Document:

exhibit101.htm

Amendment #1 to License Agreement

 

Palomar Medical Technologies, Inc. (hereinafter, “PALOMAR”, as that term is defined in the AGREEMENT), The Procter & Gamble Company (hereinafter, “P&G”, as that term is defined in the AGREEMENT), and The Gillette Company (hereinafter, “GILLETTE”, as that term is defined in the AGREEMENT) have previously entered into a License Agreement dated February 29, 2008 (“AGREEMENT“).  This amendment (“AMENDMENT”) is entered into as of the last date of signing of this AMENDMENT by the parties (“AMENDMENT EXECUTION DATE”) and is retroactively effective as of October 1, 2010. PALOMAR, P&G, and GILLETTE hereby amend the AGREEMENT as follows:

 

Table 3.2 NOS-Based Payments.  Original Table 3.2 is deleted and replaced with the following new Table 3.2:

 

 

	 Table 3.2

 

	  	
LAUNCH TTP TERM

	
INITIAL TTP TERM

	
REMAINING TTP TERM

	  	
Pre-THRESHOLD TRIGGER

	
Post-THRESHOLD TRIGGER

	
Pre-THRESHOLD TRIGGER

	
Post-THRESHOLD TRIGGER

	  	
(as a percentage of NOS)

	
TTP’s

	
**

	
**

	
**

	
**

	
**

	
Royalties

	
**

	
**

	
**

	
**

	
**

 

Payments During LAUNCH TTP TERM.  The following new Sections 3.3.2.1, 3.3.2.1.1, 3.3.2.1.1.1, 3.3.2.1.2 are added:

 

	
3.3.2.1.  

	
Payments During LAUNCH TTP TERM.  On a TTP-BEARING PRODUCT-by-TTP-BEARING PRODUCT basis, P&G shall pay to PALOMAR TTPs in the amount of **on that portion of worldwide NOS of each TTP-BEARING PRODUCT after LAUNCH and prior to the start of the INITIAL TTP TERM (“LAUNCH TTP TERM”).

 

** This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on December 9, 2010.

  

  

  

	
3.3.2.1.1.  

	
Additional Payment During LAUNCH TTP TERM. If P&G does not meet its SPENDING COMMITMENT and either (a) the payments in Section 3.3.2.1 (Payments During LAUNCH TTP TERM) do not exceed ** or (b) P&G unilaterally terminates the AGREEMENT under Section 7.2.2 (Unilateral Termination of this AGREEMENT by P&G) during the LAUNCH TTP TERM, then P&G shall pay to PALOMAR a one-time sum of the difference between ** and the payments made under Section 3.3.2.1 (Payments During LAUNCH TTP TERM).  This “one-time sum of the difference” payment shall be paid to PALOMAR within thirty (30) days of the end of the LAUNCH TTP TERM, or, in the case of unilateral termination under 7.2.2 (Unilateral Termination of this AGREEMENT  by P&G), within thirty (30) days of such termination.

 

	
3.3.2.1.1.1.  

	
Example.  By way of non-limiting example, if P&G did not meet the SPENDING COMMITMENT and under Section 3.3.2.1 (Payments During LAUNCH TERM TTP) P&G has paid TTPs to PALOMAR in the amount of only ** by either (a) the end of the LAUNCH TTP TERM or (b) before unilateral termination by P&G under Section 7.2.2 (Unilateral Termination of this AGREEMENT by P&G) within the LAUNCH TTP TERM, then P&G would pay PALOMAR a one-time sum of ** (i.e., the difference between ** and the TTPs of ** paid under Section 3.3.2.1).

 

	
3.3.2.1.2.  

	
Payment if Delayed LAUNCH.  If P&G does not LAUNCH by **, then (i) subsection (b) of the definition of INITIAL TTP TERM (defined in Exhibit A, Section 40) shall be deleted and replaced with "(b) ending on a date which is determined by extending the date of **by three months for every QUARTER beyond the ** that LAUNCH is delayed, up to and including the QUARTER in which there is a LAUNCH" and (ii) subsection (b) of the definition of REMAINING TTP TERM (defined in Exhibit A, Section 129) shall be deleted and replaced with "(b) ending on a date which is determined by extending the date of ** by three months for every QUARTER beyond the ** that LAUNCH is delayed, up to and including the QUARTER in which there is a LAUNCH".   For clarity and by way of example, if P&G does not LAUNCH until **, then the INITIAL TTP TERM shall be extended from ** and the REMAINING TTP TERM shall be extended from **.

