<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 15, 1997
REGISTRATION NO. 333-37159
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
IOMED, INC.
(NAME OF ISSUER IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
UTAH 2834 87-0441272
(STATE OF INCORPORATION) (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
3385 WEST 1820 SOUTH
SALT LAKE CITY, UTAH 84104
(801) 975-1191
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES AND
PRINCIPAL PLACE OF BUSINESS)
------------------------
NED M. WEINSHENKER, PH.D.
CHIEF EXECUTIVE OFFICER
3385 WEST 1820 SOUTH
SALT LAKE CITY, UTAH 84104
(801) 975-1191
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
J. GORDON HANSEN, ESQ. RODD M. SCHREIBER, ESQ.
ROBERT C. DELAHUNTY, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
SCOTT R. CARPENTER, ESQ. 333 WEST WACKER DRIVE
PARSONS BEHLE & LATIMER CHICAGO, ILLINOIS 60606
201 SOUTH MAIN STREET, SUITE 1800 (312) 407-0700
SALT LAKE CITY, UTAH 84111
(801) 532-1234
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ------------------
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH A DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses, other than underwriting
discounts and commissions, payable by the Company in connection with the sale of
the Common Shares being registered. All the amounts shown are estimates except
for the registration fee and the NASD filing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............... $ 8,712
NASD Filing Fee................................................... 3,375
National Market Listing Fee....................................... 33,000
Printing and Engraving Expenses................................... 200,000
Legal Fees and Expenses........................................... 250,000
Accounting Fees and Expenses...................................... 125,000
Blue Sky Qualification Fees and Expenses.......................... 15,000
Transfer Agent and Registrar Fees and Expenses.................... 5,000
Other Non-Accountable Underwriting Expense........................ 245,000
Miscellaneous..................................................... 31,913
--------
Total................................................... $917,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation limit the personal liability of
directors and officers for monetary damages to the maximum extent permitted by
Utah law. Under Utah law, such limitations include monetary damages for any
action taken or failed to be taken as an officer or director except for (i)
amounts representing a financial benefit to which the person is not entitled,
(ii) liability for intentional infliction of harm on the Corporation or its
shareholders, (iii) unlawful distributions, or (iv) an intentional violation of
criminal law. The Articles of Incorporation also provide that the Company will
indemnify its directors and officers against any damages arising from their
actions as agents of the Company, and that the Company may similarly indemnify
its other employees and agents. The Company is also empowered under its Articles
of Incorporation to enter into indemnification agreements with its directors and
officers.
The Company's Bylaws provide that, to the full extent permitted by the
Company's Articles of Incorporation and the Utah Revised Business Corporation
Act, the Company will indemnify (and advance expenses to) the Company's
officers, directors and employees in connection with any action, suit or
proceeding (civil or criminal) to which those persons are made party by reason
of their being a director, officer or employee). Any such indemnification will
be in addition to the advancement of expenses.
The terms of the Company's Stock Option Plan provide that, to the fullest
extent permitted by the Company's Articles of Incorporation and Bylaws and by
Utah law, no member of the committee which administers the plan will be liable
for any action or omission taken with respect to the plan or any options issued
thereunder. The Plan also provides that no member of the Board of Directors will
be liable for any action or determination made in good faith with respect to the
Plan or any option granted thereunder.
There is no pending litigation or proceeding involving a director, officer,
employee or other agent of the Company as to which indemnification is being
sought, nor is the Company aware of any pending or threatened litigation that
may result in claims for indemnification by any director, officer, employee or
other agent.
II-1
<PAGE> 3
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The Company has entered into five transactions in the past three years
involving the issuance of its securities under certain transactional exemptions
of the Securities Act of 1933.
On February 20, 1996, the Company issued to Laboratoires Fournier 337,837
Common Shares in conversion and satisfaction of a non-interest bearing
$3,000,000 promissory note sold to Laboratoires Fournier in 1993. On November
29, 1996, the Company issued 37,202 Common Shares to CHIC, an affiliate of CHCA,
for a total purchase price of $250,000. In connection with that transaction, on
December 1, 1996, the Company also issued to ACH, a subsidiary of CHCA, a
warrant to acquire up to 44,791 Common Shares at an exercise price of $8.88 per
share. In March 1997, the Company issued two promissory notes (one for $10.0
million and the other for $5.0 million) to Elan and delivered to Elan a warrant
to purchase 104,166 Common Shares in connection with the purchase of certain
technology from Elan. Effective November 1, 1997, the Company issued Novartis
238,541 Common Shares and warrants to acquire 18,750 Common Shares in connection
with the exchange by Novartis of its 20% equity interest in Dermion for an
equity position in the Company pursuant to the provisions of the 1997
Amendments.
In connection with each of these isolated issuances of the Company's
securities, each purchaser of those securities represented and warranted to the
Company that it (i) was aware that the securities had not been registered under
federal securities laws, (ii) acquired the securities for its own account for
investment purposes and not with a view to or for resale in connection with any
distribution for purposes of the federal securities laws, (iii) understood that
the securities would need to be indefinitely held unless registered or an
exemption from registration applied to a proposed disposition, (iv) was aware
that the certificate representing the securities would bear a legend restricting
their transfer, and (v) was aware that there was no public market for the
securities. The Company believes that, in light of the foregoing, and in light
of the sophisticated nature of each of the acquirers, the sale of the Company's
securities to the respective acquirers did not constitute the sale of an
unregistered security in violation of the federal securities laws and
regulations by reason of the exemption provided under sec. 4(2) of the
Securities Act, and the rules and regulations promulgated thereunder.
Concurrently with the closing of the Offering, Elan will acquire, directly
from the Company in private placement transactions, approximately 833,333 Common
Shares (subject to adjustment as described below) for approximately $10.2
million (the amount outstanding under the $10.0 million note) and approximately
$5.1 million of Common Shares at a price per share equal to the initial public
offering price hereunder. Simultaneously with such purchase, the Company will
repay the Elan Notes, including interest thereon. If the initial public offering
price hereunder is less than $12.00 per share, the number of Common Shares that
Elan will have the right to purchase for approximately $10.2 million (the amount
outstanding under the $10.0 million note) will be equal to approximately $10.2
million divided by the initial public offering price hereunder. Elan has
represented in the Elan agreements that it is aware that those Common Shares
will not be registered under federal securities laws, will acquire those Common
Shares for its own account and for investment purposes, understands that the
Common Shares will need to be held indefinitely unless registered or an
exemption from registration applies to any proposed disposition, and that the
certificates representing the shares will bear a restrictive legend. In light of
the foregoing, the Company believes that the acquisition of the approximately
833,333 Common Shares (subject to adjustment under certain circumstances) and
the approximately $5.1 million of Common Shares at a price per share equal to
the initial public offering price hereunder in private placement transactions
will not constitute the sale of an unregistered security in violation of federal
securities law by reason of the exemption provided under sec. 4(2) of the
Securities Act.
II-2
<PAGE> 4
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- ----------------------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement
3.1** Amended and Restated Articles of Incorporation of the Company
3.2** Amended and Restated Bylaws of the Company
4.1** Reference is made to Exhibit 3.1
4.2* Specimen of Common Share Certificate
5.1* Opinion of Parsons Behle & Latimer
10.1** Lease between the Company and Hayter Properties, Inc., dated September 1,
1997
10.2**** License Agreement between the Company and Elan International Services, Ltd.,
dated April 14, 1997
10.3**** License Agreement between the Company and Drug Delivery Systems, Inc., dated
April 14, 1997
10.4** Promissory Note issued by the Company to Elan International Management,
Ltd., in the principal amount of $10,000,000, dated April 14, 1997
10.5** Promissory Note issued by the Company to Elan International Management,
Ltd., in the principal amount of $5,000,000, dated April 14, 1997
10.6**** Note Purchase and Warrant Agreement among the Company, Elan International
Services, Ltd. And Elan International Management, Ltd. dated April 14, 1997
10.7 Warrant issued to Elan International Services, Ltd., dated April 14, 1997
10.8** Registration Rights Agreement between the Company and Elan International
Services, Ltd., dated April 14, 1997
10.9**** Asset Acquisition Agreement between the Company and Fillauer, Inc., dated
December 27, 1996
10.10**** License Agreement between the Company and Fillauer, Inc., dated December 26,
1996.
10.11 Warrant issued to Alliance of Children's Hospitals, Inc., dated December 1,
1996
10.12** Stock Purchase Agreement between the Company and Child Health Investment
Corporation, dated November 29, 1996
10.13*** Manufacturing Agreement between the Company and KWM Electronics Corporation,
dated November 1, 1996
10.14**** Contribution Agreement between the Company and Dermion, Inc., dated March
29, 1996
10.15*** Patent License Agreement between the Company and Dermion, Inc., dated March
29, 1996
10.16**** Research and Development Agreement among the Company, Dermion, Inc. and
Ciba-Geigy Corporation, dated March 29, 1996
10.17**** Stock Purchase Agreement among the Company, Dermion, Inc. and Ciba-Geigy
Corporation, dated March 29, 1996
10.18** Stockholders' Agreement among the Company, Dermion, Inc. and Ciba-Geigy
Corporation, dated March 29, 1996
10.19**** Agreement between the Company and Laboratoires Fournier S.C.A., dated
February 20, 1996
10.20*** Agreement between the Company and ALZA Corporation, dated July 28, 1993
</TABLE>
II-3
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- ----------------------------------------------------------------------------
<S> <C>
10.21**** Supply Agreement between the Company and Abbot Laboratories, Inc., dated
April 27, 1993
10.22** Stock Purchase Agreement between the Company and The CIT Group/Venture
Capital, Inc., dated March 8, 1993
10.23** Stock Purchase Agreement between the Company and certain investors, dated
February 19, 1993
10.24 License Agreement between the Company and the University of Utah Research
Foundation, dated October 1, 1992
10.25 Warrant issued to Silicon Valley Bank, dated June 25, 1992
10.26** Company 1997 Share Incentive Plan
10.27**** Preferred Stock Purchase Agreement between the Company, Newtek Ventures, MBW
Venture Partners, Michigan Investment Fund, Utah Ventures, Cordis
Corporation, Ian R.N. Bund, James R. Weersing and Robert J. Harrington,
dated August 4, 1987
10.28** Exchange Agreement among the Company, Novartis Pharmaceuticals Corporation
and Dermion, Inc., dated November 1, 1997
10.29** Warrant to Purchase Shares of Common Stock in favor of Novartis
Pharmaceuticals Corporation, dated November 1, 1997
10.30** First Amendment of Research & Development Agreement among the Company,
Novartis Pharmaceuticals Corporation and Dermion, Inc. dated November 1,
1997.
10.31**** Supply Agreement between the Company and Luitpold Pharmaceuticals,
Inc./American Regent Laboratories, Inc. dated December 4, 1994
11.1** Statement re computation of earnings per share
21.1** Schedule of Subsidiaries
23.1** Consent of Parsons Behle & Latimer
23.2** Consent of Ernst & Young LLP
23.3** Consent of Workman Nydeggar & Seeley
24.1** Power of Attorney (see signature page)
27.1** Financial Data Schedule
</TABLE>
- ---------------
Filed herewith
* To be filed by amendment
** Previously filed
*** Confidential portions omitted and previously filed separately with the
Commission.
**** Confidential portions omitted and filed herewith
(B) FINANCIAL STATEMENT SCHEDULES
All required financial statement schedules are included as part of the
Consolidated Financial Statements.
II-4
<PAGE> 6
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes that:
(1) The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreements
certificates in such denominations and registered in such names as required
by the underwriters to permit prompt delivery to each purchaser.
(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(3) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(4) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Salt Lake City, State of Utah on the
15th day of December, 1997.
IOMED, Inc.
/s/ NED M. WEINSHENKER
--------------------------------------
By: Ned M. Weinshenker, Ph.D.
Its: Chief Executive Officer and
Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Ned M. Weinshenker, and Robert J.
Lollini, and each of them, his attorneys-in-fact and agents, each with full
power of substitution and resubstitution, for him in any and all capacities, to
sign any and all amendments (including posteffective amendments) to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully as to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that each of said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------------- ------------------------ ----------------
<S> <C> <C>
/s/ NED M. WEINSHENKER President, Chief October 3, 1997
- ----------------------------------------------- Executive Officer and
Ned M. Weinshenker Director (Principal
Executive Officer)
/s/ ROBERT J. LOLLINI Vice President and Chief October 3, 1997
- ----------------------------------------------- Financial Officer
Robert J. Lollini (Principal Financial and
Accounting Officer)
/s/ JAMES R. WEERSING Chairman of the Board of October 3, 1997
- ----------------------------------------------- Directors
James R. Weersing
/s/ JOHN W. FARA Director October 3, 1997
- -----------------------------------------------
John W. Fara, Ph.D.
/s/ PETER J. WARDLE Director October 3, 1997
- -----------------------------------------------
Peter J. Wardle
/s/ STEVEN P. SIDWELL Director October 3, 1997
- -----------------------------------------------
Steven P. Sidwell
/s/ WARREN WOOD Director October 3, 1997
- -----------------------------------------------
Warren Wood
Director October 3, 1997
- -----------------------------------------------
Michael T. Sember
</TABLE>
II-6
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
-------- ------------------------------------------------------------------ ------------
<C> <S> <C>
1.1* Form of Underwriting Agreement....................................
3.1** Amended and Restated Articles of Incorporation of the Company.....
3.2** Amended and Restated Bylaws of the Company........................
4.1** Reference is made to Exhibit 3.1..................................
4.2* Specimen of Common Share Certificate..............................
5.1* Opinion of Parsons Behle & Latimer................................
10.1** Lease between the Company and Hayter Properties, Inc., dated
September 1, 1997.................................................
10.2**** License Agreement between the Company and Elan International
Services, Ltd., dated April 14, 1997..............................
10.3**** License Agreement between the Company and Drug Delivery Systems,
Inc., dated April 14, 1997........................................
10.4** Promissory Note issued by the Company to Elan International
Management, Ltd., in the principal amount of $10,000,000, dated
April 14, 1997....................................................
10.5** Promissory Note issued by the Company to Elan International
Management, Ltd., in the principal amount of $5,000,000, dated
April 14, 1997....................................................
10.6**** Note Purchase and Warrant Agreement among the Company, Elan
International Services, Ltd. And Elan International Management,
Ltd. dated April 14, 1997.........................................
10.7 Warrant issued to Elan International Services, Ltd., dated April
14, 1997..........................................................
10.8** Registration Rights Agreement between the Company and Elan
International Services, Ltd., dated April 14, 1997................
10.9**** Asset Acquisition Agreement between the Company and Fillauer,
Inc., dated December 27, 1996.....................................
10.10**** License Agreement between the Company and Fillauer, Inc., dated
December 26, 1996.................................................
10.11 Warrant issued to Alliance of Children's Hospitals, Inc., dated
December 1, 1996..................................................
10.12** Stock Purchase Agreement between the Company and Child Health
Investment Corporation, dated November 29, 1996...................
10.13*** Manufacturing Agreement between the Company and KWM Electronics
Corporation, dated November 1, 1996...............................
10.14**** Contribution Agreement between the Company and Dermion, Inc.,
dated March 29, 1996..............................................
10.15*** Patent License Agreement between the Company and Dermion, Inc.,
dated March 29, 1996..............................................
10.16**** Research and Development Agreement among the Company, Dermion,
Inc. and Ciba-Geigy Corporation, dated March 29, 1996.............
10.17**** Stock Purchase Agreement among the Company, Dermion, Inc. and
Ciba-Geigy Corporation, dated March 29, 1996......................
10.18** Stockholders' Agreement among the Company, Dermion, Inc. and Ciba-
Geigy Corporation, dated March 29, 1996...........................
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
-------- ------------------------------------------------------------------ ------------
<C> <S> <C>
10.19**** Agreement between the Company and Laboratoires Fournier S.C.A.,
dated February 20, 1996...........................................
10.20*** Agreement between the Company and ALZA Corporation, dated July 28,
1993..............................................................
10.21**** Supply Agreement between the Company and Abbot Laboratories, Inc.,
dated April 27, 1993..............................................
10.22** Stock Purchase Agreement between the Company and The CIT
Group/Venture Capital, Inc., dated March 8, 1993..................
10.23** Stock Purchase Agreement between the Company and certain
investors, dated February 19, 1993................................
10.24 License Agreement between the Company and the University of Utah
Research Foundation, dated October 1, 1992........................
10.25 Warrant issued to Silicon Valley Bank, dated June 25, 1992........
10.26** Company 1997 Share Incentive Plan.................................
10.27**** Preferred Stock Purchase Agreement between the Company, Newtek
Ventures, MBW Venture Partners, Michigan Investment Fund, Utah
Ventures, Cordis Corporation, Ian R.N. Bund, Jamers R. Weersing
and Robert J. Harrington, dated August 4, 1987....................
10.28** Exchange Agreement among the Company, Novartis Pharmaceuticals
Corporation and Dermion, Inc., dated November 1, 1997.............
10.29** Warrant to Purchase Shares of Common Stock in favor of Novartis
Pharmaceuticals Corporation, dated November 1, 1997...............
10.30** First Amendment of Research & Development Agreement among the
Company, Novartis Pharmaceuticals Corporation and Dermion, Inc.
dated November 1, 1997.
10.31**** Supply Agreement between the Company and Luitpold Pharmaceuticals,
Inc./American Regent Laboratories, Inc. dated December 4, 1994.
11.1** Statement re computation of earnings per share....................
21.1** Schedule of Subsidiaries..........................................
23.1** Consent of Parsons Behle & Latimer................................
23.2** Consent of Ernst & Young LLP......................................
23.3** Consent of Workman Nydeggar & Seeley..............................
24.1** Power of Attorney (see signature page)............................
27.1** Financial Data Schedule...........................................
</TABLE>
- ---------------
Filed herewith
* To be filed by amendment
** Previously filed
*** Confidential portions omitted and previously filed separately with the
Commission
**** Confidential portions omitted and filed herewith
<PAGE> 1
EXHIBIT 10.2
This Agreement is made the 14th day of April 1997
BY AND BETWEEN
ELAN CORPORATION plc
An Irish company, of Monksland, Athlone, Co. Westmeath, Ireland
AND
IOMED, Inc.
A Corporation organized and existing under the laws of the State of Utah,
having an office at 3385 West 1820 South, Salt Lake City, UT 84104, United
States of America.
