing such assistance and cooperation as is requested pursuant to
this paragraph. The party initiating or carrying on such legal proceedings shall
keep the other party informed of the progress of such proceedings and said other
party shall be entitled to counsel in such proceedings but at its own expense.
Any award paid by third parties as the result of such proceedings (whether by
way of settlement or otherwise) shall first be applied to reimbursement of the
unreimbursed legal fees and expenses incurred by either party, including
reimbursement to GENERAL or any escrowed royalties not otherwise refunded, and
then the remainder shall be divided between the parties as follows:
(a) (i) If the amount is based on lost profits, PALOMAR shall
receive an amount equal to the damages the court determines
PALOMAR has suffered as a result of the infringement less the
amount of any royalties that would have been due GENERAL on
sales of PRODUCT lost by PALOMAR as a result of the
infringement had PALOMAR made such sales; and
(ii) GENERAL shall receive an amount equal to the royalties it
would have received if such sales had been made by PALOMAR; or
14
(b) As to awards other than those based on lost profits, sixty
(60) percent to the party initiating such proceedings and
forty (40) percent to the other party, provided that in the
event that GENERAL has paid for further litigation subsequent
to GENERAL's refusal to agree to a settlement, consent
judgement or voluntary final disposition of a suit pursuant to
paragraph 7.2, such awards shall be divided equally between
the parties.
7.4 For the purpose of the proceedings referred to in this Article 7,
the GENERAL and PALOMAR shall permit the use of their names and shall execute
such documents and carry out such other acts as may be necessary. The party
initiating or carrying on such legal proceedings shall keep the other party
informed of the progress of such proceedings and said other party shall be
entitled to counsel in such proceedings but at its own expense, said expenses to
be off-set against any damages received by the party bringing suit in accordance
with the foregoing paragraph 7.3.
8. INDEMNIFICATION
8.1 (a) PALOMAR shall indemnify, defend and hold harmless GENERAL and
its trustees, officers, medical and professional staff, employees, and agents
and their respective successors, heirs and assigns (the "Indemnitees"), against
any liability, damage, loss or expense (including reasonable attorney's fees and
expenses of litigation) incurred by or imposed upon the Indemnitees or any one
of them in connection with any claims, suits, actions, demands or judgments
arising out of any theory of product liability (including, but not limited to,
actions in the form of tort, warranty, or strict liability) concerning any
product, process or service made, used or sold pursuant to any right or license
granted under this Agreement.
(b) Licensees' indemnification under (a) above shall not apply to any
liability, damage, loss or expense to the extent that it is directly
attributable to the negligent activities, reckless misconduct or intentional
misconduct of the Indemnitees.
(c) PALOMAR agrees, at its own expense to provide attorneys reasonably
acceptable to the GENERAL to defend against any actions brought or filed against
any party indemnified hereunder with respect to the subject of indemnity
contained herein, whether or not such actions are rightfully brought.
(d) This paragraph 8.1 shall survive expiration or termination of this
Agreement.
8.2 (a) At such time as any product, process or service relating to, or
developed pursuant to, this Agreement is being commercially distributed or sold
(other than for the purpose of obtaining regulatory approvals) by PALOMAR or by
a licensee,
15
AFFILIATE or agent of PALOMAR, PALOMAR shall, at its sole cost and expense,
procure and maintain comprehensive general liability insurance in amounts not
less than $2,000,000 per incident and $2,000,000 annual aggregate and naming the
Indemnitees as additional insureds. Such comprehensive general liability
insurance shall provide (i) product liability coverage and (ii) broad form
contractual liability coverage for PALOMAR's indemnification under paragraph 8.1
of this Agreement. If PALOMAR elects to self-insure all or part of the limits
described above (including deductibles or retentions which are in excess of
$250,000 annual aggregate) such self-insurance program must be acceptable to the
GENERAL and the Risk Management Foundation. The minimum amounts of insurance
coverage required under this paragraph 8.2 shall not be construed to create a
limit of PALOMAR's liability with respect to its indemnification under paragraph
8.1 of this Agreement.
(b) PALOMAR shall provide GENERAL with written evidence of such
insurance upon request of GENERAL. PALOMAR shall provide GENERAL with written
notice at least fifteen (15) days prior to the cancellation, non-renewal or
material change in such insurance; if PALOMAR does not obtain replacement
insurance providing comparable coverage prior to the expiration of such fifteen
(15) day period, GENERAL shall have the right to suspend this Agreement
effective at the end of such fifteen (15) day period without notice or any
additional waiting periods until such coverage is obtained. If such coverage is
not obtained within forty-five (45) days of the original cancellation, GENERAL
shall have the right to immediately terminate this Agreement.
(c) PALOMAR shall maintain such comprehensive general liability
insurance beyond the expiration or termination of this Agreement during (i) the
period that any product, process, or service, relating to, or developed pursuant
to, this Agreement is being commercially distributed or sold (other than for the
purpose of obtaining regulatory approvals) by PALOMAR or by a licensee,
AFFILIATE or agent of PALOMAR and (ii) a reasonable period after the period
referred to in (c) (i) above which in no event shall be less than fifteen (15)
years.
(d) This paragraph 8.2 shall survive expiration or termination of this
Agreement.
8.3 Each party warrants to the other that it has the right to enter
into this Agreement, that this Agreement is not in conflict with any other
Agreement of the party, and that the party will not do anything during the term
of this Agreement, or enter into any other Agreement during the term of this
Agreement which is inconsistent herewith. GENERAL further warrants that it is
the owner of the PATENT RIGHTS, that except for certain non-exclusive license
rights in the U.S. Government, no other party has any rights or interest in the
PATENT RIGHTS. While GENERAL makes no
16
warranty as to the efficacy of this technology for hair removal, PRINCIPAL
INVESTIGATOR does represent that he has completely and accurately disclosed to
PALOMAR all information in his possession as of the date of this Agreement
concerning the efficacy and safety of the PRODUCT and SERVICES, to the extent
the PRODUCT and SERVICES are known to him, and PRINCIPAL INVESTIGATOR agrees
that he will continue to disclose any information which he learns of in these
areas to PALOMAR for so long as PALOMAR is funding his research in the field of
lasers for hair removal at GENERAL.
8.4 OTHER THAN WARRANTIES SET FORTH HEREIN, GENERAL MAKES NO WARRANTY,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO ANY PATENT, TRADEMARK, SOFTWARE, TRADE SECRET, TANGIBLE RESEARCH
PROPERTY, INFORMATION OR DATA LICENSED OR OTHERWISE PROVIDED TO PALOMAR
HEREUNDER AND HEREBY DISCLAIMS THE SAME.
9. TERMINATION
9.1 Unless otherwise terminated as provided for in this Agreement, the
license to PATENT RIGHT granted hereunder will continue until the last to expire
of any PATENT RIGHT, the claims of which but for this Agreement would be
infringed by the manufacture, use, practice or sale of any PRODUCT or SERVICE.
9.2 GENERAL shall have the right to terminate any license under U.S.
PATENT RIGHTS granted under this Agreement in the event that, after the FIRST
COMMERCIAL EXPLOITATION in the United States there is a continuous two (2) year
period in which no NET REVENUES are generated in the United States. With respect
to PATENT RIGHTS in any other country, GENERAL shall have the right to convert,
on a country by country basis, any exclusive license under PATENT RIGHTS granted
under this Agreement to a non-exclusive license upon written notice in the event
that, after the FIRST COMMERCIAL EXPLOITATION in a country there is a continuous
two (2) year period in any country in which no NET REVENUES are generated in
said country. Notwithstanding the foregoing, GENERAL shall not have the right to
terminate a license in the United States or convert an exclusive license to a
non-exclusive license in any other country, in the event that the generation of
NET REVENUES is prevented by force majeure, government regulation or
intervention, or institution of a law suit by any third party.