 

** This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on December 9, 2010.

  

  

  

 

Scope of TTP Obligation.  Original Section 3.3.4 is deleted and replaced with the following new Section 3.3.4:

 

	
3.3.4  

	
Scope of TTP Obligation.  For clarity:  (a) no TTPs shall be payable by P&G pursuant to Section 3.3.2 (Payments During INITIAL TTP TERM), 3.3.3 (Payments During REMAINING TTP TERM), 3.3.2.1 (Payments During LAUNCH TTP TERM), or 3.3.2.1.1 (Additional Payment During LAUNCH TTP TERM) with respect to NOS of any LICENSED PRODUCT TOPICAL; (b) only one TTP under Section 3.3.2, 3.3.3, 3.3.2.1, or 3.3.2.1.1 will be payable by P&G with respect to any TTP-BEARING PRODUCT; and (c) P&G’s obligation to pay TTPs to PALOMAR pursuant to Section 3.3.2, 3.3.3, 3.3.2.1, or 3.3.2.1.1 with respect to each TTP-BEARING PRODUCT shall not commence until the first day of the TTP TERM and shall terminate with respect to all TTP-BEARING PRODUCTS on the last day of the TTP TERM.  All TTPs shall be non-creditable and non-refundable and there shall be no right of set-off with respect thereto.

 

TTP QUARTERLY PAYMENTS.  Original Section 3.3.5 is deleted and replaced with the following new Section 3.3.5:

 

	
  

	
3.3.5.  

	
TTP QUARTERLY PAYMENTS. If P&G maintains an ANNUAL SPENDING AVERAGE of ** for the period from the start of P&G's first fiscal QUARTER (July Aug Sep) of 2010 until ** (“SPENDING COMMITMENT”), then P&G shall pay to PALOMAR the payments set forth in Table 3.3.5, (each, a “TTP QUARTERLY PAYMENT”) for the period from the start of P&G’s second fiscal QUARTER (Oct Nov Dec) of 2010 up to and including the QUARTER in which there is a LAUNCH. Each TTP QUARTERLY PAYMENT shall be payable only once per QUARTER (or as otherwise noted in Table 3.3.5) irrespective of the number of TTP-BEARING PRODUCTS that are developed or commercialized by P&G pursuant to this AGREEMENT.  TTP QUARTERLY shall be non-creditable and non-refundable and there shall be no right of set-off with respect thereto.

 

Table 3.3.5.

 

 

**

 

** This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on December 9, 2010.

  

  

  

 

 

Additional TTP Quarterly Payments.  The following new Section 3.3.5.1 is added:

 

	
  

	
3.3.5.1.   

	
ADDITIONAL TTP QUARTERLY PAYMENTS.  In addition to the payments in Table 3.3.5, with respect to only the first of either a LICENSED PRODUCT or a TTP BEARING PRODUCT that is LAUNCHED (but not for both) by P&G under this AGREEMENT: (a) if P&G LAUNCHES during **, then P&G will pay PALOMAR the sum of **; (b) if P&G LAUNCHES during the **, then P&G will pay PALOMAR the sum of **; and (c) if P&G LAUNCHES during the **, then P&G will pay PALOMAR the sum of **.  For clarity, no such payment will be due for any subsequent LAUNCH of any other LICENSED PRODUCT or TTP BEARING PRODUCT.  All payments under this Section 3.3.5.1 shall be made by P&G to Palomar within thirty (30) business days of LAUNCH.  For the avoidance of doubt, the Additional TTP Quarterly Payments of this Section 3.3.5.1 are relevant for only for **.

 

Annual Spending Average.  The following new Section 3.3.5.2 is added:

 

	
  3.3.5.2.   

	
“ANNUAL SPENDING AVERAGE” means the average spending on LICENSED PRODUCT COMMERCIALIZATION COSTS by P&G over past P&G FISCAL YEAR(s) beginning with P&G FISCAL YEAR 2010/2011 until **

 

Licensed Product Commercialization Costs.  The following new Section 3.3.5.3 is added:

 

	
3.3.5.3.  

