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EXHIBIT 10.11
STRATEGIC ALLIANCE AGREEMENT
BETWEEN LASERSCOPE AND MEDICAL ALLIANCE, INC.
This Strategic Alliance Agreement ("Agreement"), dated as of the 19th
day of December, 1996 ("Effective Date") is by and between Laserscope, a
California corporation having offices at 0000 Xxxxxxx Xxxxx, Xxx Xxxx,
Xxxxxxxxxx 00000, and Medical Alliance, Inc., a Texas corporation having
offices at 0000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 ("MAI").
Laserscope and MAI are sometimes referred to herein as a "Party" or
collectively, as the "Parties".
RECITALS
WHEREAS, Laserscope is presently the holder of technology and know-how
relating to the treatment of vascular lesions, including leg veins (the
"Proprietary Rights"); and
WHEREAS, Laserscope has developed and manufactures products
incorporating the Proprietary Rights, which products are described in Schedule
A (individual products described in Schedule A shall be referred to herein as a
"Product" and all products described in Schedule A shall be referred to herein
as the "Products"); and
WHEREAS, MAI is a provider of mobile medical services which allow
physicians to perform selected procedures in their offices, and has established
a delivery network for medical products and has an existing customer base for
such products; and
WHEREAS, Laserscope and MAI desire to enter into this Agreement for
the purpose of providing the Products to the medical community and its
patients;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and on the terms and conditions
contained herein, the Parties agree as follows:
1. EXCLUSIVE PROVISION OF THE PRODUCTS. The Parties hereby agree
that, within the Territory (as defined in Paragraph 2), MAI shall have the sole
and exclusive right to offer the Product to physicians, or offer the Products
for the use by physicians whereby the physician or patient will be charged a
fee either (i) for each patient medical procedure in which the Products are
utilized by the physician, or (ii) based upon a daily rental structure, or
(iii) based upon a portion of the Product(s)-generated revenues received by the
physician. (Any or all of these arrangements shall be referred to herein as the
offering of the
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Products on a "per use" basis.) MAI also shall have a non-exclusive right to
sell, or lease on a long-term basis, the Products within the Territory subject
to Section 4(h) of the Agreement. Except as provided in Section 2 of the
Agreement, Laserscope shall not be entitled to compete directly or indirectly
with MAI for the offering of the Products on a "per use" basis. Laserscope
agrees not to enter knowingly into an agreement or arrangement, with any person
or entity, which permits such person or entity to sell, lease, or offer on a
"per use" basis the Products within the Territory.
2. ESTABLISHMENT PERIOD. The Parties agree that the period of
time from the Effective Date through June 1, 1997 shall be called the
"Establishment Period".
3. GEOGRAPHICAL TERRITORY. The "Territory" shall be defined as
the continental United States of America and Hawaii. If, upon completion of the
Establishment Period, MAI has not established national coverage of the Products
throughout the Territory, including (i) placing purchase orders for and
accepting delivery of twenty-five (25) Products, (ii) the availability of the
Products and MAI employees trained in the use of the Products in all markets
within the Territory, and (iii) the establishment of a training program in the
use of the Products, then Laserscope shall offer MAI the right of first refusal
to establish a presence in any such "noncovered" market. MAI shall have thirty
(30) days from Laserscope's offer to either accept or decline, in writing, the
offer to establish a presence in a "noncovered" market. MAI's failure to
respond shall be construed as declining the offer. If MAI declines any such
offer, then Laserscope may sell Products to others for the purpose of offering
the Products on a "per used" basis within the affected "noncovered" market.
4. REVENUE ARRANGEMENTS.
(a) Offers on a "Per Use" basis. All initial offers by MAI to
physicians on a "per use" basis shall be at rates and terms established solely
by MAI and subject to change at MAI's discretion. Laserscope shall have no
right or obligation to determine at what prices or terms MAI will offer
Products to physicians.