<PAGE> 2
WHEREAS
- -- ELAN is beneficially entitled to the use of various patents, including the
ELAN IONTOPHORETIC PATENT RIGHTS, which have been granted or are pending
under the International Convention in relation to the development and
production of iontophoretic transdermal devices and drug specific dosage
forms for pharmaceutical devices, products and processes, and
- -- ELAN is knowledgeable in the development of iontophoretic transdermal
devices and drug specific dosage forms and has developed a unique range
of device and delivery systems designed to provide improved devices and
formulations of medicaments, and
- -- IOMED is desirous of entering into a licensing agreement with ELAN to,
further develop, manufacture and have manufactured in accordance with the
terms of this Agreement and to market, sell and distribute the PRODUCTS
in the TERRITORY without infringing any of the ELAN IONTOPHORETIC
INTELLECTUAL PROPERTY rights held by ELAN, and
- -- ELAN is prepared to license the ELAN IONTOPHORETIC PATENT RIGHTS in the
TERRITORY to IOMED.
NOW IT IS HEREBY AGREED AS FOLLOWS:
ARTICLE I: DEFINITIONS
1.1. In the present Agreement and any further agreements based thereon between
the Parties hereto, the following definitions shall prevail:
1. ADDITIONAL TERM shall have the meaning set forth in Article VIII,
Paragraph 2.
2. AFFILIATE shall mean any corporation or entity controlling,
controlled by or under the common control of ELAN or IOMED as the
case may be. For the purpose of this paragraph, "control" shall
mean the direct or indirect ownership of at least fifty percent
(50%) of the outstanding shares or other voting rights of the
subject entity to elect directors, or if not meeting the preceding
criteria, any entity owned or controlled by or owning or controlling
at the maximum control or ownership right permitted in the country
where such entity exists.
<PAGE> 3
3. Agreement shall mean this agreement.
4. ****
5. ****
6. ****
7. ASSETS shall mean those items of tangible property being transferred
by ELAN to IOMED the details of which are set out in Appendix A.
8. cGCP, cGLP and cGMP shall mean current Good Clinical Practices,
current Good Laboratory Practices and current Good Manufacturing
Practices respectively.
9. CONFIDENTIAL INFORMATION shall mean information, material or data
relating to the FIELD not generally known to the public,
CONFIDENTIAL INFORMATION in tangible form disclosed hereunder shall
be marked as "Confidential" at the time it is delivered to the
receiving Party. CONFIDENTIAL INFORMATION disclosed orally shall be
identified as confidential or proprietary when disclosed and such
disclosure of CONFIDENTIAL INFORMATION shall be confirmed in writing
within thirty (30) days by the disclosing Party.
10. DDS shall mean Drug Delivery Systems, Inc.
11. DDS AGREEMENT shall mean the license agreement entered into between
IOMED and DDS on the EFFECTIVE DATE.
12. DDS IONTOPHORETIC PATENT RIGHTS shall have the meaning as defined in
Article I of the agreement being entered into by IOMED and Drug
Delivery Systems, Inc. on the EFFECTIVE DATE.
13. EFFECTIVE DATE shall mean the 14th day of April 1997.
14. ELAN shall mean Elan Corporation plc and any of its AFFILIATES.
<PAGE> 4
15. ELAN EXCLUDED TECHNOLOGY shall mean all intellectual property
including, without limitation any inventions, discoveries, material
and data whether or not protectable by patents, trade secrets,
trademark or copyright in relation *****.
16. ELAN IONTOPHORETIC INTELLECTUAL PROPERTY shall mean the ELAN
IONTOPHORETIC PATENT RIGHTS and/or the ELAN IONTOPHORETIC KNOW-HOW.
17 ELAN IONTOPHORETIC KOW-HOW shall mean all scientific or-technical
knowledge, information or expertise developed, produced, created or
acquired by or on behalf of ELAN which is not generally known to the
public, or to be developed by ELAN during the term of this
Agreement, relating to the FIELD, whether or not covered by any
patent, copyright, design, trademark or other industrial or
intellectual property rights as further set forth in Appendix B.
For the avoidance of doubt ELAN IONTOPHORETIC KNOW-HOW shall exclude
the ELAN EXCLUDED TECHNOLOGY.
18. ELAN IONTOPHORETIC PATENT RIGHTS shall mean all granted patents and
pending patent applications owned by, or licensed by ELAN, the
current status of which is set forth in Appendix C. ELAN
IONTOPHORETIC PATENT RIGHTS shall also include all continuations,
continuations-in-part, divisionals, re-issues and re-examinations of
such patents and patent applications and any patents issuing thereon
and extensions of any patents licensed hereunder and all foreign
counterparts thereto. ELAN IONTOPHORETIC PATENT RIGHTS shall
further include any patents or Patent applications covering any
improved PRODUCTS or methods of making or using the PRODUCTS
invented by ELAN during the term of this Agreement pursuant to such
research and development if any conducted by ELAN pursuant to
Article III Paragraph 1.
19. EX WORKS shall have the meaning as such term is defined in the ICC
Incoterms, 1990, International Rules for the Interpretation of Trade
Terms, ICC Publication No. 460.
20. FDA shall mean the United States Food and Drug Administration or any
other successor agency, whose approval is necessary to market the
PRODUCTS in the United States of America and its foreign equivalents
in such other countries of the TERRITORY where IOMED intends to
obtain regulatory approval.
<PAGE> 5
21. FIELD shall mean ****.
22. IOMED shall mean IOMED, Inc. and any of its AFFILIATES, including
DERMION Inc.
22. IOMED KNOW-HOW shall mean all scientific or technical knowledge,
information or expertise developed, produced, created or acquired by
or on behalf of IOMED which is not generally known to the public, or
developed by or on behalf of IOMED during the term of this
Agreement, relating to the PRODUCTS, excluding ELAN IONTOPHORETIC
KNOW-HOW, whether or not covered by any patent, copyright, design,
trademark or other industrial or intellectual property rights.
23. IOMED PATENT RIGHTS shall mean all granted patents and pending
patent applications owned or licensed by IOMED relating to the
FIELD, excluding ELAN IONTOPHORETIC PATENT RIGHTS and DDS PATENT
RIGHTS. IOMED PATENT RIGHTS shall also include all continuations,
continuations-in-part, divisionals, re-issues and re-examinations of
such patents and patent applications and any patents issuing thereon
and extensions thereof and all foreign counterparts thereto. IOMED
PATENT RIGHTS shall further include any patents or patent
applications covering any improved methods of making or using the
PRODUCTS invented or acquired by IOMED during the term of this
Agreement.
24. IND shall mean one or more investigational new drug applications
filed by ELAN or to be filed by IOMED with the FDA.
26. NET REVENUES shall mean:
26.1. ****:
26.1.1. ****
26.1.2. ****
<PAGE> 6
26.1.3. ****
****; and
26.2. ****;
26.2.1 ****;
26.2.2. ****;
26.2.3. ****;
26.2.4. ****; and
26.2.5. ****.
****.
<PAGE> 7
****.
****.
****.
27. NDA shall mean one or more of the New Drug Applications which IOMED
shall file, including any supplements or amendments thereto and
510(k)s which IOMED may file, for the PRODUCTS with the FDA.
28. OFFERING PARTY shall mean ****.
29. Party shall mean IOMED or ELAN, as the case may be, "Parties" shall
mean IOMED and ELAN.
30. PRODUCT(S) shall mean all devices or any parts thereof developed,
manufactured or sold by or on behalf of IOMED within the FIELD,
****.
31. RESEARCH AND DEVELOPMENT COST shall mean in the case of research
and development being conducted by or on behalf of ELAN for IOMED
pursuant to Article III Paragraph 1, the fully allocated costs
thereof calculated in accordance with generally accepted Irish
accounting principles consistently applied. 32. TERM shall have the
meaning set forth in Article VIII Paragraph 1.
33. TERRITORY means ****.
34. $ shall mean United States Dollars.
<PAGE> 8
1.2 In this Agreement
1.2.1 the singular includes the plural and vice versa, the masculine
includes the feminine and vice versa and references to natural
persons include corporate bodies, partnerships and vice versa.
1.2.2 any reference to a Article or Appendix shall unless otherwise
specified provided, be to an Article or Appendix of this Agreement.
1.2.3 the headings of this Agreement are for case reference only and shall
not affect its construction or interpretation.
ARTICLE II: THE LICENSE
1.1. ELAN shall remain proprietor of all the ELAN IONTOPHORETIC INTELLECTUAL
PROPERTY but hereby grants to IOMED for the term of the Agreement an
exclusive (including as to ELAN) license in the TERRITORY, with the right
to grant sublicenses pursuant to and in accordance with the provisions of
Article II Paragraph 2, to research develop, manufacture, have
manufactured for IOMED (or its permitted sublicenses), use, sell and
otherwise commercialize the ELAN IONTOPHORETIC INTELLECTUAL PROPERTY and
the PRODUCTS in the FIELD under the terms and conditions set out herein.
The exclusive nature of the licenses granted by ELAN are subject to
**** as set out in Appendix C. ELAN's license to IOMED shall specifically
exclude ELAN EXCLUDED TECHNOLOGY.
1.2. ****.
2.1. IOMED may sublicense rights which incorporate the ELAN IONTOPHORETIC
INTELLECTUAL PROPERTY ****, without the prior written consent of ELAN.
<PAGE> 9
2.2. Any sublicense other than permitted by paragraph 2.1. above, ****, shall
require the prior written consent of ELAN, which may be withheld in the
sole discretion of ELAN.
2.3. No sublicense granted by IOMED pursuant to Article II Paragraph 2 shall
authorize or permit the sublicense to grant further sublicenses ****.
IOMED shall use its reasonable endeavors to ensure that ELAN shall have
the same rights of audit and inspection vis a vis the sublicensee as ELAN
has pursuant to this Agreement concerning IOMED.
2.4. Insofar as the obligations owed by IOMED to ELAN are concerned, IOMED
shall remain responsible for all acts and omissions of any sublicenses as
if such acts and omissions were by IOMED; provided that no such acts or
omissions of such sublicensee will constitute a material breach by IOMED
for the purpose of Article VIII Paragraph 3. In the event that ELAN
terminates the Agreement pursuant to the provisions of Article VIII
Paragraph 3, due to the default of IOMED, then ELAN shall, with IOMED's
consent and assistance, notify each sublicensee appointed pursuant to
Article II Paragraphs 2.1. and 2.2. of its termination. If any
sublicensee elects to notify ELAN that it requires the continuation of the
licenses granted to IOMED pursuant to this Agreement, ELAN shall promptly
enter into good faith negotiations with sublicensee to establish a direct
contractual nexus between ELAN and such sublicensee. Such contractual
nexus shall, subject to ELAN's reasonable discretion, be on commercially
reasonable terms and shall to the extent practicable be on terms no less
favorable to the sublicensee than the terms of such sublicensees'
agreement with IOMED, and shall provide that the sublicensee shall take
over the applicable obligations owed by IOMED to ELAN pursuant to this
Agreement. Sales of PRODUCTS and other consideration payable to such a
sublicensee in relation to the PRODUCTS shall constitute NET REVENUES for
the purpose of calculating the sums payable by the sublicensee to ELAN.
****.
<PAGE> 10
3. It is contemplated that the physical transfer of the ELAN IONTOPHORETIC
KNOW-HOW to be licensed under this Agreement and the furnishing of copies
of relevant patent documentation regarding the ELAN IONTOPHORETIC PATENT
RIGHTS shall be completed within six months of the EFFECTIVE DATE. ELAN
shall, at its expense, provide all reasonable assistance within such
six-month period to IOMED to facilitate such transfer, provided, that in
the event that IOMED's requirements relating to such transfer are in
excess of the Parties' current reasonable, good faith, expectations, the
Parties shall negotiate in good faith reimbursement of ELAN's
out-of-pocket expenses. Any dispute under this Paragraph 3 shall be
resolved by referring such dispute to an arbitrator pursuant to the
provisions of Article IX Paragraph 14.
4. Insofar as the exercise by IOMED and its permitted sublicensees of the
ELAN IONTOPHORETIC INTELLECTUAL PROPERTY rights is concerned, and to the
extent permitted pursuant to its contractual obligations to ****, ELAN
agrees that during the TERM and the ADDITIONAL TERM ELAN shall not cite or
otherwise rely upon the patents licensed by ELAN from **** pursuant to the
**** AGREEMENT, or developed jointly by ELAN and **** pursuant to the ****
AGREEMENT, against IOMED or IOMED's sublicensees and ELAN shall use its
commercially reasonable endeavors to ensure that ELAN's sublicensees of
the **** TECHNOLOGY shall be bound in similar fashion. ELAN shall be
entitled to disclose such CONFIDENTIAL INFORMATION as ELAN considers
reasonably necessary in using such commercially reasonable endeavors to
potential sublicensees under obligations of confidentiality. As of the
date hereof (I) ELAN has no such sublicensees and (II) to the knowledge of
ELAN, there are currently no grounds to cite such patents and there are no
express provisions of the **** AGREEMENT requiring ELAN to cite such
patents,
5. IOMED shall mark or have marked the patent number an all PRODUCTS, or
otherwise reasonably communicate to the trade concerning the existence of
any ELAN IONTOPHORETIC PATENT RIGHTS for the countries within the
TERRITORY in such a manner as to ensure compliance with, and
enforceability under, applicable laws.
Performance by IOMED
6. IOMED shall use commercially reasonable efforts consistent with its
financial resources and capital constraints, to research, develop,
register, market and promote the PRODUCTS and to exploit the ELAN
IONTOPHORETIC INTELLECTUAL PROPERTY in the major markets of the TERRITORY.
<PAGE> 11
7. **** IOMED shall report on the ongoing sales performance of the PRODUCTS,
and the exploitation of the ELAN IONTOPHORETIC INTELLECTUAL PROPERTY in
the TERRITORY, ****. For the avoidance of doubt, the Parties agree that
all information furnished to ELAN pursuant to this Paragraph shall
constitute CONFIDENTIAL INFORMATION for the purposes of this Agreement.
8. ****.
9. ****.
<PAGE> 12
10. ****.
11. In consideration for the sum of ****, ELAN shall transfer title only to
the ASSETS which are relevant to the IONTOPHORETIC INTELLECTUAL PROPERTY
(but for the avoidance of doubt shall not include the time or employment
of any employees), as set forth on Appendix A hereto. ELAN shall deliver
the ASSETS EX WORKS the appropriate ELAN facilities, to IOMED, and/or any
party designated by IOMED, in proper packaging so as to permit safe
storage and transport. It is contemplated that the physical transfer of
the ASSETS shall be completed within **** of the EFFECTIVE DATE. ****.
ELAN shall not transfer title to the ELAN IONTOPHORETIC INTELLECTUAL
PROPERTY.
12. Insofar as the obligations of ELAN set out in this Agreement concerning
the **** AGREEMENT is concerned, ELAN hereby confirms that ****, a wholly
owned subsidiary and AFFILIATE of ELAN which is a contracting party to the
**** AGREEMENT, is aware of the terms of this Agreement and consents to
such obligations as ELAN is undertaking in this Agreement as relate to the
**** AGREEMENT being undertaken by ELAN on its behalf, including the
obligations set forth in Article II Paragraphs 9 and 10.
<PAGE> 13
13. IOMED hereby confirms that it intends to manufacture or procure the
manufacture of the PRODUCTS in a manner which fully complies with all
applicable statutes, ordinances and regulations of the United States of
America and other countries with respect to the manufacture of the
PRODUCTS including, but not limited to, the U.S. Federal Food, Drug and
Cosmetic Act and regulations thereunder, eGLP, cGCP and cGMP.
ARTICLE III: DEVELOPMMNT OF THE PRODUCTS
1. IOMED shall be responsible for the cost of the further development,
registration, manufacture and marketing of the PRODUCTS. The Parties
shall each negotiate in good faith the extent to which ELAN shall provide
research and development services to IOMED. In the event that ELAN
provides such services, such services shall be reimbursed by IOMED ****
ARTICLE IV: FINANCIAL PROVISIONS
1. License Royalties
1. In consideration of the rights and license granted to IOMED to the ELAN
IONTOPHORETIC PATENT RIGHTS by virtue of this Agreement, IOMED shall pay
to ELAN, the sum of **** United States Dollars **** in cash by wire
transfer due upon execution of this Agreement and payable within two
business days of the EFFECTIVE DATE.
2. Royalty on NET REVENUES
2.1. In consideration of the license of the ELAN IONTOPHORETIC PATENT RIGHTS to
IOMED, and subject to the provisions of Article IV Paragraphs 2.2. and
2.3, the royalty payable by IOMED to ELAN shall be **** percent (****%) on
NET REVENUES generated on or after the EFFECTIVE DATE.
<PAGE> 14
2.2. ****
2.3. ****
2.4. IOMED shall not discriminate in its commercialization strategy and pricing
policy as between the PRODUCTS referred to in Article IV Paragraphs 2.1.
and 2.2.
2.5. ****
<PAGE> 15
Royalty Payments, Reports and Records
3.1. Within forty five (45) days of the end of each quarter, IOMED shall notify
ELAN of the NET REVENUES of each of the PRODUCTS and arising from the
exploitation of the ELAN IONTOPHORETIC INTELLECTUAL PROPERTY and/or the
IOMED PATENT RIGHTS and/or the IOMED KNOW-HOW, for that preceding quarter.
Payments shown by each calendar quarter report to have accrued shall be
due on the date such report is due. All payments due hereunder shall be
made to the designated bank account of ELAN in accordance with such timely
written instructions as ELAN shall from time to time provide.
3.2. IOMED shall keep and shall cause its AFFILIATES and sublicensees to keep
true and accurate records of sales of PRODUCTS, other transactions giving
rise to NET REVENUS, and the royalties payable to ELAN under Article IV
hereof and shall deliver to ELAN a written statement thereof within forty
five (45) days following the and of each calendar quarter (or any past
thereof in the first or last calendar quarter of this Agreement) for such
calendar quarter. Said written statements shall set forth (I) for each
PRODUCT on ****, the calculation of NET REVENUES from gross revenues
during that calendar quarter, the applicable percentage royalty rates, and
a computation of such royalties due and (II) such details of the
transactions arising from the exploitation of the ELAN IONTOPHORETIC
INTELLECTUAL PROPERTY and/or the IOMED PATENT RIGHTS and/or the IOMED
KNOW-HOW as are relevant to the calculation of NET REVENUES (the "Royalty
Statement").