	
“LICENSED PRODUCT COMMERCIALIZATION COSTS” includes any and all costs associated with P&G’s program for LICENSED PRODUCTS or TTP-BEARING PRODUCTS ahead of a LAUNCH, consistent with (a) P&G SRA/P (Selling Research Administration/Product Supply Non-Manufacturing Expenses), (b) P&G MSA (Market Support Activities) accounting protocols (including, by way of non-limiting example:  research and development expenses, marketing program expenses such as agency and copy development fees, product supply non-manufacturing expenses such as purchasing, quality assurance and engineering cost, and overhead expenses), and (c) P&G-funded capital spending and supplier financial commitments, but (d) expressly does not include marketing costs associated with media in support of LAUNCH.

 

** This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on December 9, 2010.

  

  

  

Failure to Maintain SPENDING COMMITMENT.  The following new Sections 3.3.5.4, 3.3.5.4.1, 3.3.5.4.1.1, 3.3.5.4.1.2, 3.3.5.4.1.3, and 3.3.5.4.2 are added:

 

	
3.3.5.4.  

	
Failure to Maintain SPENDING COMMITMENT.  If P&G’s SPENDING COMMITMENT is not met, then for each P&G FISCAL YEAR following the P&G FISCAL YEAR in which P&G fails to achieve the SPENDING COMMITMENT:

 

	
  

	
3.3.5.4.1.  

	
P&G shall be required to pay Palomar One Million Two Hundred and Fifty Thousand Dollars (USD $1,250,000) for each QUARTER (each, a “TTP QUARTERLY PAYMENT”) up to and including the earlier of:

 

	
  

	
3.3.5.4.1.1.  

	
the QUARTER in which P&G sends PALOMAR written notice that P&G has met the SPENDING COMMITMENT, which written notice shall include a statement from a third-party auditor (paid for by P&G) confirming the SPENDING COMMITMENT obligation has been satisfied and no other information, and upon receipt of such written notification by PALOMAR, the payments in Table 3.3.5 (TTP QUARTERLY PAYMENTS) would be reinstated, effective for the following QUARTER; or

 

	
  

	
3.3.5.4.1.2.  

	
**; or

 

	
  3.3.5.4.1.3.  

	
the QUARTER in which a LAUNCH by P&G occurs anywhere in the world (but not for any QUARTER thereafter).

 

	
  3.3.5.4.2.  

	
Mutually Exclusive Payment Obligations.  For clarity, payments in Table 3.3.5 (TTP QUARTERLY PAYMENTS) and payments in Section 3.3.5.4.1 are mutually exclusive.  By way of example, payments as set forth in Table 3.3.5 are the only payments required by P&G if the SPENDING COMMITMENT is met; and payments as set forth in Section 3.3.5.4.1 are the only payments required by P&G if the SPENDING COMMITMENT is not met.  Beginning in the ** and if prior to a LAUNCH, only those payments as indicated in Table 3.3.5 will be paid by P&G to PALOMAR.

 

Auditing.  The following new Section 3.3.3.5 is added.

 

	
  3.3.3.5.   

	
Auditing.  The SPENDING COMMITMENT shall be auditable by PALOMAR in accordance with Section 3.10.2.1 (SPENDING COMMITMENT Audit).

 

** This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on December 9, 2010.

  

  

  

TTP and Royalty Payments In General.  Original Section 3.8.1 is deleted and replaced with the following new Section 3.8.1.

 

	
3.8.1.  

	
In General.  Royalties and TTPs payable pursuant to Sections 3.3.2 (Payments During INITIAL TTP TERM), 3.3.2.1 (Payments During LAUNCH TTP TERM), 3.3.2.1.1 (Additional Payment During LAUNCH TTP TERM), 3.3.3 (Payments During REMAINING TTP TERM), and 3.4.1 (In General) shall be payable on a QUARTERLY basis within sixty (60) days after the end of each QUARTER, based upon the NOS during such QUARTER.

 

SPENDING COMMITMENT Audit.  The following new Section 3.10.2.1 is added:

 

	
3.10.2.1.  

	
SPENDING COMMITMENT Audit. Upon the written request of PALOMAR and (a) not more than once in each P&G FISCAL YEAR in the Jul-Aug-Sep QUARTER or the Oct-Nov-Dec QUARTER of that P&G FISCAL YEAR or (b) within sixty (60) days of termination under 7.2.2 (Unilateral Termination of this AGREEMENT by P&G):  P&G shall permit Ernst & Young or an independent accounting firm mutually agreed to by the PARTIES and hired by PALOMAR at P&G’s expense, to have access during normal business hours, and upon reasonable prior written notice, to such of the accounting records of P&G as may be reasonably necessary to verify whether the SPENDING COMMITMENT obligation is met for any applicable P&G FISCAL YEAR ending not more than twenty-four (24) months prior to the date of such request.  The accounting firm shall disclose to P&G and PALOMAR whether the SPENDING COMMITMENT obligation has been satisfied.  No other information shall be provided to PALOMAR.