9.3 If either party shall fail to faithfully perform any of its
obligations under this Agreement except the due diligence milestones specified
in Section 3 herein, the nondefaulting party may give written notice of the
default to the defaulting party. Unless such default is corrected within thirty
(30) days after such notice, the notifying party may terminate this Agreement
and the license hereunder upon thirty (30) days prior written notice, provided
that only one such thirty (30) day grace period shall be
17
available in any twelve (12) month period with respect to a default of any
particular payment provision hereunder. Thereafter, at the option of the
non-defaulting party, notice of default of said provision shall constitute
termination.
9.4 In the event that any license granted to PALOMAR under this
Agreement is terminated, any sublicense under such license granted prior to
termination of said license shall remain in full force and effect, provided
that:
(i) the SUBLICENSEE is not then in breach of its sublicense agreement;
(ii) the SUBLICENSEE agrees to be bound to GENERAL as the licensor
under the terms and conditions of this sublicense agreement, as modified by the
provisions of this paragraph 9.4;
(iii) the SUBLICENSEE, at GENERAL's written request, assumes in a
signed writing the same obligations to GENERAL as those assumed by PALOMAR under
Articles 8 and 10 hereof;
(iv) GENERAL shall have the right to receive any payments payable to
PALOMAR under such sublicense agreement to the extent they are reasonably and
equitably attributable to such SUBLICENSEE's right under such sublicense to use
and exploit PATENT RIGHTS and/or TECHNOLOGICAL INFORMATION;
(v) any exclusive SUBLICENSEE agrees to be bound by the due diligence
obligations of PALOMAR pursuant to paragraph 3.1 hereof (whether set by the
parties or by arbitration) in the field and territory of the sublicense;
(vi) GENERAL has the right to terminate such sublicense upon fifteen
(15) days prior written notice to PALOMAR and such SUBLICENSEE in the event of
any material breach of the obligation to make the payments described in clause
(iv) of this paragraph 9.3, unless such breach is cured prior to the expiration
of such fifteen (15) day period, and shall further have the right to terminate
such sublicense in the event of SUBLICENSEE's failure to meet its due diligence
obligations pursuant to clause (v) hereof;
(vii) GENERAL shall not assume, and shall not be responsible to such
SUBLICENSEE for, any representations, warranties or obligations of PALOMAR to
such SUBLICENSEE, other than to permit such SUBLICENSEE to exercise any rights
to PATENT RIGHTS and TECHNOLOGICAL INFORMATION that are granted under such
sublicense agreement consistent with the terms of this AGREEMENT.
9.5 Upon termination of any license granted hereunder, PALOMAR shall
pay GENERAL all royalties due or accrued on the NET REVENUES up to and including
the date of termination. In the event of any termination, PALOMAR shall also
have the right to fill all
18
existing order for PRODUCTS, provided the royalties set forth herein are paid on
such orders. Further, in the event of any termination as a result either of a
default by GENERAL or as a result of the bankruptcy, insolvency, or other
termination of doing business by GENERAL, PALOMAR shall have the option of
maintaining the licenses granted herein in effect provided it continues to pay
royalties on NET REVENUES.
10. MISCELLANEOUS
10.1 This Agreement, including the Exhibits thereto, constitutes the
entire understanding between the parties with respect to the subject matter
hereof and all prior agreements, whether oral or written, are merged herein.
10.2 In order to facilitate implementation of this Agreement, GENERAL
and PALOMAR are designating the following individuals to act on their behalf
with respect to this Agreement for the matter indicated below:
(a) with respect to all royalty payments, any correspondence
pertaining to any PATENT RIGHT, or any notice of the use of
GENERAL's name, for GENERAL, Vice-President, Patents,
Licensing and Industry Sponsored Research, and for PALOMAR,
President; provided that correspondence relating to the
billing of patent costs shall be copied to, for GENERAL, the
Business Manager, Office of Technology Affairs, and for
PALOMAR, the President.
(b) any amendment of or waiver under this Agreement, any written
notice including progress reports or other communication
pertaining to the Agreement: for GENERAL, the Vice-President,
Patents, Licensing and Industry Sponsored Research, and for
PALOMAR, the President.
(c) the above designations may be superseded from time to time by
alternative designations made by: for GENERAL, the President
or the Senior Vice President for Research and Technology
Affairs, and for PALOMAR, the President.
10.3 This Agreement may be amended and any of its terms or conditions
may be waived only by a written instrument executed by the parties or, in the
case of a waiver, by the party waiving compliance. The failure of either party
at any time or times to require performance of any provision hereof shall in no
manner affect its rights at a later time to enforce the same. No waiver by
either party of any condition shall be deemed as a further or continuing waiver
of such condition or term or of any other condition or term.
10.4 This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
permitted assigns.
19
10.5 Any delays in or failures of performance by either party under
this Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the party
affected, including but not limited to: Acts of God; acts, regulations or laws
of any government; strikes or their concerted acts of worker; fires; floods;
explosions; riots; wars; rebellion; and sabotage. Any time for performance
hereunder shall be extended by the actual time of delay caused by such
occurrence.
10.6 Neither party shall use the name of the other party or of any
staff member, officer, employee or student of the other party or any adaptation
thereof in any advertising, promotional or sales literature, publicity or in any
document employed to obtain funds or financing without the prior written
approval of the party or individual whose name is to be used. For GENERAL, such
approval shall be obtained from the Director of Public Affairs. GENERAL agrees
to respond within ten (10) business days of GENERAL's receipt of any request for
approval under this paragraph, provided that such request is delivered to the
Director of Public Affairs, 000 Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxx, XX 00000
(Tel. #000-000-0000; fax #000-0000) and is prominently marked "Urgent -- Please
respond within ten days." GENERAL shall not unreasonably withhold its consent to
any use of its name which accurately and appropriately describes the
licensee-licensor relationship of the parties under this Agreement and of the
parties' participation in the Study conducted under the Clinical Trial
Agreement, and which does not imply directly or indirectly any endorsement by
General of any product or service. Company shall not unreasonably withhold its
consent to any use of its name which accurately and appropriately describes the
licensee-licensor relationship of the parties under this Agreement and the
parties' participation in the Study under the Clinical Trial Agreement.
10.7 This Agreement shall be governed by and construed and interpreted
in accordance with the laws of the Commonwealth of Massachusetts.
10.8 This Agreement shall not be assignable by GENERAL without
PALOMAR'S written consent except for the right to receive royalties or other
payments payable herein. PALOMAR may at its own discretion and without approval
by GENERAL transfer its interest or any part thereof under this Agreement to a
wholly-owned subsidiary or any assignee or purchaser of the portion of its
business associated with the manufacture and sale of PRODUCT or provision of
SERVICES. In the event of any such transfer, the transferee shall assume and be
bound by the provisions of this Agreement. Otherwise this Agreement shall be
assignable by PALOMAR only with the consent in writing of GENERAL.
20
10.9 For any and all claims, disputes, or controversies arising under,
out of, or in connection with this Agreement, except issues relating to the
validity, construction or effect of any PATENT RIGHT, which the parties shall be
unable to resolve within sixty (60) days, the party raising such dispute shall
promptly advise the other party of such claim, dispute, or controversy in a
writing which describes in reasonable detail the nature of such dispute. By not
later than five (5) business days after the recipient has received such notice
of dispute, each party shall have selected for itself a representative who shall
have the authority to bind such party and shall additionally have advised the
other party in writing of the name and title of such representative. By not
later than ten (10) business days after the date of such notice of dispute, such
representatives shall agree upon a third party which is in the business of
providing Alternative Dispute Resolution (ADR) services (hereinafter, "ADR
Provider") and shall schedule a date with such ADR Provider to engage in ADR.