3.3. AU payments due hereunder shall be made in United States Dollars.
Payments due on NET REVENUES received in a currency other than United
States Dollars shall first be calculated in the foreign currency and then
converted to United States Dollars on the basis of the average of the
exchange rates in effect for the purchase of United States Dollars with
such foreign currency quoted in the Wall Street Journal (or comparable
publication if not quoted in the Wall Street Journal) with respect to the
currency of the country or origin of such payment for the last business
day of each month for which the payment is being made.
<PAGE> 16
3.4. ELAN shall have the right to have access, on reasonable notice, to IOMED's
or IOMED's sublicensee's financial documentation and records during
reasonable business hours for the purpose of verifying the royalties
payable as provided in this Agreement for the two preceding years. This
right may not be exercised more than once in any calendar year, and once a
calendar year is audited it may not be reaudited. For the avoidance of
doubt, the Parties agree that all information furnished to ELAN pursuant
to this Paragraph shall constitute CONFIDENTIAL INFORMATION for the
purposes of this Agreement.
Any adjustment required by such inspection shall be made within thirty
(30) days of the agreement of the Parties or, if not agreed, upon the
determination of an arbitrator to whom any dispute under this Paragraph
shall be submitted to arbitration pursuant to Article IX Paragraph 14. If
the adjustment payable to ELAN is greater than ****, then the cost to ELAN
for the inspection and if applicable the arbitration she be paid by IOMED.
In addition, IOMED shall pay interest to ELAN at **** (applicable as of
the date on which payment should have been made pursuant to Article IV
Paragraph 3.3.), from the date on which payment should have been made
pursuant to Article IV paragraph 3.3. until the date of payment.
ARTICLE V: REGISTRATION OF THE PRODUCTS
1. During the TERM and the ADDITIONAL TERM, IOMED shall be responsible for
filing and prosecuting all NDAs and other applications for regulatory
approvals. ELAN shall transfer the INDs held by it in relation to the
PRODUCTS. IOMED or its sublicensees shall file the NDAs with the FDA and
will use its reasonable efforts in prosecuting said NDA to approval.
IOMED shall thereafter maintain at its own cost the NDAs with the FDA for
the term of this Agreement. Subject to IOMED's reasonable discretion
IOMED hereby agrees to provide to ELAN at ELAN's own cost access to such
NDAs as ELAN reasonably requests. ****. For the avoidance of doubt,
the parties agree that all information furnished to ELAN pursuant to this
Paragraph shall Institute CONFIDENTIAL INFORMATION for the purposes of
this Agreement.
<PAGE> 17
2. It is hereby acknowledged that there are inherent uncertainties involved
in the development and registration of pharmaceutical products with the
FDA or any other regulatory body in the TERRITORY insofar as obtaining
approval is concerned and such uncertainties form part of the business
risk involved in undertaking the form of commercial collaboration as set
forth in this Agreement.
ARTICLE VI: REPRESENTATIONS, WARRANTIES
1. ELAN represents to IOMED the following:
1.1 ELAN is duly and validly existing in the jurisdiction of its
incorporation and each other jurisdiction in which the conduct of
its business requires such qualification, and is in compliance with
all applicable laws, rules, regulations or orders relating to its
business and assets;
1.2 ELAN has full corporate authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby;
this Agreement has been duly executed and delivered by ELAN and
constitutes the legal and valid obligations of ELAN and is
enforceable against ELAN in accordance with its terms and the
execution, delivery and performance of this Agreement and the
transactions contemplated hereby and will not violate or result in a
default under or creation of lien or encumbrance under ELAN's
memorandum and articles of association or other organic documents,
any material agreement or instrument binding upon or affecting ELAN
or its properties or assets or any applicable laws, rules,
regulations or orders affecting ELAN or its properties or assets;
1.3 ELAN is not in material default of its memorandum and articles of
association or similar organic documents, any applicable material
laws or regulations or any material contract or agreement binding
upon or affecting it or its properties or assets and the execution,
delivery and performance of this Agreement and the transactions
contemplated hereby will not result in any such violation; and
<PAGE> 18
1.4 ****.
2. IOMED represents to ELAN the following:
2.1. IOMED is duly and validly existing in good standing in the
jurisdiction of its incorporation and each other jurisdiction in
which the conduct of its business requires such qualification, and
IOMED is in compliance with all applicable laws, rules, regulations
or orders relating to its business and assets;
2.2. IOMED has full corporate authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby;
this Agreement has been duly executed and delivered and constitutes
the legal and valid obligations of IOMED and is enforceable against
IOMED in accordance with its terms; and the execution, delivery and
performance of this Agreement and the transactions contemplated
hereby will not violate or result in a default under or creation of
lien or encumbrance under IOMED's certificate of incorporation,
by-laws or other organic documents, any material agreement or
instrument binding upon or affecting IOMED or its properties or
assets or any applicable laws, rules, regulations or orders
affecting IOMED or its properties or assets;
<PAGE> 19
2.3. IOMED is not in default of its charter or by-laws, any applicable
laws or regulations or any material contract or agreement binding
upon or affecting it or its properties or assets and the execution,
delivery and performance of this letter agreement and the
transactions contemplated hereby will not result in any such
violation.
2.4. IOMED represents and warrants that it has not granted any option,
license, right or interest to any third party which would conflict
with the terms of this Agreement.
2.5. ****.
ARTICLE VII PATENTS
1. ****.
2. The Parties agree that the following provisions of Article VII Paragraph
2. shall apply as regards the filing, prosecution and Maintenance of the
ELAN IONTOPHORETIC PATENT RIGHTS:
<PAGE> 20
2.1 ****.
2.2. ****.
2.3. ****.
<PAGE> 21
2.4. ****.
3. ****.
4. ****.
ARTICLE VIII: TERM AND TERMINATION
1. This Agreement is concluded for a period commencing as of the date of this
Agreement and shall expire ****.
<PAGE> 22
****.
2. In addition, for a period of **** commencing upon the expiration of
the TERM ("the ADDITIONAL TERM"), the licenses granted by ELAN pursuant to
Article II shall continue, provided, that the royalties payable during the
ADDITIONAL TERM to ELAN referred to in Article IV shall be ****
3. In addition to the rights of early or premature termination provided for
elsewhere in this Agreement, in the event that any of the term or
provisions hereof are incurably breached by either Party, the
non-breaching Party may immediately terminate this Agreement by written
notice. An incurable breach shall be committed when either Party is
dissolved, liquidated, discontinued, becomes insolvent or when any
proceeding is filed or commenced by either Party under bankruptcy,
insolvency or debtor relief laws (and not dismissed within ninety (90)
days). Subject to the other provisions of this Agreement in the event of
any other material breach, the non-breaching Party may terminate this
Agreement by the giving of written notice to the breaching Party that this
Agreement will terminate on the ninetieth (90th) day from notice unless
cure is sooner effected. If the breaching Party has proposed a course of
action to rectify the breach and is acting in good faith to rectify same
but has not cured the breach by the ninetieth (90th) day, the said period
shall be extended by such period as is reasonably necessary to permit the
breach to be rectified. In the event that a Party is entitled to
terminate this Agreement, such Party shall also be entitled to terminate
the DDS AGREEMENT. Furthermore in the event that a Party is entitled to
terminate the DDS AGREEMENT, such Party shall also be entitled to
terminate this Agreement. In the event that the breaching Party disputes
the validity of the of the right of the non-breaching Party to terminate
the Agreement pursuant to this Paragraph, either Party may refer the
dispute to an arbitrator pursuant to the provisions of Article IX
Paragraph 14. Pending the determination of the arbitrator, neither Party
may regard the Agreement as having been terminated and in particular shall
not allege or claim to any third party that the Agreement has been
terminated pursuant to this Paragraph.
<PAGE> 23
4. In the event that IOMED elects to proceed against ELAN for damages in
circumstances where IOMED would have been entitled to terminate the
Agreement pursuant to Article IX Paragraph 3 and IOMED obtains a final
order for damages from a court of competent jurisdiction which is not
subject of further appeal, IOMED may offset the said order for damages
against sums otherwise due to ELAN pursuant to Article IV until recovery
of the said judgment.
5. Upon termination of the Agreement:
5.1. any sums that were due from IOMED to ELAN prior to the exercise of
the right to terminate this Agreement shall be paid in full within
sixty (60) days of termination of this Agreement;
5.2. all confidentiality provisions (other than the obligations set out
in Article IX Paragraph 1.1, as they effect ELAN in the event of
termination of this Agreement by ELAN pursuant to Article VIII
Paragraph 3 due to the breach by IOMED) set out in this Agreement
shall remain in full force and effect for a period of ****;
5.3. all responsibilities and warranties shall insofar are appropriate
remain in full force and effect;
5.4. the rights of inspection and audit shall continue in force for the
period referred to in the relevant provisions of this Agreement;
5.5 termination of this Agreement for any reason shall not release any
Party hereto from any liability which, at the time of such
termination has already accrued to the other Party or which is
attributable to a period prior to such termination nor preclude
either party from pursuing all rights and remedies it may have
hereunder or at law or in equity with respect to any breach of this
Agreement;
5.6 in the event of termination of this Agreement by ELAN or IOMED
pursuant to Article VIII Paragraph 3, IOMED and ELAN shall promptly
return to the other Party all CONFIDENTIAL INFORMATION received from
the other Party (except one copy of which may be retained for
archival purposes);
<PAGE> 24
5.7 in the event this Agreement is terminated by ELAN or IOMED pursuant
to Article VIII Paragraph 3, IOMED and its sublicensees shall have
the right for a period of **** from termination to sell or
otherwise dispose of the stock of any PRODUCTS then on hand, which
such sale shall be subject to Article IV and the other applicable
terms of this Agreement. The foregoing provisions of this Paragraph
shall be subject to the Provisions of such agreement or agreements
as ELAN and one or more sublicensees conclude pursuant to Article II
Paragraph 2.4;
5.8 in the event this Agreement is terminated by ELAN or IOMED pursuant
to Article VIII Paragraph 3, the licenses granted by ELAN to IOMED
shall terminate and ELAN shall thenceforth be entitled to exploit
the ELAN INTELLECTUAL PROPERTY together with any improvements made
by IOMED to the ELAN INTELLECTUAL PROPERTY; provided that the
foregoing provision shall be subject to the provisions of Article II
Paragraph 2.4. and any agreements entered into pursuant to the said
Paragraph, and
5.9. Articles I, Article II Paragraph 2.4, Article VI, Article VII
Paragraph 1, Article VIII and Article IX (other than Paragraph 3
thereof) shall survive the termination or expiration of this
Agreement for any reason.
ARTICLE IX: SUNDRY CLAUSES
1. Secrecy
1.1. Each of the parties agrees, during the TERM and the ADDITIONAL TERM, to
hold in confidence and not disclose to any third parties, including any of
the OFFERING PARTIES, except to the extent required by applicable law or
administrative or judicial process, the ELAN IONTOPHORETIC INTELLECTUAL
PROPERTY or the contents or nature thereof, provided, that the foregoing
covenant shall not be applicable to ELAN in the event that the foregoing
covenant shall not be applicable to ELAN in the event that IOMED (i)
abandons or (ii) ceases to develop or commercialize (and provides notice
thereof to ELAN) any such ELAN IONTOPHORETIC INTELLECTUAL PROPERTY and
ELAN determines subsequently to develop products or technologies based on
such ELAN IONTOPHORETIC INTELLECTUAL PROPERTY, irrespective of whether it
is reduced to patent.
<PAGE> 25
Each Party may make such disclosure to its directors, officers and agents
and, in the case of IOMED, its potential and actual sublicensees and other
parties to whom such disclosure is appropriate to enable IOMED to conduct
its regular business (each of whom shall be bound by IOMED's disclosure
agreements), who shall be informed of such confidentiality obligation and
for whose breach the disclosing party shall be responsible.
1.2. Subject to the provisions of Paragraph 1. 1., any whether written or oral
(oral information shall be reduced to writing within one month by the
Party giving the oral information and the written form shall be furnished
to the other Party) pertaining to the ELAN IONTOPHORETIC INTELLECTUAL
PROPERTY or the PRODUCTS that has been or will be communicated or
delivered by ELAN to IOMED, and any information from time to time
communicated or delivered by IOMED to ELAN, including without limitation,
trade secrets, business methods, and cost, supplier, manufacturing and
customer information, shall be treated by IOMED and ELAN, respectively, as
CONFIDENTIAL INFORMATION, and shall not be disclosed or revealed to any
third Party whatsoever or used in any manner except as expressly provided
for herein; provided, however, that such CONFIDENTIAL INFORMATION shall
not be subject to the restrictions and prohibitions set forth in this
section to the extent that such CONFIDENTIAL INFORMATION:
1.2.1. is available to the public in public literature or otherwise, or
after disclosure by one Party to the other becomes public
knowledge through no default of the Party receiving such
information; or
1.2.2. was known to the Party receiving such information prior to the
receipt of such information by such Party, whether received before
or after the date of this Agreement; or
1.2.3. is obtained by the Party receiving such information from a third
party not subject to a requirement of confidentiality with respect
to such information; or
1.2.4. is required to be disclosed pursuant to: (A) any order of a court
having jurisdiction and power to order such information to be
released or made public; or (B) other requirement of law, provided
that if the receiving Party becomes legally required to disclose
any CONFIDENTIAL INFORMATION, the receiving Party shall give the
disclosing Party prompt notice of such fact so that the disclosing
Party may obtain a protective order or other appropriate remedy
concerning any such disclosure.
<PAGE> 26
The receiving Party shall fully cooperate with the disclosing
Party in connection with the disclosing Party's efforts to obtain
any such order or other remedy. If any such order or other remedy
does not fully preclude disclosure, the receiving Party shall make
such disclosure only to the extent that such disclosure is legally
required; or
1.2.5. is independently developed by or for the Party by persons not
having access to the CONFIDENTIAL INFORMATION of the other Party.
1.3. Each Party shall take all such precautions as it normally takes with its
own CONFIDENTIAL INFORMATION to prevent any improper disclosure of such
CONFIDENTIAL INFORMATION to any third Party, provided however, that such
CONFIDENTIAL INFORMATION may be disclosed within the limits required to
obtain any authorization from the FDA or any other United States of
America or foreign governmental or regulatory agency or, with the prior
written consent of the other Party, which shall not be unreasonably
withheld, or as may otherwise be required in connection with the purposes
of this Agreement.
1.4. IOMED agrees that it will not use, directly or indirectly, any ELAN
IONTOPHORETIC INTELLECTUAL PROPERTY, or other CONFIDENTIAL INFORMATION
disclosed to IOMED or obtained from ELAN pursuant to this Agreement, other
than as expressly provided herein. ELAN agrees that it will not use,
directly or indirectly, any IOMED KNOW-HOW, IOMED PATENT RIGHTS or other
CONFIDENTIAL INFORMATION disclosed to ELAN or obtained from IOMED pursuant
to this Agreement, other than as expressly provided herein.
1.5 IOMED and ELAN will not publicize the existence of this Agreement in any
way without the prior written consent of the other subject to the
disclosure requirements of applicable laws and regulations. In the event
that either Party wishes to make an announcement concerning the Agreement,
that Party will seek the consent of the other Party. The terms of any
such announcement shall be agreed in good faith.
2. Assignments/Subcontracting
IOMED may not assign (other than by operation of law in the event of an
acquisition of IOMED, or a merger or similar transaction, subject to the
provisions as set forth in Article IX Paragraph 3) the rights licensed by
ELAN under Article II without the prior written consent of ELAN, which may
be withheld in ELAN's sole discretion. ELAN shall be entitled to assign
its rights and obligations to an AFFILIATE.
<PAGE> 27
ELAN may not assign to an unaffiliated third party (other than by
operation of law in the event of an acquisition of ELAN, or a merger or
similar transaction) its rights under this Agreement without the prior
written consent of IOMED, which may be withheld in IOMED's sole
discretion.
3. Certain Changes of Control.
****.
****.
4. Parties bound
This Agreement shall be binding upon and enure for the benefit of Parties
hereto, their successors and permitted assigns.
<PAGE> 28
5. Severability
If any provision in this Agreement is agreed by the Parties to be, or is
deemed to be, or becomes invalid, illegal, void or unenforceable under any
law that is applicable hereto, (i) such provision will be deemed amended
to conform to applicable laws so as to be valid and enforceable or, if it
cannot be so amended without materially altering the intention of the
Parties, it will be deleted, with effect from the date of such agreement
or such earlier date as the Parties may agree, and (ii) the validity,
legality and enforceability of the remaining provisions of this Agreement
shall not be impaired or affected in any way.
6. Force Majeure
Neither Party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay results from
cause beyond its reasonable control, including, without limitation, acts
of God, fires, strikes, acts of war, or intervention of a Government
Authority, non-availability of raw materials, but any such delay or
failure shall be remedied by such Party as soon as practicable.
7. Relationship of the Parties
Nothing contained in this Agreement is intended or is to be construed to
constitute ELAN and IOMED as partners or joint venturers or either Party
as an employee of the other. Neither Party hereto shall have any express
or implied right or authority to assume or create any obligations on
behalf of or in the name of the other Party or to bind the other Party to
any contract, agreement or undertaking with any third party
8. Amendments
No amendment, modification or addition hereto shall be effective or
binding on either Party unless set forth in writing and executed by a duly
authorized representative of both Parties.
9. Waiver
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with
such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any future breach or failure to perform or of any
right arising under this Agreement.
<PAGE> 29
10. Headlines
The section headings contained in this Agreement are included for
convenience only and form no part of the agreement between the Parties.
Save as otherwise provided herein, references to articles, paragraphs,
clauses and appendices are up to those contained in this Agreement.
11. No effect on other agreements
No provision of this Agreement shall be construed so as to negate, modify
or affect in any way the provisions of any other agreement between the
Parties unless specifically referred to, and solely to the extent
provided, in any such other agreement.
12. Applicable Law
This Agreement (a) shall be governed by and construed in accordance with
the internal laws of the State of New York, without regard to principles
of conflicts of law, and subject to those provisions where the Parties
have conflicts of law expressly agreed to submit a dispute to arbitration,
each party consents to the exclusive jurisdiction of any Federal or state
court sitting in the County, City and State of New York over any dispute
arising from this Agreement.
13. Notice
13.1. Any notice to be given under this Agreement shall be sent in writing
in English by registered airmail or telefaxed to:
ELAN at
Elan Corporation plc.
Monkstand, Athlone,
Co. Westmeath,
Ireland.