 

Mode of Payment.  The last sentence in original Section 3.11 is deleted and replaced with the following new sentence:

 

Unless otherwise designated by PALOMAR in writing, all payments to PALOMAR under this AGREEMENT shall be made by wire transfer to the following bank account:

 

**

 

** This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on December 9, 2010.

  

  

  

Unilateral Termination of this AGREEMENT by P&G.  The following new Sections 7.2.2.1, 7.2.2.2, 7.2.2.2.1, 7.2.2.2.2, 7.2.2.2.3, and 7.2.2.2.4 are added:

 

	
7.2.2.1.  

	
Unilateral Termination of this AGREEMENT by P&G Before LAUNCH – SPENDING COMMITMENT Not Met.  If, at any time prior to LAUNCH, P&G terminates this AGREEMENT under Section 7.2.2 (Unilateral Termination of this AGREEMENT by P&G), then P&G will pay the difference between the payments in Table 3.3.5 (TTP QUARTERLY PAYMENTS) and One Million Two Hundred and Fifty Thousand Dollars (USD $1,250,000) for those QUARTERS in any P&G FISCAL YEAR in which the SPENDING COMMITMENT was not met.

 

	
7.2.2.2.  

	
Unilateral Termination of this AGREEMENT by P&G Before LAUNCH – SPENDING COMMITMENT Met.  If P&G has met the SPENDING COMMITMENT, and:

 

	
7.2.2.2.1.  

	
1st Calendar Quarter Termination.  if P&G terminates this AGREEMENT under Section 7.2.2 (Unilateral Termination of this AGREEMENT by P&G), during the **, then P&G will pay PALOMAR the sum of **; or

 

	
7.2.2.2.2.  

	
2nd Calendar Quarter Termination. if P&G terminates this AGREEMENT under Section 7.2.2 (Unilateral Termination of this AGREEMENT by P&G) during the **, then P&G will pay PALOMAR the sum of **; or

 

	
7.2.2.2.3.  

	
3rd Calendar Quarter Termination. if P&G terminates this AGREEMENT under Section 7.2.2 Unilateral Termination of this AGREEMENT by P&G) during the **, then P&G will pay PALOMAR the sum of **.

 

	
7.2.2.2.4.  

	
Payment Timing.  All payments under Section 7.2.2.2, 7.2.2.2.1, 7.2.2.2.2, and 7.2.2.2.3 shall be made by P&G to Palomar within thirty (30) business days of P&G's written notice of termination to PALOMAR.

 

Payments. Original Sections 7.3.3 and 7.5.3 are deleted and replaced with the following new Sections 7.3.3 and 7.5.3.

 

	
  

	
7.3.3  

	
Payments.  All payment obligations of P&G, if any, pursuant to Article 3 (Payments & Reports) shall terminate, subject to Section 7.3.5 (Authorized Sell-Off), with the exception that Section 3.3.2.1.1 (Additional Payment During LAUNCH TTP TERM) and Section 7.2.2.1 (Unilateral Termination of this AGREEMENT by P&G Before LAUNCH – SPENDING COMMITMENT Not Met) shall survive termination provided such termination by P&G in Section 3.3.2.1.1 and Section 7.2.2.1 is not due to a material breach by PALOMAR.

 

** This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on December 9, 2010.

  

  

  

	
  

	
7.5.3  

	
Survival. Subject to and without limiting anything contained in this Article 7 (Term & Termination of this AGREEMENT), Sections 1.2.2, 1.3 (other than the first sentence thereof), 1.4.1, 1.4.2, 1.5 (other than the first sentence thereof), 1.6, 1.7, 2.1.2, 2.2.1.2, 2.2.2, 2.3.2, 2.3.3, 2.4, 3.3.2.1.1, 3.3.3.5, 3.7, 3.8.2, 3.10, and 3.12, the last sentence of Section 2.1.1, and Articles 4, 5, 6, 7, 8, 10 and 11 of this AGREEMENT shall survive the termination of this AGREEMENT for any reason except however, with respect to Sections 3.3.2.1.1(a), if a termination by P&G is due to a material breach by PALOMAR; all other provisions shall terminate on any such termination of this AGREEMENT.