(b) Revenue Sharing. The Parties agree that for a period of three
(3) years from the date of MAI's receipt of each Product, MAI shall pay
Laserscope an amount equal to fifteen percent (15%) of MAI's invoiced revenues
attributable to such Product, as generated to MAI by its offering of such
Product. Invoiced revenues shall be defined as all fees net of any discounts,
invoiced by MAI for Products offered on a "per use" basis, leased or rented to
MAI customers.
(c) Sales, Use or Other Taxes. Each Party shall be responsible for
paying any and all taxes relating to its respective share of the net revenues
under this Agreement.
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(d) Revenue Statements and Audit Rights. MAI will provide monthly
revenue statements to Laserscope regarding the above matters and MAI will pay
Laserscope its share of the invoiced revenues described in this Paragraph 4,
monthly, within fifteen (15) days of the end of the month in which MAI has
invoiced the use of the Products. In addition, MAI will provide a monthly
report to Laserscope, specifying the state and ZIP code in which each Product
is predominantly located. Laserscope reserves the right to audit MAI's records
as they relate to the Products, during normal business hours, upon reasonable
written notice to MAI. All costs for such audit will be borne by Laserscope
unless discrepancies to Laserscope's detriment are equal to or in excess of the
greater of (i) the cost of the audit, or (ii) two thousand five hundred dollars
($2,500), are discovered, in which event MAI shall bear the costs of the audit.
5. MARKETING AND OPERATIONS RESPONSIBILITIES.
(a) Relationship of the Parties. The Parties understand and agree
that their relationship is, and shall remain, that of vendor and vendee. MAI is
not, and shall not be, considered an agent, partner, joint-venturer, employee,
or franchisee of Laserscope, and MAI shall not represent itself at any time as
an agent or otherwise acting on behalf of Laserscope. MAI is now, and shall
remain, a completely independent contractor, and Laserscope shall have no right
or obligation to control, supervise or manage MAI's business except as
expressly set forth herein.
(b) Reasonable Commercial Efforts. MAI agrees to exercise
reasonable commercial efforts in actively promoting the Products within the
Territory. Promotion shall include, but not be limited to, tradeshows and
exhibitions, advertising, translation of sales literature, identification of
prospective customers, and presentations or demonstrations relating to the use
of the Products to prospective customers. All public disclosures regarding or
relating to the relationship between the Parties must be approved in writing by
the Parties prior to the making of such disclosure. Each Party shall bear its
own costs of marketing the Products in the Territory, except as specified in
Paragraph 6(b) below.
(c) Seminars. MAI agrees, at its own expense, to periodically
conduct, or cause to be conducted, seminars regarding the use of the Products
for the treatment of vascular lesions. The Parties agree to use their best
efforts to coordinate the scheduling of seminars facilitated by the respective
Parties so as to avoid competition between the Parties for speakers and
attendees at such seminars. MAI shall, upon the written request of Laserscope,
provide Laserscope with a written list of its seminar
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speakers and instructors. Laserscope shall, upon the written request of MAI,
provide MAI with a written list of its seminar speakers and instructors. Only
management personnel, and not field representatives or technicians, of the
respective Parties may attend the other Party's seminars, unless a written
invitation to attend such seminar is extended through senior management of both
Parties to their respective employees. Such attendance will be on a non-paid,
non-speaking, observation-only basis.
(d) Authorizations. MAI may describe itself as an "Authorized
Laserscope Fee-for-Use Supplier" in the course of promoting the Products
during the Term of the Agreement. MAI also is authorized to use and display all
Laserscope trademarks, emblems, and logos in the furtherance of such promotion;
provided, however, that any such usage or display shall at all times be subject
to the direction and control of Laserscope. Laserscope shall not unreasonably
withhold any authorizations described in this Paragraph 5 (d).