Thereafter, the representatives of the parties shall engage in good faith in an
ADR process under the auspices of the selected ADR Provider, and each party
shall pay fifty percent (50%) of the ADR expenses. If within the aforesaid
thirty (30) business days after the date of the notice of dispute the
representatives of the parties have not been able to agree upon an ADR Provider
and schedule a date to engage in ADR, or if they have not been able to resolve
the dispute within thirty (30) business days after the termination of ADR, the
parties shall have the right to pursue any other remedies legally available to
resolve such dispute in either the Courts of the Commonwealth of Massachusetts
or in the United States District Court for the District of Massachusetts, to
whose jurisdiction for such purposes GENERAL and PALOMAR hereby irrevocably
consents and submits, provided that, with respect to royalties and payments to
be determined pursuant to Section 5 above, and due diligence obligations to be
determined in accordance with paragraph 3.1(a), the parties agree that, no later
than sixty (60) days after (a) they have failed to designate an ADR provider in
accordance with this paragraph or (b) the termination of ADR without resolution,
either party may demand in writing submitted to the other party that the dispute
be submitted to binding arbitration as provided for in the next succeeding
paragraph. Notwithstanding the foregoing, nothing in this Paragraph 10.9 shall
be construed to waive any rights or timely performance of any obligations
existing under this Agreement.
The parties agree that any dispute submitted to binding arbitration
shall be conducted in Boston, Massachusetts under the then prevailing rules of
the American Arbitration Association ("AAA") before a single arbitrator agreed
upon by both parties within twenty (20) days after the serving of a demand for
arbitration. In the event the parties fail to select an arbitrator within the
required time period, the arbitrator shall be selected in accordance with the
rules of the AAA. Each party shall pay fifty percent (50%) of the AAA
arbitration expenses.
21
10.10 If any provision(s) of this Agreement are or become invalid, are
ruled illegal by any court of competent jurisdiction or are deemed unenforceable
under then current applicable law from time to time in effect during the term
hereof, it is the intention of the parties that the remainder of this agreement
shall not be effected thereby, provided the Agreement without such provision is
still operative to accomplish its intended functions. It is further the
intention of the parties that in lieu of each such provision which is invalid,
illegal or unenforceable, there be substituted or added as part of this
Agreement a provision which shall be as similar as possible in economic and
business objectives as intended by the parties to such invalid, illegal or
enforceable provision, but shall be valid, legal and enforceable.
THE PARTIES have duly executed this Agreement as of the date first
shown above written.
PALOMAR THE GENERAL HOSPITAL CORPORATION
BY /s/ Xxxxxxx X. Xxxxxxxx BY /s/ Xxxxxx X. Xxxxxxx, XX
------------------------- -----------------------------
TITLE President TITLE VP Patents, Licensing
and Industry Sponsored
Research
DATE August 18, 1995 DATE August 18, 1995
22
EXHIBIT A
EXHIBIT A
CLINICAL TRIAL AGREEMENT
Agreement made this 18th day of August, 1995 ("Effective Date") between
The General Hospital Corporation, a not-for-profit corporation doing business as
Massachusetts General Hospital, having a principal place of business at Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 ("General"), R. Rox Xxxxxxxx, M.D.
("Principal Investigator"), Xxxxxxx Laboratories of Photomedicine, Massachusetts
General Hospital, Xxxxxx, Xxxxxxxxxxxxx 00000 ("Principal Investigator") and
Palomar Medical Technologies, a Delaware corporation having an office at 00
Xxxxxx Xxxx Xxxxx, Xxxxxxx, XX 00000 ("Palomar").
Whereas, Xx. Xxxxxxxx has conducted clinical research on, and General
has filed a patent application relating to, the use of lasers for the removal of
hair (the "Field") for which an exclusive license to Palomar has been executed
as of the Effective Date hereof (the "License Agreement");
Whereas, all of the parties to this Agreement share a common mission of
improving the public health by engaging in research for the purpose of
discovering and making available to the public new and improved medical drugs
and devices.
Whereas, in connection with this mission, Palomar desires to use the
data already generated by Xx. Xxxxxxxx and to have further clinical research
conducted on its device described below and General and Xx. Xxxxxxxx, having
particular expertise and opportunity, desire to provide this research.
Accordingly, the parties agree as follows.
SECTION 1: STUDY PERFORMANCE
1.1 PROTOCOL Subject to approval by General's Institutional Review
Board ("IRB") Principal Investigator agrees to conduct a clinical study of a
ruby laser device furnished by Palomar (hereinafter referred to as the "Study
Device, and together with any other devices provided by Palomar in accordance
with paragraph 1.4, as the "Study Device(s)") in accordance with the study
protocol attached hereto as Schedule A and including any changes to such
protocol as may be required by General's IRB (which protocol and any other
protocol added hereto in accordance with paragraph 1.4 are hereinafter referred
individually to as the "Study" and collectively as the "Studies."). In the event
of any conflict between Schedule A and the provisions of this Agreement, the
provisions of this Agreement shall govern.
1.2 STUDY REVIEW Principal Investigator shall conduct the Studies at
General with the prior approval and ongoing review of all appropriate and
necessary review authorities and in accordance with all applicable federal,
state and local laws and regulations. Principal Investigator shall, when
applicable, provide Palomar with written evidence of review and approval of the
Studies by General's IRB prior to the initiation of the Studies and shall inform
Palomar of the IRB's continuing review promptly after such review takes place,
which shall be at least once per year. All volunteers shall meet the legal age
requirements of the Commonwealth of Massachusetts, the state in which the Study
is to be conducted.
1.3 STUDY DEVICES Palomar agrees to support the Study by delivering the
Study Devices, placing such Study Devices in proper operating condition for the
conduct of the Study, and maintaining such Study Devices in such operating
condition during the term of this Agreement, all at no charge to General.
General and Principal Investigator shall have no liability for any failure to
fulfill their obligations as a result of unavailability of a Study Device. Study
Devices will remain Palomar's property unless otherwise agreed. The General and
Principal Investigator shall safeguard such property with the degree of care
used for its own property and, in accordance with Palomar's instructions at any
time, shall return or otherwise dispose of all such property. General and
Principal Investigator shall not use any Study Device for any purpose other than
the Study, unless otherwise agreed.
1.4 SECOND YEAR STUDY On or before July 1, 1996, Principal Investigator
shall submit to Palomar a study protocol for an additional one year clinical
study pertaining to the use of a Study Device provided by Palomar for hair
removal, and a budget attendant thereto, which shall not exceed Two Hundred and
Thirty Thousand Seven Hundred and Sixty Seven Dollars ($230,767). Palomar shall
have the opportunity to review and comment on such proposal. Upon approval of
Palomar and General's IRB, said protocol shall be attached hereto and the study
described therein shall be a Study hereunder subject to the terms and conditions
of this Agreement, and payments therefore shall be made as set forth in the
proposal or as otherwise agreed by the parties in writing. It is the intent of
the parties that said Study shall commence or before September 1, 1996.
1.5 STUDIES AT OTHER SITES
a. Palomar agrees to use best efforts to sponsor Dr. Xxxxxxx
X. Xxxxxxxx in New York City, New York, to conduct a clinical trial of hair
removal using a diode laser provided by Palomar.
b. Principal Investigator shall be consulted in the selection
of other sites and investigators participating in clinical trials of hair
removal using laser devices provided by Palomar.