 

Adjustments for Off-Label Sales.  Original Section 9.5 (Economic Adjustments for Off-Label Sales) and its subsections are deleted.

 

Notices. In original Section 11.5 Notices, PALOMAR's address is deleted and replaced with the following new address.

 

If to PALOMAR, to:

 

Palomar Medical Technologies, Inc.

15 Network Drive

Burlington, MA 01803

Attention: President & General Counsel

Facsimile:  (781) 993-2300

 

Appendix A. Appendix A Sections 39, 42, 43, 53, 148 and 150 are deleted, and the following new Sections 39, 42, 43, 53, 148, 150, and 153-157 are added:

 

	
  

	
39.  

	
[intentionally left blank]

 

	
  

	
42.  

	
[intentionally left blank]

 

	
  

	
43.  

	
[intentionally left blank]

 

	
  53.   

	
“LAUNCH” means, with respect to a LICENSED PRODUCT or TTP-BEARING PRODUCT, the date on which the FIRST COMMERCIAL SALE of such product occurs.

 

	
   148.   

	

“TTP QUARTERLY PAYMENT” is defined in Section 3.3.5 and 3.3.5.4.1.

 

	
  150.   

	
“TTP TERM” means the period commencing (a) on the first day of the LAUNCH TTP TERM and (b) ending on the last day of the REMAINING TTP TERM.

 

	
 153.   

	

“ANNUAL SPENDING AVERAGE” is defined in Section 3.3.5.2.

 

	
 154.   

	

“LICENSED PRODUCT COMMERCIALIZATION COSTS” is defined in Section 3.3.5.3.

 

  

  

  

	
  

	
155.  

	
“LAUNCH TTP TERM” is defined in Section 3.3.2.1.

 

	
  156.   

	
“SPENDING COMMITMENT” is defined in Section 3.3.5.

 

	
  157.   

	
“TTP QUARTERLY PAYMENT” is defined in Section 3.3.5.4.1.

 

Acknowledgement of 4th Quarter 2010 Payment.  The PARTIES hereby acknowledge PALOMAR’s receipt of P&G’s fourth calendar QUARTER 2010 (Oct Nov Dec 2010) payment under Table 3.3.5.  In addition, for clarity, the TTP QUARTERLY PAYMENTS made prior to this AMENDMENT, shall be non-creditable and non-refundable and there shall be no right of set-off with respect thereto.

 

Press Release Regarding AMENDMENT.  On or after the AMENDMENT EXECUTION DATE, each PARTY shall have the right to issue a press release in the form of Attachment 1, announcing this AMENDMENT.  Each PARTY shall have the right to publicly disclose any statements contained in this press release (Attachment 1) regarding this AMENDMENT, without the prior consent or approval of the other PARTY.

 

Filing of this AMENDMENT with SEC.  PALOMAR shall file a redacted version of this AMENDMENT with the SEC within four (4) BUSINESS DAYS of the execution of this AMENDMENT along with a request for confidential treatment of the redacted portions. The PARTIES shall have agreed on the proposed redactions to this AMENDMENT within two (2) BUSINESS DAYS of the execution of this AMENDMENT.

 

Headings.  The headings or titles of sections in this AMENDMENT are provided for convenience and are not to be used in construing the AGREEMENT.

 

Except as modified by this AMENDMENT, all of the terms and conditions of the AGREEMENT shall remain in full force and effect.  This AMENDMENT shall be governed by the laws of the Commonwealth of Massachusetts (without reference to the rules of conflict of laws thereof), and any dispute with respect hereto shall be resolved in accordance with Article 10 of the AGREEMENT.

 

IN WITNESS WHEREOF, the PARTIES hereto have caused this AMENDMENT to be signed by their duly authorized representatives.