Attention: President Elan Pharmaceutical
Technologies, a division of Elan Corporation
plc
Telephone: 353 902 94666
Telefax: 353 902 92427
<PAGE> 30
IOMED at
IOMED, Inc.
3385 West 1820 South,
Salt Lake City, UT 84104,
United States of America
Attention: President and Chief Executive Officer
Telephone: 1-801-975-1191
Telefax: 1-801-972-9072
or to such other addresses) and telefax numbers as may from time to
time be notified by either Party to the other hereunder.
13.2. Any notice sent by mail shall be deemed to have been delivered
within seven (7) working days after dispatch and any notice sent by
telefax shall be deemed to have been delivered within twenty four
(24) hours of the time of the dispatch. Notice of change of address
shall be effective upon receipt provided that such date of receipt
must be a business day for the Party to whom the notice is
delivered.
14. Arbitration
Any dispute under this Agreement which is not settled by mutual consent
and which is the subject of an arbitration clause shall be finally settled
by binding arbitration conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association by an arbitrator
appointed in accordance with said rules. The arbitration shall be held in
New York, New York and the arbitrator shall be to the extent practicable
experienced as to the subject matter of the dispute such as an independent
expert in pharmaceutical product development and marketing (including
clinical development and regulatory affairs) or an independent patent
attorney as the case may be. The arbitrator shall determine what
discovery will be permitted, consistent with the goal of limiting the cost
and time which the Parties must expend for discovery; provided the
arbitrator shall permit such discovery as he deems necessary to permit an
equitable resolution of the dispute. Any written evidence originally in a
language other than English shall be submitted in English translation
accompanied by the original or a true copy thereof. The costs of the
arbitration, including administrative and arbitrator's fees, shall be
shared equally by the Parties and each Party shall bear its own costs and
attorneys' and witness' fees incurred in connection with the arbitration,
provided that the prevailing Party may be awarded the reasonable costs and
fees incurred in connection with the arbitration at the discretion of the
arbitrator.
<PAGE> 31
A disputed performance or suspended performance pending the resolution of
the arbitration must be completed within thirty (30) days following the
final decision of the arbitrators or such other reasonable period as the
arbitrators determine in a written opinion. Any arbitration subject to
this Paragraph 14 shall be completed within one (1) year from the filing
of notice of a request for such arbitration. The arbitration proceedings
and the decision shall not be made public without the joint consent of the
Parties and each Party shall maintain the confidentiality of such
proceedings and decision unless (a) otherwise permitted by the other Party
or (b) otherwise required by the applicable law in which case the
provisions of Article IX Paragraph 1.2.4. shall be applicable. ****.
15. Withholding
Any income or other taxes which IOMED is required by law to pay or
withhold on behalf of ELAN with respect to royalties and any other moneys
payable to ELAN under this Agreement shall be deducted from the amount of
such royalties and moneys due. IOMED shall furnish ELAN with proof of
such payments. Any such tax required to be paid or withheld shall be an
expense of and borne solely by ELAN. IOMED shall promptly provide ELAN
with a certificate or other documentary evidence to enable ELAN to support
a claim for a refund or a foreign tax credit with respect to any such tax
so withheld or deducted by IOMED. Both Parties will reasonably cooperate
in completing and filing documents required under the provisions of any
applicable tax treaty or under any other applicable law, in order to
enable IOMED to make such payments to ELAN without any deduction or
withholding.
16. Indemnity
16.1. ELAN shall indemnify, defend and hold harmless IOMED from all actions,
losses, claims, demands, damages, costs and liabilities (including
reasonable attorneys' fees) to which IOMED is or may become subject
insofar as they arise out of or are alleged or claimed to arise out of any
breach by ELAN of any of its obligations under this Agreement or
warranties of ELAN.
<PAGE> 32
16.2. ****
16.3. As a condition of obtaining an indemnity in the circumstances set out
above, the Party seeking an indemnity shall:
16.3.1 ****;
16.3.2. ****;
16.3.3. ****;
16.3.4. ****; and
16.3.5. ****.
16.4. Notwithstanding anything to the contrary in this Agreement, ELAN and IOMED
shall not be liable to the other by reason of any representation or
warranty, condition or other term or any duty of common law, or under the
express terms of this Agreement for any consequential or incidental loss
or damage (whether for loss of profit or otherwise) and whether occasioned
by the negligence of the respective Parties, their employees or agents or
otherwise.
<PAGE> 33
17. Entire Agreement
This Agreement including its Appendices, together with **** and the
further documents referred to therein, each of which are being executed of
even date herewith, set forth the entire agreement and understanding of
the Parties with respect to the subject matter hereof, and supersedes all
prior discussions agreements and writings in relating thereto, ****.
18. Counterparts
This Agreement may be executed in two counterparts, each of which shall be
deemed an original and which together shall constitute one instrument.
IN WITNESS THEREOF the Parties hereto have executed this Agreement in duplicate.
Executed by IOMED on ____ April, 1997
By: ______________________________
Name: ____________________________
Title: ___________________________
Executed by ELAN _____ April, 1997
By: ______________________________
Name: ____________________________
Title: ___________________________
<PAGE> 34
APPENDIX A
ASSETS
****
Summary of Design Assets for mechanical and electronic elements for PANODERM
Clinical Device
Tangible
* Industrial design
* Specifications for components and electronic elements for all other
components for which ELAN has specifications.
* Tooling
* Know how for gluing *******
* Source and supply of connector
Pre-Production Design
Tangible
* Industrial design
* Specifications for components and electronic elements and for all other
components for which ELAN has specifications.
* Plan for miniaturisation of components
* Design for purpose built connector
* Design for full water resistant connector between patch and control housing
* Full exploration of all possible concepts for mass production with
particular emphasis on use of flex circuit and printed electrodes (note:
these designs have been explored fully with supplier and would be suitable
for **** *** ********* *** ********** ******
Materials - stock in hand in Athlone
* Materials for the manufacture of *** ********* ****** including: active
and counters electrodes - ************* ******** and ******, up to four
different suppliers (including ******** electrodes) - several thousands of
pairs
* Pre-formed patches - *************** ** ****
* Batteries - several hundred
* Other materials, e.g., adhesive, sachets, etc.
<PAGE> 35
***** ********** ****** * ******
Product drawing file
Assembled units - 100 (approx.)
Semi assembled - 100 (approx.)
Components except for PCBs for 1,000 units (approx.)
Three test benches exclusive for PANODERM
Assembly tools
<PAGE> 36
APPENDIX B
ELAN IONTOPHORETIC KNOW-HOW
*** ********* ******
Summary of Design Assets for mechanical and electronic elements for PANODERM
Clinical Device
Intangible
* Supplier relationships including quality audits, etc.
* Source of parts
Pre-Production Design
Intangible
* Supplier relationships, including quality audits
* Source of all parts
* Source of potential production suppliers for all parts
*********** ***** ****** * ******
Intangible Assets
* Drug candidate screening, in vitro/animal/human - knowledge of
pre-requisites for iontophoretic delivery
* Clinical experience - full reports, IND filings
* Scientific credibility and recognition
* Publications/presentations and patent
* Regulatory filings
* Component candidate screening (e.g., hydrogels, adhesives, plastics,
conductive elements, drug containment elements, batteries, etc.)
With respect to the foregoing:
Copies of relevant notebooks
Copies of technical, summary and other market reports
<PAGE> 37
APPENDIX C
ELAN IONTOPHORETIC PATENT RIGHTS
<PAGE> 38
DOCKET FAMILY: 1805
[ELAN LOGO] Art = Panoderm
****
****
****
****
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOUTH AFRICA ELAN CORPORATION,* 90/10260 90/10280
90.1605.ZA PLC DECEMBER 20, 1990 OCTOBER 30, 1991
- ------------------------------------------------------------------------------------------------------
ITALY ELAN CORPORATION,* 22412A/90 1244030
90.1805.IT PLC DECEMBER 16, 1990 JUNE 28, 1994
- ------------------------------------------------------------------------------------------------------
ISRAEL ELAN CORPORATION,* 96735 98735
90.1805.IL PLC DECEMBER 28, 1990 OCTOBER 1, 1995
- ------------------------------------------------------------------------------------------------------
IRELAND ELAN CORPORATION,* 4813/90 63598
90.1805C.IE PLC DECEMBER 20, 1990 APRIL 26, 1995
- ------------------------------------------------------------------------------------------------------
IRELAND ELAN CORPORATION,* 364/90 62025
90.1805.IE PLC JUNE 29, 1990 DECEMBER 2, 1994
- ------------------------------------------------------------------------------------------------------
UNITED KINGDOM ELAN CORPORATION,* 9027883.3 2239803
90.1805.GB PLC DECEMBER 20, 1990 AUGUST 3, 1994
- ---------
- ------------------------------------------------------------------------------------------------------
</TABLE>
PANODERM ISSUED PATENTS
INTELLECTUAL PROPERTY DEPARTMENT March 3, 1997
ELAN PHARMACEUTICAL RESEARCH CORPORATION 2:49:59 PM
<PAGE> 39
DOCKET FAMILY: 1805
<TABLE>
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SWITZERLAND ELAN CORPORATION,* 04145/90.9 684725 G 684725
90.1805.CH PLC DECEMBER 20, 1990 DECEMBER 15, 1994 JUNE 15, 1995
- ------------------------------------------------------------------------------------------------------
AUSTRALIA ELAN CORPORATION,* 68330/90 652,135 652135
90.1805.AU PLC DECEMBER 20, 1990 AUGUST 16, 1994 DECEMBER 6, 1994
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Subject to the joint ownership interest held by ASULAB S.A. and/or SMH Swiss
Corporation for Microelectronics and Watchmaking Industries Ltd.
PANODERM ISSUED PATENTS
INTELLECTUAL PROPERTY DEPARTMENT March 3, 1997
ELAN PHARMACEUTICAL RESEARCH CORPORATION 2:49:59 PM
<PAGE> 40
DOCKET FAMILY: 1807
[ELAN LOGO] ART = PANODERM
DRUG DELIVERY DEVICE
I.E.C.D.
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCET NO. PATENTEE FILING DATE PUBLICATION DATA PATENT ISSUE DATA
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOUTH AFRICA ELAN CORPORATION, 92/8689 92/8689
92.1807.ZA PLC NOVEMBER 11, 1992 JULY 28, 1992
- ----------------------------------------------------------------------------------------------------------
UNITED STATES ELAN CORPORATION, 08/244,094 5,633,995
94.1807.US PLC MAY 13, 1994 JULY 9, 1996
- ----------------------------------------------------------------------------------------------------------
NEW ZEALAND ELAN CORPORATION, 245091 1378 245091
92.1807.NZ PLC NOVEMBER 11, 1992 MARCH 25, 1994 AUGUST 10, 1994
- ----------------------------------------------------------------------------------------------------------
IRELAND ELAN CORPORATION, 2798/92 66757
92.1667.IE PLC NOVEMBER 10, 1992 JUNE 21, 1995
- ----------------------------------------------------------------------------------------------------------
IRELAND ELAN CORPORATION, 3941/91 68767
91.1807.IE PLC NOVEMBER 13, 1991 JUNE 21, 1993
- ----------------------------------------------------------------------------------------------------------
AUSTRALIA ELAN CORPORATION, 29099/92 664214
94.1807.AU PLC MAY 28, 1994 MARCH 19, 1996
- ----------------------------------------------------------------------------------------------------------
INTELLECTUAL PROPERTY DEPARTMENT MARCH 3, 1997
ELAN PHARMACEUTICAL RESEARCH CORPORATION PANODERM ISSUED PATENTS 2:51:20 PM
</TABLE>
<PAGE> 41
DOCKET FAMILY: EMT 6
[ELAN LOGO] ART = PANODERM
****
****
****
****
****
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATA PATENT ISSUE DATA
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOUTH AFRICA EMT 91/9794 91/9794
91.EMT 6.AZ DECEMBER 12, 1991 AUGUST 25, 1992
- ----------------------------------------------------------------------------------------------------------
UNITED STATES EMT 07/627,104 5,158,591
90.EMT 6.US DECEMBER 13, 1900 OCTOBER 20, 1992
- ----------------------------------------------------------------------------------------------------------
TAIWAN EMT 60109555 199,665 60732
91.EMT 8.TI DECEMBER 5, 1991 FEBRUARY 11, 1993 JUNE 1, 1993
- ----------------------------------------------------------------------------------------------------------
NEW ZEALAND EMT 2406875 240675 240875
91.EMT 6.NZ DECEMBER 5, 1991 APRIL 27, 1994 AUGUST 16, 1994
- ----------------------------------------------------------------------------------------------------------
EPO EMT 92901285.6 516,763 516,763
92.EMT 6.EP DECEMBER 13, 1991 DECEMBER 9, 1992
- ----------------------------------------------------------------------------------------------------------
AUSTRALIA EMT 90587191 91/90, 587 642112
94.EMT 6.AU PLC DECEMBER 13, 1991 JULY 8, 1982 FEBRUARY 1, 1994
- ----------------------------------------------------------------------------------------------------------
ER, AUSTRIA, BELGIUM, FRANCE, GERMAN, GREAT BRITAIN, GREECE, ITALY, MARCH 3, 1997
LUXEMBOURG, NETHERLANDS, SPAIN, SWEDEN, SWITZERLAND & LICHTENSTEIN 3:11:21 PM
INTELLECTUAL PROPERTY DEPARTMENT
ELAN PHARMACEUTICAL RESEARCH CORPORATION PANODERM ISSUED PATENTS
</TABLE>
<PAGE> 42
Docket Family: EMT 8
[ELAN LOGO]
Art = Panoderm
****
****
****
<TABLE>
<CAPTION>
Country/ Assignee/ Application No./ Publication Number/ Patent Number/
Docket No. Patentee Filing Date Publication Date Patent Issue Date
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES 07/759,006 5,356,632
91.EMT 8.US EMT September 12, 1991 October 18, 1994
EPO 92630083.1 532,451 532451
92.EMT 8.EP(14) EMT September 10, 1991 March 17, 1993 January 17, 1996
</TABLE>
EP(14) Austria, Belgium, Denmark, France, Germany, Great Britain, Greece,
Ireland, Italy, Netherlands, Portugal, Spain, Sweden, Switzerland &
Liechtenstein
PANODERM ISSUED PATENTS
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation 3:14:49PM
<PAGE> 43
Docket Family: EMT 9
[ELAN LOGO]
Art = Panoderm
****
****
****
****
****
<TABLE>
<CAPTION>
Country/ Assignee/ Application No./ Publication Number/ Patent Number/
Docket No. Patentee Filing Date Publication Date Patent Issue Date
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States EMT 08/077,146 5380272
93.EMT 9C1.US June 16, 1993 January, 16, 1995
</TABLE>
PANODERM ISSUED PATENTS
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation 3:16:23 PM
<PAGE> 44
PROPRIETARY & CONFIDENTIAL INFORMATION
SUMMARY OF ELAN'S PENDING PATENT APPLICATIONS
FOR IONTOPHORETIC TECHNOLOGY
<PAGE> 45
PROPRIETARY & CONFIDENTIAL INFORMATION
****
<PAGE> 46
[ELAN LOGO]
APPENDIX D
IOMED CURRENT PRODUCTS
****
<PAGE> 1
EXHIBIT 10.3
This Agreement is made the 14th day of April 1997
BY AND BETWEEN
DRUG DELIVERY SYSTEMS, INC.
A Corporation organized and existing under the laws of the State of New
York, having an office at 1300 Gould Drive, Gainesville, Georgia 30504,
United States of America
AND
IOMED, Inc.
A Corporation organized and existing under the laws of the State of Utah,
having an office at 3385 West 1820 South Salt Lake City, UT 84104, United
States of America.
<PAGE> 2
WHEREAS:
- -- DDS is beneficially entitled to the use of various patents, including the
DDS IONTOPHORETIC PATENT RIGHTS, which have been granted or are pending
under the International Convention in relation to the development and
production of iontophoretic transdermal devices and drug specific dosage
forms for pharmaceutical devices, products and processes, and
- -- IOMED is desirous of entering into a licensing agreement with DDS to
further develop, manufacture and have manufactured in accordance with the
terms of this Agreement and to market, sell and distribute the PRODUCTS in
the TERRITORY without infringing any of the DDS IONTOPHORETIC PATENT
RIGHTS held by DDS, and
- -- DDS is prepared to license the DDS IONTOPHORETIC PATENT RIGHTS in the
TERRITORY to IOMED, and
NOW IT IS HEREBY AGREED AS FOLLOWS:
ARTICLE I. DEFINITIONS
1.1. In the present Agreement and any further agreements based thereon between
the Parties hereto, the following definitions shall prevail:
1. ADDITIONAL TERM shall have the meaning set forth in Article VIII,
Paragraph 2.
2. AFFILIATE shall mean any corporation or entity controlling,
controlled by or under the common control of DDS or IOMED as the
case may be. For the purpose of this paragraph, "control" shall
mean the direct or indirect ownership of at least fifty percent
(50%) of the outstanding shares or other voting rights of the
subject entity to elect directors, or if not meeting the preceding
criterion any entity owned or controlled by or owning or controlling
at the maximum control or ownership right permitted in the country
where such entity exists.
<PAGE> 3
3. Agreement shall mean this agreement.
4. cGCP, cGLP and cGNO shall mean current Good Clinical Practices,
current Good Laboratory Practices and current Good Manufacturing
Practices respectively.
5. CONFIDENTIAL INFORMATION shall mean information, material or data
relating to the FIELD not generally known to the public.
CONFIDENTIAL INFORMATION in tangible form disclosed hereunder shall
be marked as "Confidential" at the time it is delivered to the
receiving Party. CONFIDENTIAL INFORMATION disclosed orally shall be
identified as confidential or proprietary when disclosed and such
disclosure of CONFIDENTIAL INFORMATION shall be confirmed in writing
within thirty (30) days by the disclosing Party.
6. DDS shall mean Drug Delivery Systems, Inc. and any of its
AFFILIATES.
7. DDS IONTOPHORETIC PATENT RIGHTS shall mean all granted patents and
pending patent applications owned by, or licensed by DDS, the
current status of which is set forth in Appendix C. DDS
IONTOPHORETIC PATENT RIGHTS shall also include all conditions,
continuations-in-part, divisionals, re-issues and re-examinations of
such patents and patent applications and any patents issuing thereon
and extensions of any patents licensed hereunder and all foreign
counterparts thereto.