SECTION 2: RESULTS OF THE STUDY; INVENTIONS
2.1 OWNERSHIP OF RECORDS, DATA AND INTELLECTUAL PROPERTY Palomar shall
own its case report forms and the data resulting from the Study. General shall
own its medical records, research notebooks and related documentation and any
intellectual property resulting from the Studies subject to paragraph 2.3 below
regarding Inventions. General shall have the right to use the data for research,
educational and patient care purposes as well as to comply with any federal,
state or local government laws or regulations. In recognition of Palomar's
legitimate business interest in keeping unpublished research results from being
made available to its commercial competitors, General and Principal Investigator
agree that they shall not knowingly:
(i) disclose the research results to third party commercial
entities in a form or in sufficient detail suitable for use to
obtain pre-marketing approval from the FDA prior to a
publication of the Study; and
(ii) provide the case report forms to third party commercial
entities.
Notwithstanding the above, the Palomar shall not use any patient names, or
identifying information, photographs, or other likenesses without first
obtaining the specific written informed consent of such patient for such use,
except for purposes of obtaining FDA approval.
2.2 PUBLICATION The Principal Investigator shall be free to publish the
results of the Studies subject only to the provisions of Section 3 regarding
Palomar's Proprietary Information. The Principal Investigator shall furnish
Palomar with a copy of any proposed publication for review and comment prior to
submission for publication, at least thirty (30) days prior to submission for
manuscripts and at least seven (7) days prior to submission for abstracts. At
the expiration of such thirty (30) day or seven (7) day period, Principal
Investigator may proceed with submission for publication provided, however, that
upon notice by Palomar within said thirty (30) or seven (7) day period that
Palomar reasonably believes a patent application
claiming an Invention (as defined in paragraph 2.3) should be filed prior to
such publication, such submission for publication shall be delayed until any
patent application or applications have been filed by General, pursuant to
paragraph 2.3.
2.3 INVENTIONS The Principal Investigator and any other General
personnel performing the Study under his direction ("Investigators") who makes
an invention in the performance of the Study (" Study Invention") shall promptly
report and assign such Study Invention to General. General shall promptly
disclose in writing any Inventions to Palomar. Within sixty (60) days of Palomar
receiving an enabling disclosure from General (except in the case of any
disclosure received by Palomar in a proposed publication, to which Palomar shall
have an obligation to respond within the time periods designated in paragraph
2.2 above), Palomar shall notify General in writing if it wishes General to file
a patent application claiming the Study Invention at Palomar's expense. Any such
application shall be added as a Patent Right under the License Agreement and to
the extent General has ownership rights in the Study Invention by virtue of an
assignment by an Investigator hereunder, such Patent Right shall be treated in
accordance with the terms of such License Agreement. In the absence of such
notice, General shall be free to license such patent application to any third
party on any terms.
2.4 FURTHER RESEARCH
(a) Investigators shall be free at any time to seek and accept
funding for any research in the Field, from any state or federal agency, private
or public foundation except foundations owned or operated by a commercial entity
other than Palomar ("Non-Profit Sponsored Study"). In the event that during the
term of this Agreement an Investigator makes an invention in the Field and in
the performance of any Non-Profit Funded Study, General agrees to give Palomar
prompt notice of said invention and to give Palomar an opportunity to negotiate
an exclusive license under General's rights in said invention assigned to
General by an Investigator, it being understood that General shall have no
obligation to enter into such a license with Palomar.
(b) In the event that an Investigator during the term of this Agreement
or for six (6) months thereafter wishes to seek funding from any for profit
entity for additional research in the Field (it being understood that for
funding sought during the term of this Agreement or any extension hereof such
additional research will be research other than that which is described in the
study protocols appended hereto as Schedule A), said Investigator shall do so in
accordance with this paragraph. The
Investigator shall submit to Palomar a description of such additional research
and a budget of the costs to be funded by Palomar and a schedule of payment of
such costs. Unless the parties shall otherwise agree in writing, negotiations
between them over any such proposal shall not extend beyond the sixtieth (60)
day next following the date when the proposal shall have first been so made.
(c) Whenever such negotiations shall end without agreement between the
parties to proceed with the proposed research, the party proposing the
additional research may go ahead without the other party and seek funding from
any other sponsor including but not limited to a commercial sponsor for such
proposal, so long as the subject matter of the proposal is not so closely
related scientifically to the Study that sponsorship of such proposal by such
other commercial sponsor (i) would in the opinion of General's Trustee's
Committee on Technology Affairs after consultation with Palomar create a
conflict of interest for General or any Investigator performing the Study or
(ii) would conflict with the terms and conditions of this Agreement. It is
understood that, in the event that General proceeds to seek support from such
other commercial sponsor, for a period of one year after first offering said
proposal to Palomar, General shall not enter into an agreement with a third
party to fund such proposal upon more favorable financial terms than those
offered to Palomar without first offering Palomar the more favorable terms.
(d) When such proposal is accepted by the General and Palomar, it shall
be appended hereto as an additional study protocol and shall be subject to the
terms and conditions of this Agreement unless otherwise specified, and the Study
described therein shall commence and budgeted amounts shall be paid as set forth
in the proposal. In the event that the parties reach agreement under this
paragraph 2.4 (d) on a proposal for a non-clinical study, the parties will
execute a separate agreement pertaining to said study, it being the intent of
the parties that the terms and conditions of said non-clinical study be
substantially the same as those of this agreement, subject to the policies of
General in effect at the time with respect to non-clinical sponsored research.
The budgeted amounts paid by Palomar in support of any such clinical or
non-clinical study shall be credited toward the sums made available to General
pursuant to paragraph 2.4(e) and 4.3.
(e) On or before both September 1, 1997 and September 1, 1998, Palomar
shall make grants to General as described in paragraph 4.3 for research of
mutual interest to General and Palomar and to be conducted in the Xxxxxxx
Laboratories of
Photomedicine under the direction of Dr. R. Rox Xxxxxxxx, or any other
investigator at General mutually agreeable to General and Palomar, it being
understood that said grants may be used to support further research in the
Field. Said research and the budgets attendant thereto shall be agreed upon in
writing by General and Palomar prior to the commencement of said research. In
the event that General and Palomar reach agreement under this paragraph on a
proposal and budget for a clinical study in the Field, said study shall become a
Study hereunder and subject to terms and conditions as this Agreement. In the
event that General and Xxxxxxx reach agreement under this paragraph on a
proposal and budget for a clinical study outside the Field, it is the intent of
the parties that said study be subject to terms and conditions substantially the
same as this Agreement. In the event that General and Xxxxxxx reach agreement
under this paragraph on a proposal for a non-clinical study, it is the intent of
the parties that the terms and conditions of said non-clinical study be
substantially the same as those of this agreement, subject to the policies of
General in effect at the time with respect to non-clinical sponsored research.
2.5 USE OF NAME No party to this Agreement shall use the name of any
other party or of any staff member, employee or student of any other party or
any adaptation, acronym or name by which any party is commonly known, in any
advertising, promotional or sales literature or in any publicity without the
prior written approval of the party or individual whose name is to be used. For
General, such approval shall be obtained from the Director of Public Affairs and
for Palomar, from the President. GENERAL agrees to respond within ten (10)
business days of GENERAL's receipt of any request for approval under this
paragraph, provided that such request is delivered to the Director of Public
Affairs, 000 Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxx, XX 00000 (Tel.
#000-000-0000; fax #000-0000) and is prominently marked "Urgent -- Please
respond within ten days." General shall not unreasonably withhold its consent to
any use of its name which accurately and appropriately describes parties'
participation in the Study conducted under this Clinical Trial Agreement, and
which does not imply directly or indirectly any endorsement by General of any
product or service. Company shall not unreasonably withhold its consent to any
use of its name which accurately and appropriately describes the relationship of
the parties under this Agreement and the scope and nature of the parties'
participation in the Study under the Clinical Trial Agreement.