 

For:  Palomar Medical Technologies, Inc. For:  The Procter & Gamble Company

 

 

	By: /s/ Joseph P. Caruso   	By: /s/ Jeffrey D. Weedman   
	Joseph P. Caruso 	Jeffrey D. Weedman
	CEO     	Vice President
	 	Global Business Development
	 	 
	Date: December 8, 2010     	Date: December 9, 2010     
	 	 
	 	
For:  The Gillette Company

	 	 
	 	By: /s/ Jeffrey D. Weedman   
	 	Vice President
	 	Global Business Development
	 	 
	 	Date: December 9, 2010      

 

  

  

  

Attachment 1 - Press Release Regarding AMENDMENT

 

NEWS RELEASE for December 9, 2010 

 

	 Contacts:	Kerry McAnistan
	 	Investor Relations Assistant
	 	Palomar Medical Technologies, Inc.
	 	781-993-2411
	 	ir@palomarmedical.com

 

  

PALOMAR AND P&G AMEND LICENSE AGREEMENT

 

TO SUPPORT SUCCESSFUL PRODUCT LAUNCH

 

 

BURLINGTON, MA (December 9, 2010) ... Palomar Medical Technologies, Inc. (Nasdaq:PMTI), a leading researcher and developer of light-based systems for cosmetic treatments, today announced that it has entered into an amendment to its non-exclusive License Agreement executed February 29, 2008 (retroactively effective as of February 14, 2003) with The Procter & Gamble Company (NYSE:PG).  The amendment provides additional funding from each company to meet the common goal of a successful product launch. The amendment does not change the scope of P&G’s non-exclusive license to Palomar's broad patent portfolio as well as its non-exclusive license to the extensive technology developed by Palomar prior to February 28, 2008 for home-use light-based hair removal devices for women.

Under the amended License Agreement, P&G and Palomar have agreed to reduce pre-commercial launch calendar quarterly payments from $1.25 million to $1 million for the calendar quarter ending December 31, 2010 and thereafter to $2 million per year for an agreed period, after which the payments return to $1.25 million per calendar quarter if no product has been launched.  P&G will apply the savings, together with agreed minimum overall program funding, to accelerating product readiness and commercialization while Palomar will be paid an increased percentage of sales after commercial launch.

P&G’s Vice President of New Business Creation Jennifer Dauer said “We have been actively working on development of this product and are pleased with our progress to date. This amendment better balances short and long term financial compensation to enable our mutual objective of successfully getting this technology to market.”

 

 

Commenting on this development, Palomar Chief Executive Officer Joseph P. Caruso said, “Together the companies have each agreed to invest more to put this product in consumers’ hands as early as possible.  We are trading some of our fixed short-term pre-commercial launch calendar quarterly payments for an increase in sales related payments post launch that we believe will provide us greater benefit in the long run.”

 

 

For more information, please see the Amendment filed as Exhibit 10.1 to a Current Report on Form 8-K filed today and the non-exclusive License Agreement filed as Exhibit 10.1 to a Current Report on Form 8-K filed March 3, 2008.

 

 

About Palomar Medical Technologies Inc.: Palomar is a leading researcher and developer of light-based systems for cosmetic treatments. Palomar pioneered the optical hair removal field, when, in 1997, it introduced the first high-powered laser hair removal system. Since then, many of the major advances in light-based hair removal have been based on Palomar technology. In December 2006, Palomar became the first company to receive a 510(k) over-the-counter (OTC) clearance from the United States Food and Drug Administration (FDA) for a new, patented, home-use, light-based hair removal device. In June 2009, Palomar became the first company to receive a 510(k) OTC clearance from the FDA for a new, patented, home-use, laser device for the treatment of periorbital wrinkles. OTC clearance allows these products to be marketed and sold directly to consumers without a prescription. There are now millions of light-based cosmetic procedures performed around the world every year in physician offices, clinics, spas and salons.  Palomar is testing many new and exciting applications to further advance the hair removal market and other cosmetic applications. Palomar is focused on developing proprietary light-based technology for introduction to the mass markets.

For more information on Palomar and its products, visit Palomar’s website at www.palomarmedical.com. To continue receiving the most up-to-date information and latest news on Palomar as it happens, sign up to receive automatic e-mail alerts by going to the About Palomar/Investors section of the website.

 

With the exception of the historical information contained in this release, the matters described herein contain forward-looking statements, including, but not limited to, statements relating to new markets, future royalty amounts due from third parties, development and introduction of new products, and financial and operating projections. These forward-looking statements are neither promises nor guarantees, but involve risk and uncertainties that may individually or mutually impact the matters herein, and cause actual results, events and performance to differ materially from such forward-looking statements. These risk factors include, but are not limited to, results of future operations, technological difficulties in developing or introducing new products, the results of future research, lack of product demand and market acceptance for current and future products, the effect of economic conditions, challenges in managing joint ventures and research with third parties and government contracts, the impact of competitive products and pricing, governmental regulations with respect to medical devices, including whether FDA clearance will be obtained for future products and additional applications, the results of litigation, difficulties in collecting royalties, potential infringement of third-party intellectual property rights, factors affecting the Company's future income and resulting ability to utilize its NOLs, and/or other factors, which are detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year ended December 31, 2009 and the Company's quarterly reports on Form 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.ex10-1.htm

 

Exhibit 10.1

 

Certain portions of this Exhibit have been omitted pursuant to a request for confidential treatment.  The non-public information has been filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.  The omitted portions of this Exhibit are indicated by the following: [****].