(e) Intellectual Property Ownership and Use. In connection with
its use, distribution, and promotion of the Products as provided in this
Agreement, MAI is hereby granted during the term of this Agreement, a
non-exclusive license to use Laserscope's Proprietary Rights and trademarks, and
to distribute Laserscope's copyrighted material, incident or relating to the
Products for the sole purpose of marketing and providing on a per use basis,
leasing, renting, or otherwise providing Products to customers, it being agreed
and understood that nothing in this Agreement shall constitute any transfer or
conveyance of Laserscope's right, title, or interest in or to any of
Laserscope's patents, trademarks, copyrighted material, or other proprietary
rights.
(f) Laserscope Names and Logos. The use of the Laserscope name and
logo and the use of any other names and logos originating from Laserscope on
marketing and advertising materials shall bear all applicable copyright and
trademark notices, and shall be subject to Laserscope's prior written approval,
which approval shall not be unreasonably withheld. MAI shall not use the
Laserscope name in the name of MAI's organization. MAI shall not use the
Laserscope name, or any of Laserscope's trademarks or copyrighted material, in
any written material created by MAI unless Laserscope gives its prior written
approval.
(g) Personnel Training. Laserscope agrees that it will provide
instructors and equipment to train and certify MAI personnel in the promotion
and operation of the Products. Laserscope further agrees to provide training,
course materials, information, and clinician-determined treatment parameters to
MAI seminar instructors. Laserscope shall provide MAI with one "hard copy" of
these materials, which MAI may reproduce at its own expense, for use in
training courses only. Whenever possible, all training materials provided to
MAI personnel shall be provided
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prior to the date of the training course. Such training shall take place on a
regional basis at MAI offices in the region in which the course is scheduled to
occur, or at such other locations as may be agreed by the Parties. Laserscope
shall bear its own costs of much training, but will not be responsible for
salaries and wages of MAI personnel, and incidental costs such as travel,
lodging, and other expenses incurred by MAI personnel and MAI seminar
instructors.
(h) Sale of Products by MAI. MAI may sell to third parties any
Product it has purchased; provided, however, that the Aura(TM) lasers may be
sold only on a "first in first out" (FIFO) basis, i.e., the first laser
purchased by MAI must be the first one it sells, the second laser purchased is
the next one sold, and so on.
6. PRODUCT PRICES, DELIVERY, MATERIALS AND WARRANTIES.
(a) Prices and Delivery. Laserscope agrees to provide the Product
components and accessories (the "Equipment") listed in Schedule A at the prices
given in such Schedule; provided that such prices may be adjusted up or down a
maximum of five percent (5%) per year, beginning in January 1998. Such prices
shall apply to all MAI purchase orders. All Equipment shall be shipped F.O.B.
shipping point, freight costs to be paid by MAI. Laserscope agrees to ship
Equipment to the destinations specified by MAI.
(b) Accessories and Promotional Materials. MAI hereby agrees to
purchase all its requirements for Product accessories, including, but not
limited to, handpieces, scanners, and fibers, from Laserscope. The Parties
hereby agree that Laserscope will produce Practice Enhancement Kits and
promotional materials, including but not limited to, brochures describing
Laserscope products, patient education videos, and patient information
brochures, for purchase by MAI at a price mutually agreeable to the Parties;
provided that Laserscope shall supply such promotional items described above at
a reduced costs when ordered in quantity by MAI. The reduced cost will be
determined by Laserscope in its sole discretion.
(c) Warranties. Laserscope hereby warrants that all Aura(TM)
lasers provided under this Agreement shall be free from defects. All
accessories will be sold with Laserscope's standard warranties. Laserscope will
provide MAI's Aura(TM) lasers with "bumper to bumper" warranty service (i.e.
preventative maintenance, labor, repair/replacement of parts,
repair/replacement shipping costs) until the earlier of (i) three (3) years
from the date of each Aura(TM) laser purchase or (ii) the date an Aura(TM)
laser is sold by MAI to a third party. Laserscope agrees to repair or replace,
within twenty-four (24) hours after notification from MAI, at Laserscope's sole
cost, any Aura(TM) laser that is not functioning
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according to product specifications. Laserscope agrees, at Laserscope's
cost, to keep and maintain for delivery to MAI as a replacement one (1)
additional Aura(TM) laser for each ten (10) Aura(TM) lasers purchased or
ordered by MAI. Any shipping costs for Products under warranty shall be borne
by Laserscope.