2.6 STUDY RECORDS General shall make Study records available to Palomar
representatives upon request for comparison
with case report forms. General shall also make such records available upon
reasonable request for review by representatives of the U.S. Food and Drug
Administration. General shall retain records of the Studies including either the
original or a copy of all volunteer consent forms in conformance with applicable
federal regulations. Palomar shall notify Principal Investigator of the date the
required approval (e.g., 510K, Pre-Market Approval application (PMA)) is
received for a Study Device; or if the application is not approved, Palomar
shall notify Principal Investigator when all clinical investigations of the
Study Devices have been discontinued and the FDA notified.
2.7 USE OF DATA GENERATED UNDER PRIOR STUDY Principal Investigator
shall provide to Palomar the data generated in the prior clinical trial
referenced in the introduction to this Agreement ("Prior Data") and Palomar
shall pay General for such data in accordance with paragraph 4.2 as
reimbursement to General for its expenses in generating such data. General
grants to Palomar the right to use the Prior Data for submission to the FDA for
approval of the use of a laser device for hair removal, provided that Palomar
shall not use any patient names, or identifying information, photographs, or
other likenesses without first obtaining the specific written informed consent
of such patient for such use.
SECTION 3: PALOMAR PROPRIETARY INFORMATION
3.1 It is anticipated that in the performance of the Studies, Palomar
shall provide to General, Principal Investigator and other General personnel who
are designated in writing by the Principal Investigator as being authorized to
receive Proprietary Information and who agrees in writing to the following
confidentiality obligations (each such institution or person individually
referred to in this paragraph 3.1 as "a Recipient" and collectively as
"Recipients"), or shall give Recipients access to, certain information which the
Palomar considers proprietary. The rights and obligations of the parties with
respect to such information are as follows:
(a) For the purposes of this Agreement, "Proprietary Information"
refers to information of any kind which is disclosed by Palomar to a Recipient
and which, by appropriate marking, is identified as confidential and proprietary
at the time of disclosure. In the event that proprietary information must be
provided visually or orally, obligations of confidentiality shall attach only to
that information which is confirmed by Palomar in writing within twenty (20)
working days as being confidential.
(b) For a period of five (5) years after the Effective Date of this
Agreement, each Recipient agrees to use reasonable efforts, no less than the
protection given their own confidential information, to use Proprietary
Information received from the Palomar and accepted by that Recipient only in
accordance with this paragraph 3.1(b).
(i) Each Recipient shall use the Palomar's Proprietary Information
solely for the purposes of conducting the Study, obtaining any required
review of the Study or its conduct, or ensuring proper medical
treatment of any patient or subject. Each Recipient agrees to make
Proprietary Information available only to those employees and students
of General who require access to it in the performance of this Study
and to inform them of the confidential nature of such information.
(ii) Except as provided in subsection 3.1(b)(i), each Recipient shall
keep all Proprietary Information confidential unless the Palomar gives
specific written consent for release.
(iii) If any Recipient becomes aware of any disclosure not authorized
hereunder, that Recipient shall notify Palomar and take reasonable
steps to prevent any further disclosure or unauthorized use.
(c) No Recipient shall be required to treat any information as
Proprietary Information under this Agreement in the event: (i) it is publicly
available prior to the date of the Agreement or becomes publicly available
thereafter through no wrongful act of any Recipient; (ii) it was known to any
Recipient prior to the date of disclosure or becomes known to any Recipient
thereafter from a third party having an apparent bona fide right to disclose the
information; (iii) it is disclosed by any Recipient in accordance with the terms
of the Palomar's prior written approval; (iv) it is disclosed by Palomar without
restriction on further disclosure; (v) it is independently developed by any
Recipient; or, (vi) any Recipient is obligated to produce it pursuant to an
order of a court of competent jurisdiction or a facially valid administrative,
Congressional or other subpoena, provided that the Recipient subject to the
order or subpoena (A) promptly notifies the Palomar and (B) cooperates
reasonably with the Palomar's efforts to contest or limit the scope of such
order.
SECTION 4: PAYMENTS
4.1 (a) Palomar agrees to support the agreed expenses of the Study
appended hereto on the Effective Date with a research
grant of Two Hundred Seventeen Thousand Six Hundred and Sixty Seven Dollars ($
217,667) which includes indirect costs and indirect costs attendant thereto.
Agreed expenses by Palomar are enumerated in attached Schedule B, and are
payable as follows:
Fifty percent (50%) equalling One Hundred Eight Thousand Eight Hundred
and Thirty Three Dollars ($ 108,833) upon execution of this Agreement
by all parties.
Twenty Five Percent (25%) equalling Fifty Four Thousand Four Hundred
and Seventeen Dollars ($54,417) upon initial radiation of twenty five
(25) patients in the Study.
Twenty Five Percent (25%) equalling Fifty Four Thousand Four Hundred
and Seventeen Dollars ($54,417) upon completion of the study and notice
thereof to Palomar.
(b) Palomar agrees to support the expenses of the Study to be performed
pursuant to paragraph 1.4 hereof, with a grant of Two Hundred and Thirty
Thousand Seven Hundred and Sixty Seven Dollars ($230,767) to be paid in
accordance with the terms of said paragraph.
(c) General agrees to keep complete records of expenses incurred in
performing the studies and Palomar shall have a right to audit such records at
the place where such records are maintained, or at another location mutually
agreeable to the parties, on reasonable notice to General provided such audit
shall be conducted no more than twice during any twelve (12) month period. To
the extent such audit reveals an error in amounts paid, the parties agree that
suitable adjustments will be made.
4.2 Pursuant to paragraph 2.7, Palomar shall pay General for Prior Data
the sum of Sixty Eight Thousand Five Hundred Dollars ($68,500) within thirty
(30) days of the date on which the last party signs this Agreement.
4.3 On or before both September 1, 1997 and September 1, 1998, Palomar
shall make grants to General of Two Hundred Thousand Dollars ($200,000) per year
to be used in accordance with paragraph 2.4(e) hereof.
4.4 Checks should be made payable to "The General Hospital Corporation"
and sent, along with a letter indicating the name of the Principal Investigator
and Project Number (#5950) for which the funds are intended, to:
Vice President for Patents, Licensing and
Industry Sponsored Research
Office of Technology Affairs
Massachusetts General Hospital
Thirteenth Street, Building 149, Suite 1101
Xxxxxxxxxxx, XX 00000
SECTION 5: TERM AND TERMINATION
5.1 (a) The term of this Agreement shall be until the completion of the
Studies, which is anticipated to be two (2) year(s) from the Effective Date,
unless terminated in accordance with paragraph 5.2 or 5.3, or unless continued
in accordance with paragraph 2.4 (e) above.
5.2 Any party hereto shall have the right to terminate any Study
hereunder in the event that the emergence of any adverse reaction or side effect
with the Study Device is of such magnitude or incidence, in the opinion of such
party, to support termination.
5.3. If either party shall substantially fail faithfully to perform any
of its obligations under this Agreement, the nondefaulting party may give
written notice of the default to the defaulting party. Unless such default is
corrected within sixty (60) days after such notice, the notifying party, upon
thirty (30) days prior written notice may terminate this Agreement, provided
that only one such sixty (60) day grace period shall be available in any twelve
(12) month period with respect to a default of any particular provision
hereunder.