 

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4. Payment: Payment terms on this agreement are 60 days. Payment will be via ACH bank transfer at least four business days prior to the calendar month end. Terms on prior agreements are outlined in Exhibit B.

5. Returns: All or any part of the Merchandise purchased from Media Solutions will be returnable by you for full credit provided items are returned on a timely basis and are within the guidelines of the “Title off Sale” report currently provided with each billing invoice.

6. Exclusivity: During this agreement, BAMM agrees to purchase all magazines, for a minimum of at least [****] of all store locations, from Media Solutions in quantities we mutually determine, unless we mutually agree that a magazine title is not available through Media Solutions, in which case this magazine title will be excluded from this agreement for so long as the magazine title is not available through Media Solutions. BAM must provide Media Solutions with a current list of titles purchased from other suppliers, and BAM must notify Media Solutions in writing of any future additions. If Media Solutions is able to obtain the magazine title, then BAM will purchase the title from Media Solutions beginning within thirty (30) days of notice from Media Solutions that it will have the magazine title available for sale to BAM.

7. Retail Support: Media Solutions will provide a dedicated marketing and store support team. Media Solutions will be responsible for setting the magazine department in all new stores and remodels prior to opening and ongoing resetting of the magazine presentations in stores as requested by BAM management. Additionally, Media Solutions will provide training at periodic store personnel training events, as well as through regular store visits.

  

  

  

8. Insurance: Media Solutions shall carry worker’s compensation insurance with respect to its employees as required by law. Media Solutions shall at all times during the term of this Agreement maintain and pay for comprehensive general liability insurance affording protection to BAM and Media Solutions, naming BAM as an additional insured, for a combined bodily injury and property damage limit or liability of not less than $1 million for each occurrence. Media Solutions shall deliver to BAM a certificate of insurance for such policies containing a clause requiring the insurer to give BAM at least ten (10) days written notice of cancellation of such policies.

9. Termination: The Term may be terminated by either BAM or by Media Solutions only “For Cause”, as follows:

(1) You will be permitted to terminate this Agreement for Cause if:

(a) We fail to service the Stores in accordance with this agreement and we fail to cure any problems that you identify to us in writing within thirty (30) days after we receive the notice of the problems, or

(b) We breach any other material provision of this letter agreement and we fail to cure any breach that you identify to us in writing within thirty (30) days after we receive the notice of the breach, or

(c) We file for bankruptcy protection.

(2) We will be permitted to terminate this Agreement for Cause if:

(a) You fail to make any payment within fifteen (15) days after receiving written notice from us that your payment is late, or

(b) You breach any other material provision of this letter agreement and you fail to cure any breach that we identify to you in writing within thirty (30) days after you receive the notice of the breach, or

(c) You file for bankruptcy protection.

10. Dispute Resolution: We expect our relationship to continue to be mutually beneficial; however, if a dispute should arise, it is our goal to have the dispute resolved as expeditiously and cost-effectively as possible. Therefore, we both agree that if any dispute arises under our agreement, we both will submit the dispute to binding arbitration (i) with an arbitrator selected by the American Arbitration Association (AAA); (ii) under the Commercial Arbitration Rules of the AAA; and (iii) with the arbitration located in Birmingham AL.  We both agree to resort to the court system only to enforce an arbitration award or decree.

 

 

11. Confidentiality: Media Solutions and BAM agree to maintain the confidentiality of this agreement and the pricing structure, and not to disclose it to anyone other than legal advisors, accountants and consultants who agree to maintain its confidentiality, or under court order or otherwise required by law.

12. Force Majeure: Neither of us will be liable to the other by reason of any failure in performances of this agreement if the failure arises out of acts of God, acts of the other party, acts of governmental authority, fires, strikes, delays in transportation, riots, war, or any cause beyond the reasonable control of that party. If any such event delays performance, the time allowed for each performances will be appropriately extended.