8. EFFECTIVE DATE shall mean the 14th day of April 1997.
9. ELAN shall mean Elan Corporation plc and any of its AFFILIATES.
10. ELAN AGREEMENT shall mean the license agreement entered into between
IOMED and ELAN on the EFFECTIVE DATE.
11. ELAN IONTOPHORETIC KNOW-HOW shall have the meaning as defined in
Article I of the ELAN AGREEMENT.
12. ELAN IONTOPHORETIC PATENT RIGHTS shall have the meaning as defined
in Article I of the ELAN AGREEMENT.
13. FDA shall mean the United States Food and Drug Administration or any
other successor agency, whose approval is necessary to market the
PRODUCTS in the United States of America and its foreign equivalents
in such other countries of the TERRITORY where IOMED intends to
obtain regulatory approval.
<PAGE> 4
14. FIELD shall mean ****.
15. IOMED shall mean IOMED, Inc. and any of its AFFILIATES, including
DERMION Inc.
16. IOMED KNOW-HOW shall mean all scientific or technical knowledge,
information or expertise developed, produced, created or acquired by
or an behalf of IOMED which is not generally known to the public, or
developed by or on behalf of IOMED during the term of this
Agreement, relating to the PRODUCTS, excluding ELAN IONTOPHORETIC
KNOW-HOW, whether or not covered by any patent copyright, design,
trademark or other industrial or intellectual property rights.
17. IOMED PATENT RIGHTS shall mean all granted patents and pending
patent applications owned or licensed by IOMED relating to the
FIELD, excluding ELAN IONTOPHORETIC PATENT RIGHTS and DDS
IONTOPHORETIC PATENT RIGHTS. IOMED PATENT RIGHTS shall also include
all continuations, continuations-in-part, divisionals, re-issues and
re-examinations of such patents and patent applications and any
patents issuing thereon and extensions thereof and all foreign
counterparts thereto. IOMED PATENT RIGHTS shall further include any
patents or patent application covering any improved methods of
making or using the PRODUCTS invented or acquired by IOMED during
the term of this Agreement.
18. IND shall mean one or more investigational new drug applications
filed by ELAN or to be filed by IOMED with the FDA-
19. NET REVENUES shall mean:
19.1. ****:
19.1.1 ****, or
19.1.2. ****, or
<PAGE> 5
19.1.3. ****; and
19.2. ****:
19.2.1. ****;
19.2.2. ****;
19.2.3. ****;
19.2.4. ****; and
19.2.5. ****.
****.
<PAGE> 6
****.
****.
****.
20. NDA shall mean one or more of the New Drug Applications which IOMED
shall file, including any supplements or amendments thereto and
510(k)s which IOMED may file, for the PRODUCTS with the FDA.
21. OFFERING PARTY shall mean ****.
22. Party shall mean IOMED or DDS, as the case may be. "Parties" shall
mean IOMED and DDS.
23. PRODUCT(S) shall mean all devices or any parts thereof developed,
manufactured or sold by or on behalf of IOMED within the FIELD,
****.
24. TERM shall have the meaning set forth in Article VIII Paragraph 1.
25. TERRITORY means ****.
26. $ shall mean United States Dollars.
<PAGE> 7
1.2 In this Agreement
1.2.1 the singular includes the plural and vice versa, the masculine
includes the feminine and vice versa and references to natural
persons include corporate bodies, partnerships and vice verse.
1.2.2 any reference to a Article or Appendix shall, unless otherwise
specifically provided, be to an Article or Appendix of this
Agreement.
1.2.3 the headings of this Agreement are for ease of reference only and
shall not affect its construction or interpretation.
ARTICLE II: THE LICENSE
1.1. DDS shall remain Proprietor of all the DDS IONTOPHORETIC PATENT RIGHTS but
hereby grants to IOMED for the term of the Agreement an exclusive
(including as to DDS) license in the TERRITORY, with the right to grant
sublicenses pursuant to and in accordance with the provisions of Article
II Paragraph 2, to research, develop, manufacture, have manufactured for
IOMED (or its permitted sublicensees), use, sell and otherwise
commercialize the DDS IONTOPHORETIC PATENT RIGHTS and the PRODUCTS in the
FIELD under the terms and conditions set out herein.
1.2. ****.
2.1. IOMED may sublicense rights which incorporate the DDS IONTOPHORETIC PATENT
RIGHTS ****, without the prior written consent of DDS .
2.2. Any sublicense other than permitted by Paragraph 2. 1. above, ****,
shall require the prior written consent of DDS, which may be withheld in
the sole discretion of DDS.
<PAGE> 8
2.3. NO sublicense granted by IOMED pursuant to Article II Paragraph 2 shall
authorize or permit the sublicensee to grant further sublicenses ****,
IOMED shall use its reasonable endeavors to ensure that DDS shall have the
same rights of audit and inspection vis a vis the sublicensee as DDS has
pursuant to this Agreement concerning IOMED.
2.4. Insofar as the obligations owed by IOMED to DDS are concerned, IOMED shall
remain responsible for all acts and omissions of any sublicensee as if
such acts and omissions were by IOMED; provided that no such acts or
omissions of such sublicensee will constitute a material breach by IOMED
for the purposes of Article VIII Paragraph 3. In the event that DDS
terminates the Agreement pursuant to the provisions of Article VIII
Paragraph 3, due to the default of IOMED, then DDS shall, with IOMED's
consent and assistance, notify each sublicensee appointed pursuant to
Article II Paragraphs 2.1 and 2.2 of its termination. If any sublicensee
elects to notify DDS that it requires the continuation of the licenses
granted to IOMED pursuant to this Agreement, DDS shall promptly enter into
good faith negotiations with such sublicensee to establish a direct
contractual nexus between DDS and such sublicensee. Such contractual
nexus shall subject to DDS's reasonable discretion be on commercially
reasonable terms and shall to the extent practicable be on terms no less
favorable to the to the sublicensee than the terms of such sublicensees'
agreement with IOMED, and shall provide that the sublicensee shall take
over the applicable obligations owed by IOMED to DDS pursuant to this
Agreement. Sales of PRODUCTS and other consideration payable to such a
sublicensee in relation to the products shall constitute NET REVENUES for
the purpose of calculating the sums payable by the sublicensee to DDS.
****.
3. It is contemplated that the furnishing of copies of relevant patent
documentation regarding the DDS IONTOPHORETIC PATENT RIGHTS shall be
completed within six months of the EFFECTIVE DATE.
4. LEFT DELIBERATELY BLANK
<PAGE> 9
5. IOMED shall mark or have marked the patent number on all PRODUCTS, or
otherwise reasonably communicate to the trade concerning the existence of
any DDS IONTOPHORETIC PATENT RIGHTS for the countries within the TERRITORY
in such a manner as to ensure compliance with, and enforceability under,
applicable laws.
PERFORMANCE BY IOMED
6. IOMED shall use commercially reasonable efforts consistent with its
financial resources and capital constraints, to research, develop,
register, market and promote the PRODUCTS and to exploit the DDS
IONTOPHORETIC PATENT RIGHTS in the major markets of the TERRITORY.
7. **** IOMED shall report on the ongoing sales performance of the PRODUCTS,
and the exploitation of the DDS IONTOPHORETIC PATENT RIGHTS in the
TERRITORY, ****. For the avoidance of doubt, the Parties agree that all
information furnished to DDS pursuant to this Paragraph shall constitute
CONFIDENTIAL INFORMATION for the purpose of this Agreement.
8. LEFT DELIBERATELY BLANK
9. LEFT DELIBERATELY BLANK
10. LEFT DELIBERATELY BLANK
11. LEFT DELIBERATELY BLANK
12. LEFT DELIBERATELY BLANK
13. IOMED hereby confirms that it intends to manufacture or procure the
manufacture of the PRODUCTS in a manner which fully complies with all
applicable statutes, ordinances, and regulations of the United States of
America and other countries with respect to the manufacture of the
PRODUCTS including, but not limited to, the U.S. Federal Food, Drug and
Cosmetic Act and regulations thereunder, cGLP, cGCP and cGMP.
<PAGE> 10
ARTICLE III: DEVELOPMENT OF THE PRODUCT
1. IOMED shall be responsible for the cost of the further development,
registration, manufacture and marketing of the PRODUCTS.
ARTICLE IV: FINANCIAL PROVISIONS
1. License Royalties
1. In consideration of the rights and license granted to IOMED to the DDS
IONTOPHORETIC PATENT RIGHTS by virtue of this Agreement, IOMED shall pay
to DDS, the sum of **** United States Dollars **** in cash by wire
transfer due upon execution of this Agreement and payable within two
business days of the EFFECTIVE DATE.
2. Royalty on NET REVENUES
2.1. In consideration of the license of the DDS IONTOPHORETIC PATENT RIGHTS to
IOMED, and subject to the provisions of Article IV paragraphs 2.2. and
2.3, the royalty payable by IOMED to DDS shall be **** percent (****%) on
NET REVENUES generated on or after the EFFECTIVE DATE.
2.2. ****.
<PAGE> 11
IOMED shall not be required to pay a royalty to DDS in excess of one
percent (1%) of NET REVENUES on commercialization of the products listed
in Appendix D hereto which, the Parties acknowledge, are
presently-marketed products of IOMED. In the event of any dispute
relating to the foregoing provisions of this Paragraph, the Parties shall
cause such dispute to be arbitrated before an experienced patent attorney.
In such event the procedure set forth in Article VIII Paragraph 14 shall
to the extent practicable apply to the conduct of such arbitration.
2.3. LEFT DELIBERATELY BLANK
2.4. IOMED shall not discriminate in its commercialization strategy and pricing
policy as between the PRODUCTS referred to in Article IV Paragraphs 2. 1.
and 2.2.
2.5. ****.
ROYALTY PAYMENTS, REPORTS AND RECORDS
3.1. Within forty five (45) days of the end of each quarter, IOMED shall notify
DDS of the NET REVENUES of- each of the PRODUCTS and arising from the
exploitation of the DDS IONTOPHORETIC PATENT RIGHTS and/or the IOMED
PATENT RIGHTS and/or the IOMED KNOW-HOW, for that preceding quarter.
Payments shown by each calendar quarter report to have accrued shall be
due on the date such report is due. All payments due hereunder shall be
made to the designated bank account of DDS in accordance with such timely
written instructions as DDS shall from time to time provide.
3.2. IOMED shall keep and shall cause its AFFILIATES and sublicensees to keep
true and accurate records of sales of PRODUCTS, other transactions giving
rise to NET REVENUES, and the royalties payable to DDS under Article IV
hereof and shall deliver to DDS a written statement thereof within forty
five (45) days following the end of each calendar quarter (or any part
thereof in the first or last calendar quarter of this Agreement) for such
calendar quarter.
<PAGE> 12
Said written statements shall set forth (I) for each PRODUCT ****,
the calculation of NET REVENUES from gross revenues during that calendar
quarter, the applicable percentage royalty rates, and a computation of
such royalties due and (II) such details of the transactions arising from
the exploitation of the DDS IONTOPHORETIC PATENT RIGHTS and/or the IOMED
KNOW-HOW as are relevant to the calculation of NET REVENUES (the "Royalty
Statement").
3.3. All payments due hereunder shall be made in United States Dollars.
Payments due on NET REVENUES received in a currency other than United
States Dollars shall first be calculated in the foreign currency and then
converted to United States Dollars on the basis of the average of the
exchange rates in effect for the purchase of United States Dollars with
such foreign currency quoted in the Wall Street Journal (or comparable
publication if not quoted in the Wall Street Journal) with respect to the
currency of the country or origin of such payment for the last business
day of each mouth for which the payment is being made.
3.4. DDS shall have the right to have access, on reasonable notice, to IOMED's
or IOMED's sublicensees' financial documentation and records during
reasonable business hours for the purpose of verifying the royalties
payable as provided in this Agreement for the two preceding years. This
right may not be exercised more than once in any calendar year, and once a
calendar year is audited it may not be reaudited. For the avoidance of
doubt, the Parties agree that all information furnished to DDS pursuant to
this Paragraph shall constitute CONFIDENTIAL INFORMATION for the purposes
of this Agreement.
Any adjustment required by such inspection shall be made within thirty
(30) days of the agreement of the Parties or, if not agreed, upon the
determination of an arbitrator to whom any dispute under this Paragraph
shall be submitted to arbitration pursuant to Article IX Paragraph 14. If
the adjustment payable to DDS is greater than ****, then the cost to DDS
for the inspection and if applicable the arbitration shall be paid by
IOMED. In addition, IOMED shall pay interest to DDS at **** (applicable
as of the date on which payment should have been made pursuant to Article
IV Paragraph 3.3.), from the date on which payment should have been made
pursuant to Article IV Paragraph 3.3. until the date of payment.
<PAGE> 13
ARTICLE V. REGISTRATION OF THE PRODUCTS
1. During the TERM and the ADDITIONAL TERM, IOMED shall be responsible for
filing and prosecuting all NDAs and other applications for regulatory
approvals. IOMED or its sublicensees shall file the NDAs with the FDA and
will use its reasonable efforts in prosecuting said NDA to approval.
IOMED shall thereafter maintain at its own cost the NDAs with the FDA for
the term-of this Agreement. Subject to IOMED'S reasonable discretion
IOMED hereby agrees to provide to DDS at DDS's own cost access to such
NDAs as DDS reasonably requests. **** For the avoidance of doubt, the
Parties agree that all information furnished to DDS pursuant to this
Paragraph shall constitute CONFIDENTIAL INFORMATION for the purposes of
this Agreement.
2. It is hereby acknowledged that there are inherent uncertainties involved
in the development and registration of pharmaceutical products with the
FDA or any other regulatory body in the TERRITORY insofar as obtaining
approval is concerned and such uncertainties form part of the business
risk involved in undertaking the form of commercial collaboration as set
forth in this Agreement.
ARTICLE VI: REPRESENTATIONS, WARRANTIES
1. DDS represents to IOMED the following:
1.1. DDS is duly and validly existing in good standing in the
jurisdiction of its incorporation and each other jurisdiction in
which the conduct of its business requires such qualification, and
is in compliance with all applicable laws, rules, regulations or
orders relating to its business and assets;
<PAGE> 14
1.2. DDS has full corporate authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby;
this Agreement has been duly executed and delivered by DDS and
constitutes the legal and valid obligations of DDS and is
enforceable against DDS in accordance with its terms and the
execution, delivery and performance of this Agreement and the
transactions contemplated hereby and will not violate or result in a
default under or creation of lien or encumbrance under DDS's
certificate of incorporation, by-laws or other organic documents,
any material agreement or instrument binding upon or affecting DDS
or its properties or assets or any applicable laws, rules,
regulations or orders affecting DDS or its properties or assets;
1.3. DDS is not in material default of its charter or by-laws, any
applicable material laws or regulations or any material contract or
agreement binding upon or affecting it or its properties or assets
and the execution, delivery and performance of this Agreement and
the transactions contemplated hereby will not result in any such
violation; and
1.4. ****.
2. IOMED represents to DDS the following:
2.1. IOMED is duly and validly existing in good standing in the
jurisdiction of its incorporation and each other jurisdiction in
which the conduct of its business requires such qualification, and
IOMED is in compliance with all applicable laws, rules, regulations
or orders relating to its business and assets;
<PAGE> 15
2.2. IOMED has full corporate authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby;
this Agreement has been duly executed and delivered and constitutes
the legal and valid obligations of IOMED and is enforceable against
IOMED in accordance with its terms; and the execution, delivery and
performance of this Agreement and the transactions contemplated
hereby will not violate or result in a default under or creation of
lien or encumbrance under IOMED's certificate of incorporation,
by-laws or other organic documents any material agreement or
instrument binding upon or affecting IOMED or its properties or
assets or any applicable laws, rules, regulations or orders
affecting IOMED or its properties or assets;
2.3. IOMED is not in default of its charter or by-laws, any applicable
laws or regulations or any material contract or agreement binding
upon or affecting it or its properties or assets and the execution,
delivery and performance of this letter agreement and the
transactions contemplated hereby will not result in any such
violation;
2.4. IOMED represents and warrants that it has not granted any option,
license, right or interest to any third party which would conflict
with the terms of this Agreement.
2.5. ****.
<PAGE> 16
ARTICLE VII: PATENTS
1. ****.
2. The Parties agree that the following provisions of Article VII Paragraph
2, shall apply as regards the filing, prosecution and maintenance of the
DDS IONTOPHORETIC PATENT RIGHTS:
2.1. ****.
2.2. ****.
<PAGE> 17
****.
2.3. ****.
2.4. ****.
3. ****.
4. ****.
<PAGE> 18
ARTICLE VIII: TERM AND TERMINATION
1. This Agreement is concluded for a period commencing as of the date of this
Agreement and shall expire ****.
2. In addition, for a period of **** commencing upon the expiration of
the TERM ("the ADDITIONAL TERM"), the licenses granted by DDS pursuant to
Article II shall continue; provided, that the royalties payable during the
ADDITIONAL TERM to DDS referred to in Article IV shall be ****.
3. In addition to the rights of early or premature termination provided for
elsewhere in this Agreement, in the event that any of the terms or
provisions hereof are incurably breached by either Party, the
non-breaching Party may immediately terminate this Agreement by written
notice. An incurable breach shall be committed when either Party is
dissolved, liquidated, discontinued, becomes insolvent, or when any
proceeding is filed or commenced by either Party under bankruptcy,
insolvency or debtor relief laws (and not dismissed within ninety (90)
days). Subject to the other provisions of this Agreement, in the event of
any other material breach, the non-breaching Party may terminate this
Agreement by the giving of written notice to the breaching Party that this
Agreement will terminate on the ninetieth (90th) day from notice unless
cure is sooner effected.
<PAGE> 19
If the breaching Party has proposed a course of action to rectify the
breach and is acting in good faith to rectify same but has not cured the
breach by the ninetieth (90th) day, the said period shall be extended by
such period as is reasonably necessary to permit the breach to be
rectified. In the event that a Party is entitled to terminate this
Agreement, such Party shall also be entitled to terminate the ELAN
AGREEMENT. Furthermore in the event that a Party is entitled to terminate
the ELAN AGREEMENT, such Party shall also be entitled to terminate this
Agreement. In the event that the breaching Party disputes the validity of
the right of the non-breaching Party to terminate the Agreement pursuant
to this Paragraph, either Party may refer the dispute to an arbitrator
pursuant to the provisions of Article IX Paragraph 14. Pending the
determination of the arbitrator, neither Party may regard the Agreement as
having been terminated an in particular shall not allege or claim to any
third party that the Agreement has been terminated pursuant to this
Paragraph.