5.4 Any delays in or failures of performance by either party under this
Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the party
affected, including but not limited to: Acts of God; acts, regulations or laws
of any government; strikes or other concerted acts of workers; fires; floods;
explosions; riots; wars; rebellion; and sabotage; and any time for performance
hereunder shall be extended by the actual time of delay caused by such
occurrence, provided the affected party has used reasonable efforts to overcome
the cause of delay.
5.5 The obligations of the parties under Sections 2, 3 and 6 shall
survive the termination or expiration of this Agreement.
SECTION 6: INDEMNIFICATION AND INSURANCE
6.1 INDEMNIFICATION (a) Palomar shall indemnify, defend and hold
harmless General and its trustees, officers,
medical and professional staff, employees, and agents and their respective
successors, heirs and assigns (the "Indemnitees"), against any liability,
damage, loss, or expense (including reasonable attorney's fees and expenses of
litigation) incurred by or imposed upon the Indemnitees or any one of them in
connection with any claims, suits, actions, demands or judgements arising out of
any theory of product liability (including, but not limited to, actions in the
form of tort, warranty, or strict liability) concerning a Study Device or any
modification thereof including any side effect or adverse reaction, illness or
injury attributable to a Study Device and occurring to any person involved in
such Study, provided Palomar shall have no obligation to indemnify, defend and
hold harmless Indemnitees under this paragraph to the extent that such claim,
suit, action, demand or judgement is attributable to any modification to a Study
Device that is physically made by an Indemnitee without the permission of
Palomar. General agrees to notify Palomar promptly of any such claim, suit,
action, demand or judgement and General and Principal Investigator agree to
reasonably cooperate with Palomar in the handling thereof.
(b) Palomar's indemnification under (a) above shall not apply to any
liability, damage, loss or expense to the extent that it is attributable to the:
(i) negligent activities, reckless misconduct or intentional misconduct of the
Indemnitees; or (ii) failure of the Indemnitees to adhere to the terms of the
protocol for a Study.
(c) Palomar agrees, at its own expense, to provide attorneys reasonably
acceptable to the General to defend against any actions brought or filed against
any party indemnified hereunder with respect to the subject of indemnity
contained herein, whether or not such actions are rightfully brought.
(d) Company also agrees to reimburse General for the costs of the care
and treatment of any illness or injury to a subject resulting from his or her
participation in a Study arising under any theory of product liability
pertaining to a Study Device to the extent that such costs are not covered by
the subject's medical or hospital insurance or governmental programs providing
such coverage provided, however, that Company's obligation under this paragraph
6.1(d) shall not apply to any such illness or injury to the extent that it is
attributable to the negligence, reckless misconduct or intentional misconduct of
the Indemnitees or the failure of the Indemnitees to adhere to the terms of the
protocol for a Study.
6.2 INSURANCE (a) At such time as a Study Device or any modification
thereof is being commercially distributed or sold (other than for the purpose of
obtaining regulatory approvals) by Palomar or by a licensee, affiliate or agent
of Palomar, Palomar shall, at its sole cost and expense, procure and maintain
commercial general liability insurance in amounts not less than $2,000,000 per
incident and $2,000,000 annual aggregate and naming the Indemnitees as
additional insureds. Such commercial general liability insurance shall provide
(i) product liability coverage and (ii) broad form contractual liability
coverage for Palomar's indemnification under paragraph 6.1 of this Agreement. If
Palomar elects to self-insure all or part of the limits described above
(including deductibles or retentions which are in excess of $250,000 annual
aggregate) such self-insurance program must be acceptable to the General and the
Risk Management Foundation of the Harvard Medical Institutions, Inc. The minimum
amounts of insurance coverage required under this paragraph 6.2 shall not be
construed to create a limit of Palomar's liability with respect to its
indemnification under paragraph 6.1 of this Agreement.
(b) Palomar shall provide General with written evidence of such
insurance upon request of General. Palomar shall provide General with written
notice at least fifteen (15) days prior to the cancellation, non-renewal or
material change in such insurance.
(c) Palomar shall maintain such commercial general liability insurance
during (i) the period that the Study Drug or any modification thereof is being
commercially distributed or sold (other than for the purpose of obtaining
regulatory approvals) by Palomar or by a licensee, affiliate or agent of Palomar
and (ii) a reasonable period after the period referred to in (c)(i) above which
in no event shall be less than fifteen (15) years.
SECTION 7: MISCELLANEOUS
7.1 The terms of this Agreement can be modified only by a writing which
is signed by General, Principal Investigator and Palomar.
7.2 The provisions of this Agreement shall be interpreted under the
laws of the Commonwealth of Massachusetts.
7.3 No party to this Agreement may assign its obligations hereunder
without the prior written consent of the other parties.
7.4 This Agreement constitutes the entire understanding between the
parties, and supersedes and replaces all prior
agreements, understandings, writings and discussions between the parties, with
respect to the subject matter of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
Palomar THE GENERAL HOSPITAL CORPORATION
(Federal Tax ID No.: 042 697 983)
BY: /s/ Xxxxxxx X. Xxxxxxxx BY: /s/ Xxxxxx X. Xxxxxxx
----------------------- -----------------------------
TITLE: President TITLE: Vice President For Patents,
Licensing And Industry
Sponsored Research
DATE: August 18, 1995 DATE: August 18, 1995
PRINCIPAL INVESTIGATOR
/s/ R. Rox Xxxxxxxx
------------------------------
R. Rox Xxxxxxxx, M.D.
DATE: August 18, 1995
SCHEDULE A
Evaluation of a Pulsed Laser System for Selective
Destruction of Hair Follicles
R. Rox Xxxxxxxx, NID
Xxxx A- Xxxxxxx, NID
Xxxxxxxxx Diericky, NM
OVERVIEW AND BACKGROUND:
Unwanted excess growth of tem-dnal (coarse) hair due to endocrine
disorders, tumors, drugs, or heredity is a significant cosmetic problem. In the
extreme of hirsutism, abnormal hair growth is disfiguring. Removal of hair from
skin grafts is a problem also. However, the vast majority of people who dislike
excess hair do not have a medical or iatrogenic problem. Removal of hair is
easily done temporarily by shaving or by epilation with wax or various devices.
Permanent hair removal is traditionally done with electrolysis in which a
negative electrode is inserted into each follicle individually. Electrolysis is
painful, tedious, expensive, and often ineffective. The average number of
treatments per follicle is about 6. An altemative, more effective, safe, less
tedious method is needed. Selective photothermolysis using laser pulses may
offer this method.
In a previous study (MGH accession # 937286) we showed that
normal-mode ruby laser PULSES ARE effective and well tolerated for producing
selective destruction of hair follicles in normal adult caucasians with xxxxx or
black hair. Based on the principles of selective photothermolysis, and confirmed
in an in-vitro study prior to human studies, we chose a wavelength and pulse
duration which "targets" melanin in the hair follicles. Because melanin is also
present in the epidermis, a handpiece for laser light delivery was devised which
tends to spare the epidermis, while maximizing light intensity deep in the
dermis where the follicles are. MGH filed a patent on this device, which will be
licensed under an agreement with Palomar, Inc, who will be supporting this human
study.
In the first human study, 200 gs, 694nm ruby laser pulses were
delivered to shaved vs. EPILATED sites on the back or extremities, in a range of
fluences. The exposures were moderately painful but typically tolerated without
local anesthesia (which itself is painful). No significant adverse events
occured (e.g. ulceration, scarring, depigmentation). In all subjects, there was
a fluence-dependent growth delay of approximately 6 months for regrowing hairs
in the exposure SITES. At the highest fluence, 6 months after exposure there was
an average of about 30% permanent hair loss. There was no significant difference
between epilated and shaved sites, suggesting that the hair shaft itself is not
important for light absorption. Hypopigmentation was NOTED in most subjects, and
was transient.