13. Miscellaneous: All of the terms and conditions of this agreement will be binding on our and your successors and assigns. The agreement will be governed by the laws of the State of Alabama without reference to the choice of law doctrine of that state. This letter reflects the entire agreement of Media Solutions and BAM regarding the subject matter of this letter. If either you or we desire to waive any breach of the agreement, the waiver must be in writing and be signed by the party granting the waiver.

14. Scan Based Trading: It is agreed to by both parties that this agreement will remain in force until such time that Scan Based Trading (SBT) relationship is implemented at which time the agreement will convert to a Scan Based Trading agreement covering the same term. It is also acknowledged that before the parties implement Scan Based Trading or convert this agreement to a Scan Based Trading agreement, both parties must meet certain technological and financial requirements listed below but not limited to:

 

	
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Items to achieve prior to conversion:

a)  A one-time inventory will be taken at the time of conversion.

b)  Front-end processes will be reviewed.

c)  Loss prevention measures will be reviewed.

d)  The outstanding payable to Media Solutions will be reconciled at the date of conversion.

e)  Data feeds must be in place and tested.

	
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Provisions of SBT after conversion:

a)  Shrink will be handled based on Barnes and Noble industry accepted practices.

b)  BAM shall cause its sales systems to record the sale of the merchandise upon the merchandies being scanned at the point of sale.  Sales information by store, day, unit, title and issue shall be sent on a daily basis to Media Solutions.  Media Solutions shall prepare remittance reports based upon the information pertaining to this scanned sales information.

c)  Invoicing by Media Solutions will be weekly and will be based on SBT transactions of BAM sales as indicated above.

d)  Payment will be net 7 from the date of invoice transmission by Media Solutions and will be paid by ACH transfer.

15.  Conversion Inventory.  It is agreed by both parties that BAM will perform an inventory count of all stores on an agreed upon date prior to the effective date of this agreement.  The purpose of the inventory count will be to determine a beginning inventory for a traditional billing relationship.  BAM and Media Solutions agree to split the cost of counting of the inventory.

  

  

  

IN WITNESS WHEREOF, the parties have caused this agreement to be executed by their duly authorized officers as of this 27th day of October, 2010.

BOOKS-A-MILLION                                                                           MSOLUTIONS, LLC

BY:         /s/ Brian White                                                                      BY:  /s/ John Franznick                                                                

NAME:  Brian White                                                                           NAME:  John Franznick

TITLE:CFO                                                                                           TITLE: President

 

  

  

  

 Exhibit A

Media Solutions

Pricing

Magazines Discounts

Domestic                             Retail Less [****]

Imports                                Retail Less [****]

Weeklies                             Retail Less [****]

Comic Magazines              Retail Less [****]

All traditional RDA money collected will be granted Media Solutions where applicable.

Transportation Allowance

Media Solutions will provide Books-A-Million with a [****] freight allowance to ship all product via AWBC. Media Solutions will however, ship as directed by Books-A-Million as necessary. All billing (sales) related to any product commercially shipped will be excluded from net billing prior to payment of transportation allowance. Allowance will be paid monthly.

Promotional Allowances

Media Solutions will provide sales, billing and management of the various Books-A-Million promotional programs. Additionally Media Solutions will guarantee a additional [****] promotional allowance.

  

  

  

Exhibit B

Media Solutions

Incentives

Volume Incentive

Media Solutions will offer Books-A-Million a volume incentive program. This incentive will be paid for the life of the agreement. Payment will be made on a quarterly basis in the amount of [****]. Books-A-Million must be in compliance with all other articles and Exhibits of this agreement in order to receive this payment.

Existing Balances Payable to Media Solutions

Open invoices transacted and due under the Pay-On-Scan agreement dated March 22nd, 2010 will remain due. At the commencement of this agreement, outstanding Pay-On-Scan generated invoices will be paid, 1 per week, until all are paid and no unpaid P.O.S. invoice balance remains. The open balance(s) [old account # 50943] predating P.O.S. generated invoices must also be reconciled and paid within fifteen (15) days of the approval of the reconciliation by both parties.  If an agreement of these open items cannot be reached, both parties agree to resolution as outlined in paragraph 10.

 

All returns after the effective date of this contract will be credited to BAM.

 

All amounts due BAM for incentives, allowances that remain unpaid prior to signing this agreement must be paid at the within 15 days of the effective date of the agreement.

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