4 . In the event that IOMED elects to proceed against DDS for damages in
circumstances where IOMED would have been entitled to terminate the
Agreement pursuant to Article IX Paragraph 3 and IOMED obtains a final
order for damages from a court of competent jurisdiction which is not
subject of further appeal, IOMED may offset the said order for damages
against sums other due to DDS pursuant to Article IV until recovery of the
said judgment.
5. Upon termination of the Agreement:
5.1. any sums that were due from IOMED to DDS prior to the exercise of
the right to terminate this Agreement, shall be paid in full within
sixty (60) days of terminate of this Agreement.
5.2. all confidentiality provisions (other than the obligations set out
in Article IX Paragraph 1.1. as they affect DDS in the event of
termination of this Agreement by DDS pursuant to Article VIII
Paragraph 3 due to the breach by IOMED) set out in this Agreement
shall remain in full force and effect for a period of ****;
5.3. all responsibilities and warranties shall insofar are appropriate
remain in full force and effect;
5.4. the rights of inspection and audit shall continue in force for the
period referred to in the relevant provisions of this Agreement;
<PAGE> 20
5.5. termination of this Agreement for any reason shall not release any
Party hereto from any liability which, at the time of such
termination, has already accrued to the other Party or which is
attributable to a period prior to such termination nor preclude
either Party from pursuing all rights and remedies it may have
hereunder or at law or in equity with respect to any breach of this
Agreement;
5.6. in the event of termination of this Agreement by DDS or IOMED
pursuant to Article VIII Paragraph 3. IOMED and DDS shall promptly
return to the other Party all CONFIDENTIAL INFORMATION received from
the other Party (except one copy of which may be retained for
archival purposes);
5.7. in the event this Agreement is terminated by DDS or IOMED pursuant
to Article VIII Paragraph 3, IOMED and its sublicensees shall have
the right for a period of **** from termination to sell or otherwise
dispose of the stock of any PRODUCTS then on hand, which such sale
shall be subject to Article IV and the other applicable terms of
this Agreement. The foregoing provisions of this Paragraph shall be
subject to the provisions of such agreement or agreements as DDS and
one or more sublicensees conclude pursuant to Article II Paragraph
2.4;
5.8 In the event this Agreement is terminated by DDS or IOMED pursuant
to Article VIII Paragraph 3, the licenses granted by DDS to IOMED
shall terminate and DDS shall thenceforth be entitled to exploit the
DDS IONTOPHORETIC PATENT RIGHTS together with any improvements made
by IOMED to the DDS IONTOPHORETIC PATENT RIGHTS; provided that the
foregoing provision shall be subject to the provisions of Article II
Paragraph 2.4 and any agreements entered into pursuant to the said
Paragraph; and
5.9. Article I, Article II Paragraph 2.4, Article VI, Article VII
Paragraph 1, Article VIII and Article IX (other than Paragraph 3
thereof) shall survive the termination or expiration of this
Agreement for any reason.
<PAGE> 21
ARTICLE IX: SUNDRY CLAUSES
1. Secrecy
1.1. Each of the Parties agrees, during the TERM and the ADDITIONAL TERM to
hold in confidence and not disclose to any third parties, including any of
the OFFERING PARTIES, except to the extent required by applicable law or
administrative or judicial process, the DDS IONTOPHORETIC PATENT RIGHTS or
the contents or nature. thereof provided that the foregoing covenant shall
not be applicable to DDS in the event that IOMED (i) abandons or (ii)
ceases to develop or commercialize (and provides notice thereof to DDS)
any such DDS IONTOPHORETIC PATENT RIGHTS and DDS determines subsequently
to develop products or technologies based an such DDS IONTOPHORETIC PATENT
RIGHTS, irrespective of whether it is reduced to patent. Each law may
make such disclosure to its directors, officers and agents and, in the
case of IOMED, its potential and actual sublicensees and other parties to
whom such disclosure is appropriate to enable IOMED to conduct its regular
business (each of whom shall be bound by IOMED's customary confidential
disclosure agreements), who shall be informed of such confidentiality
obligation and for whose breach the disclosing party shall be responsible.
1.2. Subject to the provisions of Paragraph 1.1., any information, whether
written or oral (oral information shall be reduced to writing within one
month by the Party giving the oral information and the written form shall
be furnished to the other Party) pertaining to the DDS IONTOPHORETIC
PATENT RIGHTS or the PRODUCTS that has been or will be communicated or
delivered by DDS to IOMED, and any information from time to time
communicated or delivered by IOMED to DDS, including, without limitation,
trade secrets, business methods, and cost, supplier, manufacturing and
customer information, shall be treated by IOMED and DDS, respectively, as
CONFIDENTIAL INFORMATION, and shall not be disclosed or revealed to any
third party whatsoever or used in any manner except as expressly provided
for herein; provided, however, that such CONFIDENTIAL, INFORMATION shall
not be subject to the restrictions and prohibitions set forth in this
section to the extent that such CONFIDENTIAL INFORMATION:
1.2.1. is available to the public in public literature or otherwise, or
after disclosure by one Party to the other becomes public
knowledge through no default of the Party receiving such
information; or
<PAGE> 22
1.2.2. was known to the Party receiving such information prior to the
receipt of such information by such Party, whether received before
or after the date of this Agreement; or
1.2.3. is obtained by the Party receiving such information from a third
party not subject to a requirement of confidentiality with respect
to such information; or
1.2.4. is required to be disclosed pursuant to: (A) any order of a court
having jurisdiction and power to order such information to be
released or made public; or (B) other requirement of law, provided
that if the receiving Party becomes legally required to disclose
any CONFIDENTIAL INFORMATION, the receiving Party shall give the
disclosing Party prompt notice of such fact so that the disclosing
Party may obtain a protective order or other appropriate remedy
concerning any such disclosure. The receiving Party shall fully
cooperate with the disclosing Party in connection with the
disclosing Party's efforts to obtain any such order or other
remedy. If any such order or other remedy does not fully preclude
disclosure, the receiving Party shall make such disclosure only to
the extent that such disclosure is legally required; or
1.2.5. is independently developed by or for the Party by persons not
having access to the CONFIDENTIAL INFORMATION of the other Party.
1.3. Each Party shall take all such precautions as it normally takes with its
own CONFIDENTIAL INFORMATION to prevent any improper disclosure of such
CONFIDENTIAL INFORMATION to any third party, provided, however, that such
CONFIDENTIAL INFORMATION may be disclosed within the limits required to
obtain any authorization from the FDA or any other United States of
America or foreign governmental or regulatory agency or, with the prior
written consent of the other Party, which shall not be unreasonably
withheld, or as may otherwise be required in connection with the purposes
of this Agreement.
1.4. IOMED agrees that it will not use, directly or indirectly, any DDS
IONTOPHORETIC PATENT RIGHTS, or other CONFIDENTIAL INFORMATION disclosed
to IOMED or obtained from DDS pursuant to this Agreement, other than as
expressly provided herein. DDS agrees that it will not use, directly or
indirectly, any IOMED KNOW-HOW, IOMED PATENT RIGHTS or other CONFIDENTIAL
INFORMATION disclosed to DDS or obtained from IOMED pursuant to this
Agreement, other than as expressly provided herein.
<PAGE> 23
1.5. IOMED and DDS will not publicize the existence of this Agreement in any
way without the prior written consent of the other subject to the
disclosure requirements of applicable laws and regulations. In the went
that either Party wishes to make an announcement concerning the Agreement,
that Party will seek the consent of the other Party, The terms of any such
announcement be agreed in good faith.
2. Assignments/Subcontracting
IOMED may not assign (other than by operation of law in the event of an
acquisition of IOMED. or a merger or similar transaction subject to the
provisions as set forth in Article IX Paragraph 3) the rights licensed by
DDS under Article II without the prior written consent of DDS , which may
be withheld in DDS's sole discretion. DDS shall be entitled to assign its
rights and obligations to an AFFILIATE. DDS may not assign to an
unaffiliated third party (other than by operation of law in the event of
an acquisition of DDS, or a merger or similar transaction) its rights
under this Agreement without the prior written consent of IOMED, which may
be withheld in IOMED's sole discretion.
3. Certain Changes of Control.
****.
<PAGE> 24
****.
4. Parties bound
This Agreement shall be binding upon and enure for the benefit of Parties
hereto, their successors and permitted assigns.
5. Severability
If any provision in this Agreement is agreed by the Parties to be, or is
deemed to be, or becomes invalid, illegal, void or unenforceable under any
law that is applicable hereto, (i) such provision will be deemed amended
to conform to applicable laws so as to be valid and enforceable or, if it
cannot be so amended without materially altering the intention of the
Parties, it will be deleted, with effect from the date of such agreement
or such earlier date as the Parties may agree, and (ii) the validity,
legality and enforceability of the remaining provisions of this Agreement
shall not be impaired or affected in any way.
6. Force Majeure
Neither Party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay results from
causes beyond its reasonable control, including, without limitation, acts
of God, fires, strikes, acts of war, or intervention of a Government
Authority, non availability of raw materials, but any such delay or
failure shall be remedied by such Party as soon as practicable.
7. Relationship of the Parties
Nothing contained in this Agreement is intended or is to be construed to
constitute DDS and IOMED as partners or joint venturers or either Party as
an employee of the other. Neither Party hereto shall have any express or
implied right or authority to assume or create any obligations on behalf
of or in the name of the other Party or to bind the other Party to any
contact, agreement or undertaking with any third party.
<PAGE> 25
8. Amendments
No amendment, modification or addition hereto shall be effective or
binding an either Party unless set forth in writing and executed by a duly
authorized representative of both Parties.
9. Waiver
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the Party charged with
such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any future breach or failure to perform or of any
other right arising under this Agreement.
10. Headings
The section headings contained in this Agreement are included for
convenience only and form no part of the agreement between the Parties.
Save as otherwise provided herein, references to articles, paragraphs,
clauses and appendices are to those contained in this Agreement.
11. No effect on other agreements
No provision of this Agreement shall be construed so as to negate, modify
or affect in any way the provisions of any other agreement between the
Parties unless specifically referred to, and solely to the extent
provided, in any such other agreement.
12. Applicable Law
This Agreement (a) shall be governed by and construed in accordance with
the internal laws of the State of New York, without regard to principles
of conflicts of laws, and subject to those provisions where the Parties
have expressly earned to submit a dispute to arbitration, each party
consents to the exclusive jurisdiction of any Federal or state court
sitting in the County, City and State of New York over any dispute arising
from this Agreement.
<PAGE> 26
13. Notice
13.1. Any notice to be given under this Agreement shall be sent in writing
in English by registered airmail or telefaxed to:
DDS at
Drug Delivery Systems, Inc.
1300 Gould Drive,
Gainesville,
Georgia 30504
United States of America
Attention: President
Telephone: 770 534 8239
Telefax: 770 534 8247
IOMED at
IOMED, Inc.
3385 West 1820 South,
Salt Lake City, UT 84104,
United States of America
Attention: President and Chief Executive Officer
Telephone: 801 975 1191
Telefax: 801 972 9072
or to such other address(es) and telefax numbers as may from time
-to time be notified by either Party to the other hereunder.
13.2. Any notice sent by mail shall be deemed to have been delivered
within seven (7) working days after dispatch and any notice sent by
telefax shall be deemed to have been delivered within twenty four
(24) hours of the time of the dispatch. Notice of change of address
shall be effective upon receipt; provided that such date of receipt
must be a business day for the Party to whom the notice is
delivered.
<PAGE> 27
14. Arbitration
Any dispute under this Agreement which is not settled by mutual consent
and which is the subject of an arbitration clause shall be finally settled
by binding arbitration, conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association by an arbitrator
appointed in accordance with said rules. The arbitration shall be held in
New York, New York and the arbitrator shall be to the extent practicable
experienced as to the subject matter of the dispute such as an independent
expert in pharmaceutical product development and marketing (including
clinical development and regulatory affairs) or an independent patent
attorney as the case may be. The arbitrator shall determine what
discovery will be permitted, consistent with the goal of limiting the cost
and time which the Parties must expend for discovery, provided the
arbitrator shall permit such discovery as he deems necessary to permit an
equitable resolution of the dispute. Any written evidence originally in a
language other than English shall be submitted in English translation
accompanied by the original or a true copy thereof. The costs of the
arbitration, including administrative and arbitrator's fees, shall be
shared equally by the Parties and each Party shall bear its own costs and
attorney's and witness' fees incurred in connection with the arbitration;
provided that the prevailing party may be awarded the reasonable costs and
fees incurred in connection with the arbitration at the discretion of the
arbitrator. A disputed performance or suspended performances pending the
resolution of the arbitration must be completed within thirty (30) days
following the final decision of the arbitrators or such other reasonable
period as the arbitrators determine in a written opinion. Any arbitration
subject to this Paragraph 14 shall be completed within one (1) year from
the filing of notice of a request for such arbitration. The arbitration
proceedings and the decision shall not be made public without the joint
consent of the Parties and each Party shall maintain the confidentiality
of such proceedings and decision unless (a) otherwise permitted by the
other Party or (b) otherwise required by the applicable law in which case
the Provisions of Article IX Paragraph 1.2.4. shall be applicable. ****.
<PAGE> 28
15. Withholding
Any income or other taxes which IOMED is required by law to pay or
withhold on behalf of DDS with respect to royalties and any other moneys
payable to DDS under this Agreement shall be deducted from the amount of
such royalties and moneys due. IOMED shall furnish DDS with proof of such
payments. Any such tax required to be paid or withheld shall be an
expense of and borne solely by DDS. IOMED shall promptly provide DDS with
a certificate or other documentary evidence to enable DDS to support a
claim for a refund or a foreign tax credit with respect to any such tax so
withheld or deducted by IOMED. Both Parties will reasonably cooperate in
completing and filing documents required under the provisions of any
applicable tax treaty or under any other applicable law, in order to
enable IOMED to make such payments to DDS without any deduction or
withholding.
16. Indemnity
16.1. DDS shall indemnify, defend and hold harmless IOMED from all actions,
losses, claims, demands, damages, costs and liabilities (including
reasonable attorneys' fees) to which IOMED is or may become subject
insofar as they arise out of or are alleged or claimed to arise out of any
breach by DDS of any of its obligations under this Agreement or warranties
of DDS.
16.2. ****.
16.3. ****:
16.3.1. ****;
<PAGE> 29
16.3.2. ****;
16.3.3. ****;
16.3.4. ****
16.3.5. ****.
16.4. Notwithstanding anything to the contrary in this Agreement, DDS and IOMED
shall not be liable to the other by reason of any representation or
warranty, condition or other term or any duty of common law, or under the
express terms of this Agreement, for any consequential or incidental loss
or damage (whether for loss of profit or otherwise) and whether occasioned
by the negligence of the respective Parties, their employees or agents or
otherwise.
17. Entire Agreement
17.1. This Agreement including its Appendices, together with ****
and the further documents referred to therein, each of which are being
executed of even date herewith, set forth the entire agreement and
understanding of the Parties with respect to the subject matter hereof,
and supersedes all prior discussions, agreements and writings in relating
thereto, including ****.
17.2. The Parties agree that the obligations of IOMED to provide access to the
NDAs pursuant to Article V Paragraph 1 to DDS shall be discharged if such
access is provided to ELAN pursuant to the equivalent provisions of the
ELAN AGREEMENT.
17.3. The Parties agree that the obligations of IOMED to furnish the
documentation and information to DDS pursuant to the provisions of Article
II Paragraph 7, shall be discharged by furnishing such documentation to
ELAN pursuant to the equivalent provisions of the ELAN AGREEMENT.
<PAGE> 30
17.4. The Parties agree that the obligations of IOMED to obtain the prior
written consent of IOMED pursuant to Article II Paragraphs 2.1. or 2.2.
shall be satisfied by obtaining the consent of ELAN pursuant to the
equivalent provisions of the ELAN AGREEMENT.
17.5. The Parties agree that DDS's right of access and audit in any particular
calendar year pursuant to Article IV Paragraph 3.4. shall be exhausted if
such rights are exercised by ELAN pursuant to the equivalent provisions of
the ELAN AGREEMENT; provided that nothing in this Paragraph shall limit or
restrict DDS's rights to seek an adjustment to the royalties payable,
whether by agreement between the Parties or pursuant to arbitration.
17.6. The Parties agree that the obligations of IOMED to obtain the prior
written consent of DDS pursuant to Article IX Paragraph 3 shall be
satisfied by obtaining the consent of ELAN pursuant to the equivalent
provisions of the ELAN AGREEMENT. In addition the Parties agree that the
right of DDS to exercise its rights to conduct appropriate due diligence
and to make an offer as envisaged by Article IX Paragraph 3 shall be
discharged by the exercise of such rights by ELAN pursuant to the
equivalent provisions of the ELAN AGREEMENT. In the event that an
OFFERING PARTY consummates a Control Transaction (as defined in Article IX
Paragraph 3) without the consent of the IOMED's Board of Directors (as
such Board is comprised at the time such transaction is first publicly
announced or commenced) (including without limitation, in connection with
a tender offer or offers or proxy solicitation), and in the event that
ELAN determines at its sole discretion that it shall not terminate the
licenses granted by ELAN pursuant to the ELAN AGREEMENT, DDS shall be
deemed to have elected not to have terminated the licenses granted by DDS
pursuant to this Agreement.
18. Counterparts
This Agreement may be executed in two counterparts, each of which shall be
deemed an original and which together shall constitute one instrument.
<PAGE> 31
IN WITNESS WHEREOF the Parties hereto have executed this Agreement in duplicate.
Signed by IOMED on _____ April, 1997.
By: ________________________________
Name: ______________________________
Title: _____________________________
Executed by DDS ______ April, 1997.
By: _______________________________
Name: _____________________________
Title: ____________________________
<PAGE> 32
[ELAN LOGO]
APPENDIX A
DDS IONTOPHORETIC PATENT RIGHTS
<PAGE> 33
PROPRIETARY & CONFIDENTIAL INFORMATION
SUMMARY OF DDS'S PENDING PATENT APPLICATIONS
FOR IONTOPHORETIC TECHNOLOGY
****
<PAGE> 34
PROPRIETARY & CONFIDENTIAL INFORMATION
****
*indicates claims have been allowed
Europe(4) indicates the designation of the following countries: Germany,
France, Great Britain and Italy
Europe(10) = Europe(4) + Austria, Belgium, Switzerland/Liechtenstein,
Luxembourg, Netherlands & Sweden
Europe(12) = Europe(10) + Greece & Spain
Europe(13) = Europe(12) + Denmark, Portugal & Monaco
Europe(15) = Europe(13) + Ireland
<> This file is the subject of an opposition proceeding in the Japanese Patent
Office. The opposer is Hiroyuki Shigero, and individual. We filed our answer
and supporting documents to the opposition in November 1995 and await further
action from the Japanese Patent Office.