THE STUDY PROPOSED HERE:
- Uses a longer pulse duration, to better match follicle thermal
relaxation times.
- Examines response to more than one treatment, given 4 weeks apart.
- Tests the hypothesis that hair growth cycle (anagen, telogen, catagen
phase) affects response.
- Provides treatment of a hair-bearing area of concern to the subject,
based on response in each subject's test sites.
SUBJECTS:
EXCLUSIONS:
Fifty (50) adults with xxxxx or black hair present on the back or legs.
Keloid history, pregnant, history of radiation treatment or surgery to
test or treatment sites, active infections, hypersensitivity to retin-A,
hydroquinone, or mupincin.
LASER AND DELIVERY DEVICE:
A normal-mode ruby laser (Spectrum, Inc.) emitting up to 30 J pulses at
1-5 ms pulse duration,~Arill be used. Pulses are delivered through an optical
handpiece which provides refractive index matching, cooling to -10*C, a
convergent entrance beam at the skin surface, and compression of the skin.
The optical manipulations maxirnize delivery of light deep into the
xxxx-iis; cooling raises the tolerated fluence, provides partial anesthesia, and
spares the epidermis by conduction during LASER PULSE DELIVERY; compression
decreases the distance to the deep follicular papillae and drives blood away,
eliminating a competing chromophore. We have established that under these
conditions, the primary site of photothermal injury is the pigmented hair
follicles, all the way down to their deep papillae.
PROTOCOL:
MAPPING AND DETERMINATION OF HAIR GROWTH CYCLES.
One month prior to laser exposures, ten test areas of 5x5 cm, each
containing about 100200 follicles, will be mapped on the thighs or back. The
sites will be clipped, using a xxxxxx'x clipper such that the hairs are all 3 mm
long. Digtal images with a CCD camera and COMPUTER FRAME-CAPTURE BOARD WILL THEN
BE taken at a normal angle of incidence, to record the position and length of
each hair in each test area. The same sites will be imaged again prior to laser
exposure. Anagen hairs will be identified as those with active growth (much
greater than 3 nun length) between the two sets of images. The images will also
provide a permanent record of follicle density, hair shaft density, and
individual follicle locations.
PRE-TREATMENT WITH RETIN-A, HYDROQUINONE:
For one month prior to laser exposures, a standard regimen of 0. 1%
retin-A cream and 4% hydroquinone cream will be applied daily by each subject to
the test sites. Retin-A causes increased epidermal turnover and as a
pre-treatment improves wound healing. Hydroquinone decreases epidermal
pigmentation without influencing follicular pigmentation. Subjects will also be
instructed to avoid sun exposure to the test areas before and during this study.
Retin-A can be irritating with prolonged use, and will be discontinued in any
subject experiencing irritation at the application sites.
LASER EXPOSURES AND FLUENCES:
Subjects and investigators will wear laser protective eyewear. Eight
sites will be shaved before laser exposures, two sites will be wax-epilated, and
all will be cleaned with isopropanol. Laser exposures will be administered in
contiguous exposure spots covering each of the test areas, at a maximim of 1 Hz,
according to the table below. Three fluences will be tested in each subject,
beginning with 25, 50, and 75 j/CM2 as shown in the table below. Fluence may be
increased to 50, 75 and 100 j/CM2 'based on evaluation of response in the first
three subjects. Specifically, the fluence range will be increased if there is no
erosion, ulceration, scarring, or depigmentation at the one-month followup
visit. Based on the same criteria, fluence may be increased again to 75, 100,
and 125 j/CM2 following evaluation of the second set of three subjects.
Local anesthesia will be offered, using 2% xylocaine with epinephrine,
given by intradermal injections around each site. In our experience anesthesia
will not be routinely needed, but will always be offered for the subjects'
comfort.
Subjects will return 1 month after the first set of laser exposures for
evaluation and a second set of exposures. Each skin site will be photographed
and digitally imaged using the CCD camera system. Responses will also be scored
visually for changes in pigmentation, inflammation, hair reqrowth, and textural
changes, using an arbitrary scale shown in a table below. After evaluations are
recorded, a second series of exposures will be performed in those test sites to
be treated twice (see table).
LASER EXPOSURES TABLE
Test sites
(back or thigh) Single treatment 2 treatments at 1 month interval
75 J/cn-L2 75 J/cm2
50 J/cm2 50 J/cm2
25 J/cm2 25 J/cm17
75 J/cm2 75 J/cm2
epilated epilated
75 J/cm2 75 J/cm2
2 passes 2 passes
SINGLE-TREATMENT:
A treatment may be performed in a site up to 100 cm2 with excess hair
growth of concem to the subject, using the maximum tolerated fluence according
to test site results. We do not expect to see scarring, ulcreation, or
depigmentation. However, if any of these unwarranted effects do occur, the
treatment fluence will be less than that causing these responses. Skin
preparation, anaesthesia, exposure techniques, and post-exposure care will be
identical to that of the test sites.
POST-EXPOSURE SKIN CARE:
After the laser exposures, mupircin ointment (Bactroban) will be
applied and a sterile dressing applied. Subjects will be instructed to gently
cleanse the sites with warrn water and mild soap (e.g. Dove), and to re-apply
mupiricin ointment twice a day until any weeping or crusting has subsided.
Subjects will also be asked to avoid sun exposure, which can cause
hyperpigmentation.
RESPONSE GRADING (SUBJECTIVE SCALE)*
--------------------------------------------------------------------------------
hair regrowth | none | sparse | moderate | full
-------------------------|---------|---------------|--------------|-------------
hypigmentation | absent | present | |
-------------------------|---------|---------------|--------------|-------------
hyperpigmentation | absent | present | |
-------------------------|---------|---------------|--------------|-------------
depigmentation | absent | present | |
-------------------------|---------|---------------|--------------|-------------
erythema | none | mild | moderate | violaceous
-------------------------|---------|---------------|--------------|-------------
edema | none | mild | moderate | tumescent
-------------------------|---------|---------------|--------------|-------------
textural change | none | mild | moderate | severe
(includes scarring) | | | |
-------------------------|---------|---------------|--------------|-------------
ulceration | absent | present | |
--------------------------------------------------------------------------------
* objective and quantitative endpoints are also included in this study
FOLLOW-UP SCHEDULE:
Hair regrowth and skin response will be recorded at I month, 3 months and 6
months after exposures in all test and treatment sites.
FLOW CHART OF SUBJECT VISITS
Month 0 Evaluation, consent and entry into study. Mapping, clipping and
imaging of 10 test sites. Retin-A, hydroquinone, sun avoidance
instructions
Month 1 Mapping and imaging of test sites. Shave, anesthetize if necessary.
Laser exposures per protocol. Wound dressing and wound care
instructions. Retin-A, hydroquinone, sun avoidance for site.
Month 2 Mapping.and imaging of test sties. Response recording (subjective).
Mapping and recording of treatment site. Laser exposures per protocol
(test and treatment sites). Wound care and wound care instructions.
MONTH 3 MAPPING, imaging AND recording of responses.
Month 6 Mapping, imaging and recording of responses.
Month 9 Mapping, imaging and recording of responses. Conclusion of study.
Subject REMUNERATION ($500).
DATA ANALYSIS:
Hair follicle counts, growth cycle and shaft diameter will be determined from
digital imaging prior to laser exposure. The site subject to wax epilation
serves primarily as a control for the presence of hair shafts at the time of
exposure, but will also produce a direct measure of hair follicle depth, by
measuring the depth from skin surface, to the papillae of the epilated hairs.