(d) Purchase Credit. Laserscope agrees that it will give
MAI a credit equal to three thousand five hundred dollars ($3,500) for each
Aura(TM) laser which is a part of the Product purchased by MAI. Such credit
shall be used by MAI solely to purchase Product accessories for a period of up
to two (2) years after the date of receipt of the purchased Aura(TM) laser by
MAI.
(e) Initial Order. MAI agrees that on or prior to December 20,
1996, it will place a purchase order (the "Purchase Order") for twenty-one (21)
sets of Equipment from Laserscope. The Parties acknowledge that MAI already has
purchased three (3) sets of Equipment, which Equipment shall be subject to the
terms of this Agreement. Unless Laserscope receives written notice from MAI,
either canceling the Purchase Order ("Cancellation Notice") or requesting a
different delivery schedule, by December 20, 1996, the Equipment which
comprises the Purchase Order shall be shipped to MAI by Laserscope as follows:
(i) eight (8) sets of Equipment delivered in January 1997, (ii) eight (8) sets
of Equipment to be delivered in February 1997, and (iii) five (5) sets of
Equipment to be delivered in March 1997. MAI agrees to provide payment in full
for these twenty-one (21) sets of Equipment, and all subsequent orders for sets
of Equipment, within sixty (60) days of receipt of the Equipment by MAI. If
MAI does provide the Cancellation Notice in the manner described above, it
shall have no obligation whatsoever with regard to any Equipment not received
from Laserscope by the date of such Cancellation Notice.
7. Term and Termination.
(a) Term of Agreement. Except as provided in Paragraph 4 above
with regard to the sharing of revenues and subject to (b) below, this Agreement
shall commence as of the Effective Date and shall continue for a period of
three (3) years thereafter (the "Initial Term"), and subject to the succeeding
sentence will be renewable for one year terms thereafter by written agreement
of both Parties made no later than ninety (90) days prior to the end of any
Term (each, a "Renewal Term"). The Initial Term and any Renewal Term(s) may be
referred to collectively as the "Term".
(b) Early Termination. In the event of breach by either Party of
any of the provisions of this Agreement, and if such breach is not cured with
thirty (30) days after the receipt by such breaching Party of written notice
from the non-breaching party of such breach, which notice shall reasonably
describe such breach,
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the non-breaching Party may, in addition to any other rights or remedies it may
have in law or in equity, terminate this Agreement (except that the revenue-
sharing provisions of Paragraph 4(b) above will be terminated only if
Laserscope is the breaching Party), with no further action required by such
Party to effect such termination.
(c) Rights Upon Termination. In the event of a termination of this
Agreement pursuant to (a) or (b) above, (i) MAI shall be entitled to continue
using Products owned by MAI in its business, (ii) MAI shall either return to
Laserscope all products shipped by Laserscope but not yet paid for by MAI, or
immediately pay all outstanding invoices by cashier's check, and (iii) MAI
shall cease representing itself as an Authorized Laserscope Fee-for-Use
Supplier. The confidentiality rights described in Paragraphs 8(c) and 8(d)
shall remain in full force upon termination of the Agreement for any reason.
8. Miscellaneous Provisions.
(a) MAI Personnel. In marketing Products, MAI will use only sales
and delivery personnel who have been trained by Laserscope or under
Laserscope's direction in the proper marketing of the Products. Any marketing
of the Products by MAI also will be within FDA-approved guidelines for
Laserscope's products used within the vascular/pigmented lesion market
segment.
(b) Assignments. This Agreement and the rights and obligations of
the Parties hereunder shall be binding upon and inure to the benefit of the
Parties and their respective successors and assignees. Neither Party shall
assign this Agreement or any rights or obligations hereunder without first
obtaining the written consent of the other Party.