<PAGE> 35
DOCKET FAMILY: P1
[ELAN LOGO] ART = PANODERM
****
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRALIA DDS 31850/84 563137
64.P-1.AU August 13, 1994 October 2, 1987
- ----------------------------------------------------------------------------------------------------------
CANADA DDS 461304 1224993
84.P-1.CA August 17, 1984 August 4, 1987
- ----------------------------------------------------------------------------------------------------------
EPO DDS 84109840.3 147524
84.P-1.EP(10) August 17, 1984 July 10, 1985 August 8, 1989
- ----------------------------------------------------------------------------------------------------------
JAPAN DDS 171396/1984 1764538
84.P-1.JP August 17, 1984 June 9, 1992 May 20, 1993
- ----------------------------------------------------------------------------------------------------------
SOUTH KOREA DDS 4970/84 67091
84.P-1.KR August 17, 1984 June 15, 1993 June 15, 1993
- ----------------------------------------------------------------------------------------------------------
MEXICO DDS 202435 158181
84.P-1.MX August 17, 1984 January 13, 1989
- ----------------------------------------------------------------------------------------------------------
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation PANODERM ISSUED PATENTS 3:39:06 PM
</TABLE>
<PAGE> 36
DOCKET FAMILY: P-1
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAIWAN DDS 73113316 30312
84.P-1.71 August 10, 1984 September 11, 1988 September 11, 1988
- ----------------------------------------------------------------------------------------------------------
UNITED STATES DDS 524,252 4,557,723
83.P-1.US August 18, 1983 December 10, 1985
- ----------------------------------------------------------------------------------------------------------
EP(10) Austria, Belgium, France, Germany, Great Britain, Italy, Luxembourg,
Netherlands, Sweden, Switzerland & Lichtenstein
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation PANODERM ISSUED PATENTS 2:39:08 PM
</TABLE>
<PAGE> 37
DOCKET FAMILY: P-2
[ELAN LOGO] Art = Panoderm
****
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES DDS 660,192 4,862,031
84.P-2.US October 12, 1984 November 11, 1986
- ------------------------------------------------------------------------------------------------------
UNITED STATES DDS 822,518 4,713,050
86.P-2 C.US October 24, 1986 December 15, 1987
- ------------------------------------------------------------------------------------------------------
</TABLE>
PANODERM ISSUED PATENTS
Intellectual Property Department
Elan Pharmaceutical Research Corporation
March 3, 1997
2:39:08 PM
<PAGE> 38
DOCKET FAMILY: P-3
[ELAN LOGO] Art = Panoderm
****
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRALIA DDS 38352/85 580585
65.P-3.AU January 17, 1985 July 17, 1986 January 17, 1985
- ------------------------------------------------------------------------------------------------------
CANADA DDS 474498 1226777
85.P-3.CA February 15, 1985 September 15, 1985
- ------------------------------------------------------------------------------------------------------
EPO DDS 85112811.4 178,601 178601
65.P-3.EP(10) October 17, 1986 April 23, 1986 August 11, 1983
- ------------------------------------------------------------------------------------------------------
ITALY DDS 47885A/85 1186798
85.P-3.IT February 14, 1985
- ------------------------------------------------------------------------------------------------------
JAPAN DDS 219971/1985 1825721
85.P-3.JP October 2, 1985 June 4, 1983 March 16, 1994
- ------------------------------------------------------------------------------------------------------
SOUTH KOREA DDS 7418/85 73321
65.P-3.KR October 5, 1985 January 5, 1994 May 3, 1994
- ------------------------------------------------------------------------------------------------------
</TABLE>
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation 2:39:08 PM
PANODERM ISSUED PATENTS
<PAGE> 39
DOCKET FAMILY: P-3
<TABLE>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MEXICO DDS 204285 161423
85.P-3.MX February 11, 1985 September 24, 1990
- -------------------------------------------------------------------------------------------------------
TAIWAN DDS 75201891 33845
85.P-3.TI February 12, 1985 November 18, 1988 November 18, 1988
- -------------------------------------------------------------------------------------------------------
UNITED STATES DDS 778,183 4,708,716
85.P-3.US August 16, 1985 November 24, 1987
- -------------------------------------------------------------------------------------------------------
</TABLE>
EP(10) Austria, Belgium, France, Germany, Great Britain, Italy, Luxembourg,
Netherlands, Sweden, Switzerland & Lichtenstein
PANODERM ISSUED PATENTS
Intellectual Property Department
Elan Pharmaceutical Research Corporation
March 3, 1997
2:39:08 PM
<PAGE> 40
DOCKET FAMILY: P-4
[ELAN LOGO]
ART = PANODERM
*
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER OF
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
AUSTRALIA DDS 60222/86 597890
86.P-4.AU July 16, 1988 June 14, 1990 July 16, 1988
- --------------------------------------------------------------------------------------------
CANADA DDS 614514 1287665
86.P-4.CA July 23, 1986 August 13, 1991
- --------------------------------------------------------------------------------------------
EPO DDS 86110164.0 240593
86.P-4.EP(10) July 24, 1998 October 14, 1987 May 10, 1993
- --------------------------------------------------------------------------------------------
SPAIN DDS 8801519 6801519
86.P-4.ES May 18, 1983 June 5, 1989
- --------------------------------------------------------------------------------------------
JAPAN DDS 186,721/1988 1921999
86.P-4.JP August 8, 1986 April 7, 1995
- --------------------------------------------------------------------------------------------
SOUTH KOREA DDS 6303/86 100,195
86.P-4.KR July 31, 1986 December 27, 1995 June 3, 1996
- --------------------------------------------------------------------------------------------
</TABLE>
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation 2:39:06 PM
PANODERM ISSUED PATENTS
<PAGE> 41
DOCKET FAMILY: P-4
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
MEXICO DDS 3577 172928
86.P-4.MX August 20, 1996 January 24, 1994
- --------------------------------------------------------------------------------------------
TAIWAN DDS 79203115 58937
80.P-4.TI July 16,1985 August 21, 1990 August 21, 1990
- --------------------------------------------------------------------------------------------
UNITED STATES DDS 839,050 4,840,669
86.P-4C.US March 12, 1988 February 3, 1987
- --------------------------------------------------------------------------------------------
UNITED STATES DDS 196,663 4,919,649
86.P-4C2.US May 20, 1988 April 24, 1990
- --------------------------------------------------------------------------------------------
UNITED STATES DDS 196,664 4,921,475
86.P-4C3.US May 20, 19$$ May 1, 1990
- --------------------------------------------------------------------------------------------
UNITED STATES DDS 426,476 5,087,240
86.P-4C5.US October 30, 1989 February 11, 1992
- --------------------------------------------------------------------------------------------
</TABLE>
EP(10) Austria, Belgium, France, Germany, Great Britain, Italy, Luxembourg,
Netherlands, Sweden, Switzerland & Lischtenstein
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation 2:39:06 PM
PANODERM ISSUED PATENTS
<PAGE> 42
DOCKET FAMILY: P-5
[ELAN LOGO] Art = Panoderm
****
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRALIA DDS 44943/85 591672
85.P-5.AU June 10, 1985 June 10, 1985
- ------------------------------------------------------------------------------------------------------
CANADA DDS 509791 1279542
86.P-5.CA May 22, 1984 January 29, 1991
- ------------------------------------------------------------------------------------------------------
EPO DDS 85903470.4 225672
85.P-5.EP(10) June 10, 1985 September 2, 1992
- ------------------------------------------------------------------------------------------------------
SPAIN DDS 8801520 8801520
88.P-5.ES May 16, 1985 May 3, 1989
- ------------------------------------------------------------------------------------------------------
JAPAN DDS 502839/1985(S60) 2016549
85.P-5.JP June 10, 1985 February 19, 1995
- ------------------------------------------------------------------------------------------------------
SOUTH KOREA DDS 700091/87 27793
87.P-5.KR February 2, 1987 November 28, 1985 April 20, 1989
- ------------------------------------------------------------------------------------------------------
</TABLE>
PANODERM ISSUED PATENTS
Intellectual Property Department
Elan Pharmaceutical Research Corporation
March 3, 1997
2:39:08 PM
<PAGE> 43
DOCKET FAMILY: P-5
<TABLE>
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MEXICO DDS 2747 169673
86.P-5.MX June 5, 1989 July 19, 1993
- ------------------------------------------------------------------------------------------------------
TAIWAN DDS 79202103 58100
87 P-5.TI January 12, 1987 October 11, 1990 October 11, 1990
- ------------------------------------------------------------------------------------------------------
UNITED STATES DDS 711,589 5,135,479
91.P-5 C3.US June 5, 1991 August 4, 1992
- ------------------------------------------------------------------------------------------------------
UNITED STATES DDS 711,590 5,224,928
91.P-5 C4.US June 5, 1991 July 5, 1993
- ------------------------------------------------------------------------------------------------------
UNITED STATES DDS 08/381,141 5,591,123
91.P-5 C6.US January 10, 1995 January 7, 1997
P-1
- ------------------------------------------------------------------------------------------------------
</TABLE>
EP(10) Austria, Belgium, France, Germany, Great Britain, Italy, Luxembourg,
Netherlands, Sweden, Switzerland & Liechtenstein
PANODERM ISSUED PATENTS
Intellectual Property Department
Elan Pharmaceutical Research Corporation
March 3, 1997
2:39:08 PM
<PAGE> 44
Docket Family: P-6
Art = Pandoderm
[ELAN LOGO]
****
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRALIA DDS 44944/85 582764
85.P-6 .AU June 10, 1985 June 10, 1985
- -------------------------------------------------------------------------------------------------------
CANADA DDS 509801 1277882
86.P-6 .CA May 23, 1986 December 10, 1990
- -------------------------------------------------------------------------------------------------------
EPO DDS 85903469.6 225,871 225871
85.P-6 .EP(10) June 10, 1985 June 24, 1987 March 14, 1990
- -------------------------------------------------------------------------------------------------------
JAPAN DDS 502861/1985 1802335
85.P-8 .JP June 10, 1985 October 13, 1982 November 26, 1993
- -------------------------------------------------------------------------------------------------------
SOUTH KOREA DDS 87700089 26954
88.P-6 .KR September 12, 1988 September 12, 1988
- -------------------------------------------------------------------------------------------------------
MEXICO DDS 2748 168830
86.P-6 .MX June 9, 1986 June 2, 1993
- -------------------------------------------------------------------------------------------------------
</TABLE>
PANODERM ISSUED PATENTS
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation 2:39:08 PM
<PAGE> 45
Docket Family: P-6
<TABLE>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTS FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TAIWAN DDS 76100076 30926
87.P-6 .TI January 12, 1987 December 11, 1988
UNITED STATES DDS 000,554 4,808,152
87.P-6 .US DDS January 6, 1987 February 28, 1989
</TABLE>
EP(10) Austria, Belgium, France, Germany, Great Britain, Italy
Luxembourg, Netherlands, Sweden, Switzerland & Liechtenstein
PANODERM ISSUED PATENTS
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation 2:39:08 PM
<PAGE> 46
Docket Family: P-7
[ELAN LOGO]
Art=Panoderm
****
<TABLE>
<CAPTION>
Control Assignee/ Application No./ Publication Number/ Patent Number/
Docket No. Patentee Filing Date Publication Date Patent Census Date
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRALIA DDS 66193/88 591738
86.P-7 .AU December 8, 1988 December 8, 1986
- -------------------------------------------------------------------------------------------------------
AUSTRALIA DDS 16550/88 618734
88.P-7 DIV.AU May 24, 1988 May 24, 1988
- -------------------------------------------------------------------------------------------------------
AUSTRALIA DDS 65713/81 533228
91.P-7 DIV2.AU October 10, 1991 November 25, 1992
- -------------------------------------------------------------------------------------------------------
CANADA DDS 524873 1267340
85.P-7 .CA December 10, 1985 April 3, 1990
- -------------------------------------------------------------------------------------------------------
CANADA DDS 568748 1322921
88.P-7 DIV.CA June 8, 1988 October 12, 1993
- -------------------------------------------------------------------------------------------------------
COLUMBIA DDS 263611 22484
86.P-7 .CO December 5, 1989 April 27, 1990
- -------------------------------------------------------------------------------------------------------
</TABLE>
PANODERM ISSUED PATENTS
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation 2:39:08 PM
<PAGE> 47
Docket Family: P-7
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COLUMBIA DDS 287287 24152
88.P-7 .CO June 5, 1988 September 8, 1989 July 6, 1993
- -----------------------------------------------------------------------------
EPO DDS 86116547.0 225556
86.P-7 .EP November 28, 1988 June 16, 1987 January 23, 1992
- -----------------------------------------------------------------------------
SPAIN DDS 6861521 8801521
88.P-7 .ES May 18, 1986 May 18, 1996
- -----------------------------------------------------------------------------
JAPAN DDS 293319/1986 1964597
86.P-7 .JP December 9, 1986 December 7, 1984 August 25, 1996
- -----------------------------------------------------------------------------
SOUTH KOREA DDS 10126/86 3/25/94 76691
86.P-7 .KR November 28, 1984 April 21, 1994
- -----------------------------------------------------------------------------
SOUTH KOREA DDS 6772/88 107098
88.P-7 DIV.KR June 4, 1986 August 17, 1994
- -----------------------------------------------------------------------------
MEXICO DDS 4602 171173
86.P-7 .MX December 9, 1986 October 8, 1993
- -----------------------------------------------------------------------------
MEXICO DDS 11766 175067
88.P-7 DIV.MX June 3, 1988 July 4, 1994
- -----------------------------------------------------------------------------
TAIWAN DDS 75105482 30365
86.P-7 .TI November 18, 1986 October 1, 1990
- -----------------------------------------------------------------------------
UNITED STATES DDS 807,234 4,731,926
85,P-7 .US December 10, 1985 March 22, 1988
- -----------------------------------------------------------------------------
UNITED STATES DDS 58,527 4,083,457
87.P-7 C.US June 6, 1987 November 28, 1989
- -----------------------------------------------------------------------------
</TABLE>
PANODERM ISSUED PATENTS
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation 2:39:08 PM
<PAGE> 48
DOCKET FAMILY: P-7
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
UNITED STATES 105,869 4,856,188
87.P-7 C1.US DDS OCTOBER 7, 1997 AUGUST 15, 1989
- ------------------------------------------------------------------------------------------------------
UNITED STATES 169,385 4,665,582
88.P-7 C2.US DDS MARCH 17, 1998 SEPTEMBER 12, 1989
- ------------------------------------------------------------------------------------------------------
UNITED STATES 380,196 5,167,617
89.P-7 C3.US DDS JULY 14, 1992 DECEMBER 1, 1992
- ------------------------------------------------------------------------------------------------------
UNITED STATES 949,721 5,358,483
92.P-7 C4.US DDS SEPTEMBER 23, 1992 OCTOBER 25, 1994
- ------------------------------------------------------------------------------------------------------
</TABLE>
EP(8) FRANCE, GERMANY, GREAT BRITAIN, ITALY, SWEDEN, SWITZERLAND & LIECHTENSTEIN
PANODERM ISSUED PATENTS
INTELLECTUAL PROPERTY DEPARTMENT MARCH 3, 1997
ELAN PHARMACEUTICAL RESEARCH CORPORATION 2:39:06 P.M.