Responses graded subjectively and objectively (digital imaging) will be
correlated against laser fluence and number of treatments. Computer mapping of
regrowing hair against the baseline hair follicle images will be used to
determine the relative sensitivity of amagen vs. telogen/catagen follicles. Data
at I month, 3 months, and 6 months will be compared to establish growth delay
patterns and the fraction of regrowing hairs, as a function of exposure
conditions. Changes in hair shaft diameter for those hairs which regrow will
also be compared against baseline values.
RISKS:
The goal of this study is to selectively and permanently destroy hair follicles.
Alopecia (baldness) may result in the test areas and in the treatment area. As
with any form of tissue destruction, there is a risk of infection and/or
scarring, which is minin-dzed by proper wound care. In a previous human study of
this hair removal technique, there was no scarring seen in approximately 100
test sites. Therefore, the risk of scarring appears to be low. Laser exposures
can also cause temporary or permanent changes in skin pigmentation (skin color).
A transient decrease in skin pigmentation occurred in all of those treated
previously, lasting about 3 months. This is more noticable in darker skin.
Permanent lightening or darkening of skin color is a possibility, which HAS NOT
been observed. The laser removes freckles and common xxxxx "moles" permanently.
In people with extensive freckling, this can cause a color change. New freckles
will eventually form in laser-treated skin, but may take years to do so.
BENEFITS:
The subjects may or may not benefit from removal of unwanted hair in the test
and/or treatment sites. There is no guarantee of success.
REMUNERATION:
Subjects will be paid $500 for participation, to defray travel and other costs.
VOLUNTEERS NEEDED
FOR HAIR REMOVAL STUDY
Healthy adult volunteers are sought for a medical study at the Massachusetts
General Hospital, aimed at permanent hair removal. A laser will be tested in
hair-bearing skin areas on the back or upper legs. One month later, an area with
unwanted hair may also be treated, depending on the test results. Six visits
will be required over nine months, and volunteers must be able to accommodate
this schedule. Subjects will be paid $500 for participation in the study. There
is no guarantee that permanent hair removal will be achieved.
For more information, contact:
Xxxxxxxxx Diericky, MD
726-7900
SCHEDULE B
INVESTIGATOR: X.X. Xxxxxxxx, M.D.
TITLE OF STUDY: TBD
SPONSOR: Palomar
BUDGET PERIOD: 9/1/95-8/31/96
PERSONNEL:
Fringe
Name % Effort Salary Benefits Total
HMS-APPNT. 26.04%
R.R.Andemon,M-D. 10% 12,854 $3,347 $16,201
Xxxxxxxxx Xxxxxxxx, M.D. 100% 40,000 $10,416 $50,416
NON-HMS APPNT. 21.51%
Senior Technician 50% 17,500 $3,764 $21,264
Engineer 50% 17,500 $3,764 $21,264
Secretary 5% 1,500 $323 $1,823
TEMPORARYSTAFF 11.02%
Student 100% 9,000 992 $9,092
Total Personnel 120,960
EQUIPMENT
CCD, digital hair count system 8,000
SUPPLIES
Misc. optics, sources, filters
and macro lens 1,800
Imaging software 1,000
Film purchase and developing 1,000
Epliators, mv, markers and tapes 600
Retin A 2,500
Hydroquinone 2,000
Sunscreen 1,000
Anesthetic (EEMLA; x.x.xylocaine) 1,000
Misc. disposables 600
Misc. office supplies 600
TRAVEL 3,000
PATIENT CARE COSTS
50 patients @$500 each 25,000
MISCELLANE0US COSTS
Advertising and telephone expenses 1,000
TOTAL DIRECT COSTS 170,060
INDIRECT COSTS(28%) -TDC- 47,617
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TOTAL COSTS $218.788
==========
EXHIBIT B
MASSACHUSETTS GENERAL HOSPITAL
Office of Technology Affairs
Buiding 000
Xxxxxxxxxx Xxxxxx - Xxxxx 0000
Xxxxxxxxxxx, XX 00000
000-000-0000 FAX: 000-000-0000
Xxxxxx X. Xxxxxxx, X.X.
Vice President, Patents,
Licensing and Industry Sponsored Research
August 18, 1995
Xxxxxxx Xxxxxxxx, Ph.X.
Xxxxxxx Medical Technologies, Inc.
00 Xxxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Dear Xx. Xxxxxxxx:
A License Agreement between the General Hospital Corporation
("General") and Palomar Medical Technologies, Inc. ("Palomar") has been entered
into on this date ("License Agreement") pertaining to the U.S. Patent
Application filed by Dr. R. Rox Xxxxxxxx, xx.xx. on February 1, 1995 entitled
"Permanent Hair Removal Using Optical Pulses," (Licensed Patent Application")
and Palomar has indicated its interest in paying the costs of seeking advice
from General's patent counsel with respect to the possibility of adding to the
Licensed Patent Application one or more cont inuat ions -in -part which would
expand the claimed applications of the device described in the Licensed Patent
Application to uses other than hair removal, e.g. for removal of congenital
nevi, tatoos and port wine stains ("New Use (s) 11) . In the event that counsel
advises in favor of filing such cont inuat ions - in-part, we understand that
Palomar will pay the costs of preparing and filing same. General hereby
acknowledges that Xx. Xxxxxxxx'x rights, assigned to General, in said
continuations - in-part will, once so filed, be treated as PATENT RIGHTS under
the License Agreement subject to the following:
1. The LICENSE FIELD described in paragraph 1.3 of the License
Agreement shall be amended to include the field(s) of the New Use(s)'.
2. For each New Use claimed in a continuation-in-part, General and
Palomar shall establish, within twelve (12) months of the filing of said
continuation-in-part, due diligence milestones appropriate to the New Use which
shall be incorporated into Section 3 of the License Agreement. It is understood
that General may require funding of research at General in the field of the New
Use as part of the due diligence milestones, which funding will be creditable
against the sums due General under paragraph 4.3 of the Clinical Trial Agreement
which is appended as Exhibit A to the License Agreement. In the event that
Palomar and General fail to reach agreement on said milestones, this matter
shall be determined
in accordance with the dispute resolution provisions set forth in paragraph 10.9
of the License Agreement.
3. The royalty owed General by Palomar under paragraph 5.1(b)(ii) on
NET REVENUES for a PRODUCT consisting of a non-ruby laser sold for hair removal
as well as other uses shall be five percent (5-%) so long as the other uses
include as least one New Use.
4. Royalties due General by Palomar on NET REVENUES derived by Palomar,
its AFFILIATES and SUBLICENSEES on:
(a) a PRODUCT constituting either a laser, or any product
constituting any non-laser equipment/disposables, which in either case is sold
solely f or New Uses or f or New Uses in combination with uses other than hair
removal, and
(b) SERVICES and other commercial dispositions described in
paragraph 5. 1 (b) (iii) (A) (1) and (2) of the License Agreement, which
SERVICES and other commercial dispositions involve the use or sale of New Uses,
shall be negotiated in good f aith by the partids in accordance with the
procedure described in paragraph 5.1(iii) and 5.1(iv).
5. Minimum annual royalties on PRODUCTS or SERVICES made, used, or sold
for New Uses (whether or not sold in combination with other uses) shall be
calculated in accordance with paragraph 5. 1 (b) (iii) (C) .
6. In all other respects, the PATENT RIGHTS claiming New Use(s) shall
be treated as PATENT RIGHTS under the License Agreement.
Kindly sign the enclosed copy of this letter agreement to indicate
Palomar's assent to the above terms.
Sincerely,
/s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
The terms of this Letter AGreement are agreed to by Palomar:
Name: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Title: President
-----------------------
Date: August 18, 1995
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