(c) Laserscope Confidential Information. MAI agrees to keep
confidential and secret all of Laserscope's Proprietary Rights and other
proprietary information, including but not limited to those relating to the
Products and all other existing Laserscope products, product improvements, or
new ideas under development, customer lists, financial and marketing
information, business, documents and any other information which is not public
knowledge, and which may be or may have been learned by MAI in the course of
its business relationship with Laserscope. MAI shall not use or disclose any
such information for two (2) years after the expiration of the Term of the
Agreement. MAI further agrees to instruct all of its employees, agents and
assigns to keep confidential and secret all such information. MAI will not
actively solicit to hire any of the employees of Laserscope during the Term of
the Agreement or for a period of one (1) year following the Term.
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(d) MAI Confidential Information. Laserscope agrees to keep
confidential and secret all of MAI's confidential and proprietary information
concerning MAI's customer lists, financial and marketing information, business
documents and any other information which is not public knowledge, and which
may be or may have been learned by Laserscope in the course of its business
relationship with MAI. Laserscope shall not use or disclose any such
information for two (2) years after the expiration of the Term of the
Agreement. Laserscope further agrees to instruct all of its employees, agents
and assigns to keep confidential and secret all such information. Laserscope
will not actively solicit to hire any of the employees of MAI during the Term
of the Agreement or for a period of one (1) year following the Term.
(e) Complete Agreement. This Agreement contains all of the
agreements, understandings, representations, conditions, warranties, and
covenants between the Parties with respect to the subject matter hereof, and
any modifications or amendments hereto must be a writing signed by both
Parties.
(f) Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective
during the Term, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid, or unenforceable
provision never comprised a part hereof and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance herefrom. Furthermore,
in lieu of such illegal, invalid, or unenforceable provision, there shall be
added automatically as part of this Agreement, a provision as similar in terms
to such illegal, invalid, or unenforceable provisions as possible and be legal,
valid, and enforceable.
(g) Controlling Law and Venue. The validity, interpretation, and
performance of this Agreement shall be controlled by and construed under the
laws of the State of Texas. Venue in any proceeding with respect to this
Agreement shall be in Dallas, Texas.
(h) Arbitration. Any and all disputes or disagreements arising out
of or in connection with this Agreement shall be submitted to a mandatory and
binding arbitration administered according to the commercial rules of the
American Arbitration Association in Dallas, Texas. Each Party agrees to the
complete resolution of the subject dispute by the arbitrator(s). The
arbitrator(s) is/are authorized to go forward even though one of the Parties
refuses to participate. Costs of arbitration shall be shared equally by the
Parties. Notwithstanding anything to the contrary contained herein, it is
acknowledged that the right to
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termination as provided herein shall not be affected by this Paragraph 8(h).
(i) Attorneys' Fees. The prevailing Party in any legal proceeding
relating to this Agreement shall be entitled to reasonable attorneys' fees.
(j) Counterparts. This Agreement (whether it be in the form of an
original, photocopy, or facsimile) may be executed in one or more counterparts,
each of which shall be deemed an original and all of which shall constitute one
and the same instrument.
EXECUTED as of the date first written above.
MEDICAL ALLIANCE, INC. LASERSCOPE
By:/s/ XXXX XXXXXXXX By:/s/ XXXXXX X. XXXXXXXXX
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Xxxx Xxxxxxxx Xxxxxx X. XxXxxxxxx
President and CEO President and CEO
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SCHEDULE A - "PRODUCTS"
o Aura(TM) Laser with StarPulse(TM) Feature
o Aura(TM) Laser Carrying Case
o 1 mm Dermastat(R) Handpiece
o 2 mm Dermastat(R) Handpiece
o Five (5) Pairs of Protective Eyewear (one (1) flip-up
and four (4) wrap-around)
Price for the above combination
of individual Products: $44,995.00
Strategic Alliance Agreement
Medical Alliance/Laserscope