<PAGE> 49
DOCKET FAMILY: P-9
[ELAN LOGO]
****
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
AUSTRALIA 75633/87 586382
87.P-9 .AU DDS JULY 14, 1987 JULY 14, 1987
- ----------------------------------------------------------------------------------------------------------------------------------
CANADA 540624-2 1274738
87.P-9 .CA DDS JUNE 25, 1987 OCTOBER 2, 1990
- ----------------------------------------------------------------------------------------------------------------------------------
EPO 87110049.1 254,166 254166
87.P-9 .EP (10) DDS JULY 11, 1987 MARCH 31, 1993
- ----------------------------------------------------------------------------------------------------------------------------------
JAPAN 176935/1987 1922042
87.P-9 .JP DDS JULY 15, 1987 APRIL 7, 1995
- ----------------------------------------------------------------------------------------------------------------------------------
MEXICO 7418 166018
87.P-9 .MX DDS JULY 17, 1987 DECEMBER 16, 1992
- ----------------------------------------------------------------------------------------------------------------------------------
TAIWAN 78103514 38185
87.P-9 .TI DDS JUNE 18, 1987 APRIL 1, 1990
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
INTELLECTUAL PROPERTY DEPARTMENT MARCH 3, 1997
ELAN PHARMACEUTICAL RESEARCH CORPORATION 2:39:08 PM
PANODERM ISSUED PATENTS
<PAGE> 50
DOCKET FAMILY: P-9
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
UNITED STATES 886,151 4,734,090
86.P-9.US DDS July 18, 1986 March 29, 19$$
- --------------------------------------------------------------------------------------------
</TABLE>
EP(10) Austria, Belgium, France, Germany, Great Britain, Italy, Luxembourg,
Netherlands, Sweden, Switzerland & Liechtenstein
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation 2:39:06 PM
PANODERM ISSUED PATENTS
<PAGE> 51
DOCKET FAMILY: P-10
[ELAN LOGO]
ART-PANODERM
****
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRALIA DDS 10986/88 6097699
86.P-10.AU January 30, 1988 January 29, 1988
- ------------------------------------------------------------------------------------------------------
CANADA DDS 558559 1319608
86.P-10.CA February 10, 1993 JUNE 29, 1993
- ------------------------------------------------------------------------------------------------------
EPO DDS 88101856.8 278473 278473
88.P-10.3P(11) February 9, 1993 August 17, 1992 August 5, 1992
- ------------------------------------------------------------------------------------------------------
MEXICO DDS 10386 168981
86.P-10.MX February 10, 1993 June 16, 1993
- ------------------------------------------------------------------------------------------------------
TAIWAN DDS 77100550 32711
88.P-10.TI January 2, 1993 June 1, 1993
- ------------------------------------------------------------------------------------------------------
UNITED STATES DDS 279,315 4,940,456
88.P-10 C.US December 1, 1990 July 10, 1990
- ------------------------------------------------------------------------------------------------------
</TABLE>
EP(11) Austria, Belgium, France, Germany, Great Britain, Italy, Luxembourg,
Netherlands, Spain, Sweden, Switzerland & Liechtenstein
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation 2:39:06 PM
PANODERM ISSUED PATENTS
<PAGE> 52
DOCKET FAMILY: P-11
[ELAN LOGO]
ART-PANODERM
****
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRALIA DDS 10984/88 10,984 608278
88.P-11.AU January 20, 1988 August 11, 1988 January 28, 1988
- ------------------------------------------------------------------------------------------------------
CANADA DDS 558559 1317679
88.P-11.CA February 10, 1993 May 18, 1993
- ------------------------------------------------------------------------------------------------------
EPO DDS 88101857.6 278,474 278474
88.P-11.3P(10) February 9, 1988 August 17, 1988 March 27, 1996
- ------------------------------------------------------------------------------------------------------
JAPAN DDS 26618/1988 1922056
88.P-11.JP February 9, 1988 April 7, 1995
- ------------------------------------------------------------------------------------------------------
MEXICO DDS 10367 165338
88.P-11.MX February 10, 1988 November 8, 1997
- ------------------------------------------------------------------------------------------------------
TAIWAN DDS 77100544 32616
88.P-11.TI February 10, 1987 October 7,1989
- ------------------------------------------------------------------------------------------------------
</TABLE>
Intellectual Property Department March 3, 1997
Elan Pharmaceutical Research Corporation 2:39:06 PM
PANODERM ISSUED PATENTS
<PAGE> 53
DOCKET FAMILY: P-11
<TABLE>
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES DDS 12,889 4,678,892
87.P-11.US February 10, 1987 November 7, 1989
- ------------------------------------------------------------------------------------------------------
UNITED STATES DDS 430,067 5,032,109
89.P-11 C1.US November 1, 1989 July 16, 1991
- ------------------------------------------------------------------------------------------------------
</TABLE>
EP(10) Austria, Belgium, France, Germany, Great Britain, Italy, Luxembourg,
Netherlands, Sweden, Switzerland & Liechtenstein
PANODERM ISSUED PATENTS
Intellectual Property Department
Elan Pharmaceutical Research Corporation
March 3, 1997
2:30:08 PM
<PAGE> 54
DOCKET FAMILY: P-12
[ELAN LOGO] Art = Panoderm
****
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRALIA DDS 12667/88 510133
88.P-12.AU March 7, 1988 May 16, 1991 March 7, 1991
- ------------------------------------------------------------------------------------------------------
CANADA DDS 560596 1317522
88.P-12.CA March 4, 1988 May 11, 1993
- ------------------------------------------------------------------------------------------------------
JAPAN DDS 63041/1988 1907603
88.P-12.JP March 16, 1988 December 1, 1993 February 24, 1995
- ------------------------------------------------------------------------------------------------------
MEXICO DDS 10835 173932
88.P-12.MX March 10, 1988 April 11, 1994
- ------------------------------------------------------------------------------------------------------
TAIWAN DDS 77101547 35925
88.P-12.TI March 10, 1988 November 3, 1989 December 21, 1989
- ------------------------------------------------------------------------------------------------------
UNITED STATES DDS 453,045 5,163,899
89.P-12 C1.US December 12, 1989 November 17, 1992
- ------------------------------------------------------------------------------------------------------
</TABLE>
PANODERM ISSUED PATENTS
Intellectual Property Department
Elan Pharmaceutical Research Corporation
March 3, 1997
2:39:08 PM
<PAGE> 55
DOCKET FAMILY: P-13
[ELAN LOGO] Art = Panoderm
****
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRALIA DDS 18125/88 615188
88.P-13.AU May 13, 1988 May 13, 1988
- ------------------------------------------------------------------------------------------------------
CANADA DDS 587175 1299457
88.P-13.CA May 10, 1989 April 28, 1992
- ------------------------------------------------------------------------------------------------------
EPO DDS 86108314.1 292,930 292930
88.P-13.EP(12) May 25, 1988 November 30, 1988 November 2, 1995
- ------------------------------------------------------------------------------------------------------
JAPAN DDS 128136/1988 1922069
88.P-13.JP May 25, 1989 April 7, 1995
- ------------------------------------------------------------------------------------------------------
SOUTH KOREA DDS 6294/88 107097
88.P-13.KR May 27, 1988 August 17, 1996
- ------------------------------------------------------------------------------------------------------
TAIWAN DDS 79202278 81218
88.P-13.TI May 16, 1989 February 11, 1991 February 11, 1991
- ------------------------------------------------------------------------------------------------------
</TABLE>
PANODERM ISSUED PATENTS
Intellectual Property Department
Elan Pharmaceutical Research Corporation
March 3, 1997
2:39:08 PM
<PAGE> 56
DOCKET FAMILY: P-13
<TABLE>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES DDS 438,118 5,013,293
89.P-13 C2.US NOVEMBER 13, 1988 MAY 7, 1991
- -------------------------------------------------------------------------------------------------------
UNITED STATES DDS 598,803 5,312,325
90.P-13 C3.US OCTOBER 4, 1990 MAY 17, 1994
- -------------------------------------------------------------------------------------------------------
UNITED STATES DDS 864,544 5,326,454
92.P-13 C5.US APRIL 7, 1992 JULY 12, 1994
- -------------------------------------------------------------------------------------------------------
UNITED STATES DDS 864,645 5,336,168
92.P-13 C4.US April 7, 1992 AUGUST 9, 1994
- -------------------------------------------------------------------------------------------------------
UNITED STATES DDS 08/204,784 5,372,168
94.P-13 C6.US MARCH 2, 1994 DECEMBER 13, 1994
- -------------------------------------------------------------------------------------------------------
</TABLE>
EP(12) Austria, Belgium, France, Germany, Great Britain, Italy, Luxembourg,
Netherlands, Spain, Sweden, Switzerland & Liechtenstein
PANODERM ISSUED PATENTS
Intellectual Property Department
Elan Pharmaceutical Research Corporation
March 3, 1997
2:39:08 PM
<PAGE> 57
DOCKET FAMILY: P-15
[ELAN LOGO] ART = OTHER
*
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES DDS 234,258 4,900,414
88.P-15.US AUGUST 19, 1988 FEBRUARY 13, 1990
- ------------------------------------------------------------------------------------------------------
</TABLE>
PANODERM ISSUED PATENTS
Intellectual Property Department
Elan Pharmaceutical Research Corporation
March 3, 1997
2:39:08 PM
<PAGE> 58
DOCKET FAMILY: P-16
[ELAN LOGO] Art = Panoderm
*
<TABLE>
<CAPTION>
COUNTRY/ ASSIGNEE/ APPLICATION NO./ PUBLICATION NUMBER/ PATENT NUMBER/
DOCKET NO. PATENTEE FILING DATE PUBLICATION DATE PATENT ISSUE DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ISRAEL DDS 100794 100794
92.P-18.IL JANUARY 28, 1992 MAY 1, 1996
- ------------------------------------------------------------------------------------------------------
UNITED STATES DDS 287,348 5,088,977
88.P-18.US DECEMBER 27, 1989 FEBRUARY 16, 1992
- ------------------------------------------------------------------------------------------------------
UNITED STATES DDS 823,686 5,328,453
92.P-16.US FEBRUARY 12, 1992 JULY 12, 1994
- ------------------------------------------------------------------------------------------------------
</TABLE>
PANODERM ISSUED PATENTS
Intellectual Property Department
Elan Pharmaceutical Research Corporation
March 3, 1997
2:39:08 PM
<PAGE> 59
Docket Family: P-17
[ELAN LOGO]
ART=PANODERM
****
<TABLE>
<CAPTION>
Country/ Assignee/ Application No./ Publication Number/ Patent Number/
Docket No. Patentee Filing Date Publication Date Patent Issue Date
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES DDS 349,996 5,135,478
89.P-17 .US May 10, 1989 August 4, 1992
UNITED STATES DDS 08/023,463 5,328,452
93.P-17 C1.US February 25, 1993 July 12, 1994
</TABLE>
<PAGE> 60
[ELAN LOGO]
APPENDIX D
IOMED CURRENT PRODUCT
<PAGE> 1
EXHIBIT 10.6
NOTE PURCHASE AND WARRANT AGREEMENT
NOTE PURCHASE AND WARRANT AGREEMENT dated as of April 14, 1997 by and
between IOMED, INC., a Utah corporation (the "Company"), and Elan International
Services, Ltd., a Bermuda corporation ("EIS"), and ELAN INTERNATIONAL
MANAGEMENT, LTD., a Bermuda corporation ("EIM").
RECITAL:
The parties hereto and Elan Corporation, plc, a public limited company
existing under the laws of Ireland and the parent corporation of EIS and EIM
("Elan"), have executed a binding letter agreement dated March 31, 1997 (the
"Letter Agreement"), in connection with which, subject to the terms and
conditions thereof, EIM agreed to provide certain loans to the Company and the
Company agreed to issue a certain warrant to EIS, the parties intending that
this Agreement constitute the Note Purchase Agreement referred to therein.
A G R E E M E N T:
The parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF NOTES AND WARRANT AND CONVERSION
1.1 Initial Securities; Etc. On the terms and subject to the conditions
set forth in this Agreement, on the date hereof, the Company agrees to sell to
EIM, and EIM agrees to purchase from the Company, (x) the promissory note in
the form attached hereto as Exhibit A (the "A Note") in the original principal
amount of $10 million and (y) the promissory note in the form attached hereto
as Exhibit B (the "B Note"; together with the A Note, the "Notes") in the
original principal amount of $5 million.
The Company shall issue to EIS on the date hereof a warrant in the form
attached hereto as Exhibit C (the "Warrant"; together with the Notes, the
"Initial Securities") to acquire up to 500,000 shares (as adjusted as provided
in the Warrant) of the Company's common stock, par value $.001 per share (the
"Common Stock").
EIS has undertaken to subscribe for shares of Common Stock, and the
Warrant is exercisable for shares of Common Stock (such Common Stock, the
"Conversion Shares"; together with the Initial Securities, the "Securities"),
as provided herein. In connection with the transactions described above, the
Company and EIS are entering into a Registration Rights Agreement in the form
attached hereto as Exhibit D (the "Registration Rights Agreement"; together
with this Agreement, the Notes, the Warrant and the License Agreements (to be
entered into by certain affiliates of EIM with the Company on the date hereof,
the "Closing Agreements").
|160339.1||
<PAGE> 2
1.2 Purchase Price. The purchase price for the Notes shall be $15 million
(the "Purchase Price"). Such amount shall be payable by EIM by wire transfer
to an account or accounts designated in writing by the Company on the date
hereof
1.3 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on the date hereof at the offices of
counsel to EIS and EIM in New York City, or at such other place as the parties
may agree. At the Closing:
(x) the Company shall deliver to EIM and EIS, as applicable: (i) original
executed counterparts of the Initial Securities and the Closing Agreements,
(ii) a signed copy of the legal opinion referred to in the Letter Agreement,
(iii) a signed form UCC-1 in customary form, together with a fully signed
counterpart of this Agreement in form for filing with the U.S. Patent and
Trademark Office to secure the B Note as provided herein, and (iv) such other
documents and instruments that EIS and EIM may reasonably request and that
shall be customary for similar closings;
(y) the Company shall deliver to Elan and Drug Delivery Systems Inc., a
New York corporation original executed counterparts of each of the License
Agreements; and
(z) EIM shall (I) pay the Purchase Price and (II) deliver to the Company
(i) original executed counterparts of the Initial Securities and Closing
Agreements to which it (or Elan, EIS and/or DDS) is a party, (ii) such other
documents and instruments that the Company may reasonably request and that
shall be customary for similar closings.
In addition, (x) by signing this Agreement, the Company on the one hand,
and EIS and EIM on the other hand, confirm that the conditions to closing set
forth in Sections 4(a) and 4(b), as applicable, of the Letter Agreement have
been satisfied and (y) each of the parties shall hereafter take such additional
actions as shall be necessary or appropriate to implement the transactions
contemplated hereby.
Each of the parties shall, if required, mutually and reasonably cooperate
with each other in connection with the filing of all documents and instruments
necessary or appropriate in connection with a pre-closing notification of the
Federal Trade Commission (the "FTC") and the Department of Justice (the "DOJ")
pursuant to the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as
amended ("HSIV). Each of the parties shall use their respective commercially
reasonable efforts to promptly comply with all formal or informal requests for
additional information by the FTC or DOJ in respect of such filing. It shall
be a condition precedent to the acquisition of any voting securities by EIS or
its affiliates that the parties shall have complied with applicable law
relating thereto, including the consummation of all necessary filings under
HSR, and that all applicable waiting periods shall have expired.
2
|160339.1||
<PAGE> 3
1.4 Repayment of the Notes ELC. (a) The A Note. Notwithstanding the
provisions of the A Note, the A Note shall be repaid in full in cash, at the
earlier of (x) the date of the Company's initial public offering (the "IPU') of
equity securities under the Securities Act of 1933 (the "Securities Act') and
(y) two years from the date hereof (the date of such repayment, the "Repayment
Date"). Such repayment shall occur solely as follows: On the Repayment Date,
the Company shall repay the A Note and accrued interest thereon (which shall
not be subject to withholding taxes) to EIM and EIS shall purchase shares of
Common Stock from the Company, as follows:
(I) Conversion &LM. If the IPO occurs on or prior to the date which is
two years after the date hereof and the price to the public in the EPO (as set
forth on the cover page of the prospectus forming a part of the registration
statement) (the "Price to the Public") is $2.50 per share or greater (subject
to the Anti-dilution Adjustments (as defined herein)), EIS shall purchase for $
1 0 million (plus accrued interest from the date hereof) 4 million Conversion
Shares in connection with the EPO. If the Price to the Public in such IPO is
less than $2.50 per share (subject to the Anti-dilution Adjustments), EIS shall
purchase in connection with the IPO, for a purchase price equal to the
outstanding principal amount of the A Note and accrued and unpaid interest
thereon, a number of shares of Common Stock equal to the quotient of (x) the
aggregate outstanding principal amount of the A Note plus accrued and unpaid
interest thereon and (y) such Price to the Public. Such purchase and issuance
of Conversion Shares and payment to EIM shall occur simultaneously with the
closing of the [PO and after receipt of the interest payment as set forth
above.
The Conversion Shares referred to above shall not be registered, but shall
constitute Registrable Securities under the Registration Rights Agreement.
(II) Conversion After Two Years. In the event that the EPO shall not have
occurred on or prior to the date which is two years after the date hereof, then
the Repayment Date shall be the date which is two years after the date hereof,
and on such date (x) the Company shall repay in full the A Note and accrued
interest thereon and (y) thereafter EIS shall purchase from the Company for a
cash amount equal to the outstanding principal amount of the A Note and accrued
and unpaid interest thereon, a number of Conversion Shares equal to (A) such
outstanding principal amount of the A Note and accrued and unpaid interest
thereon (B) divided by the greater of (x) $2.50 per share (subject to the
Anti-dilution Adjustments) and (y) an amount equal to 80% of the price per
share (on an as-converted basis) of the most recent bona fide Institutional
Financing (as defined below) which shall have occurred prior to such two-year
anniversary. Institutional Financing means a debt, equity or combined
financing (including a financing coupled with or in the form of a property
(including intellectual property), transfer or license) with an unaffiliated
third party which is a venture capital or similar organization, an underwriter,
financial advisor, broker/dealer or person or entity acting in a similar
capacity or an industry or "strategic" investor, joint venturer, licensee or
similar person.
3
|160339.1||
<PAGE> 4
Upon any repayment of the A Note described in clause (I) or (II) above,
the Company shall immediately issue and deliver to EIS a certificate in respect
of the applicable number of Conversion Shares (which shall bear an appropriate
restrictive legend) and EIM shall deliver to the Company the original
counterpart of the A Note'.
(b) The B Note. In the event that at any time that all or any portion of
the B Note or accrued and unpaid interest thereon (the "B Outstanding Amount)
shall be outstanding the Company completes its IPO, then (x) upon consummation
of the IPO the Company shall pay to EEIM the B Outstanding Amount (and accrued
and unpaid interest thereon (which will not be subject to withholding taxes) at
the rate set forth in the B Note from and after the date of the IPO until paid
in full) in full cancellation and satisfaction of the B Note, and (y)
thereafter, EIS shall purchase from the Company for cash in such IPO a n of
fully registered shares which shall upon issuance be admitted for trading or
listed privileges on the then principal exchange or listing authority on which
the Common Stock is traded) equal to the quotient of (1) the B Outstanding
Amount and (II) the Price to the Public in such IPO. In any such event, EIS
shall deliver to the Company the original counterpart of the B Note.
1.5 Certain Provisions Relating to the Notes. (a) During such time that
either or both of the Notes is outstanding, the Company shall not incur or
permit to exist any indebtedness of the Company or any of its subsidiaries
without the consent of EIM; provided, that the foregoing restrictions shall not
apply to indebtedness reflected on the Financial Statements (as defined below),
arising from trade accounts payable in the ordinary course of business which
are not more than 90 days past due or from a bank or other institutional lender
or lenders solely for working capital purposes, to purchase items of equipment
(provided that the principal amount of such indebtedness does not exceed the
fair market value of such equipment at the time of purchase) and capitalized
lease obligations, each of which may be senior to or pari passu with the Notes
(other than collateral in respect of the B Note, as provided herein), in each
case, in a maximum aggregate outstanding principal amount not in excess of the
amount that can prudently be financed solely by such working capital, or
equipment capitalized lease obligations, each as determined under U.S.
generally accepted accounting principles, as reasonably and in good faith
determined by such lender or lenders. In the event that the Company is
permitted to incur any indebtedness as described above, EEIM shall, if
requested by the Company, execute and deliver an Agreement, in form and
substance reasonably satisfactory to EIM and the Company, to evidence the fact
that such indebtedness may be senior to or pari passu with the Notes.
(b) The B Note (including accrued and unpaid interest thereon) shall be
secured by all of the Elan Iontophoretic Intellectual Property and the DDS
Iontophoretic Patent Rights (as defined in the License Agreement) and the
proceeds thereof, on a first priority perfected security interest, which the
parties agree is hereby created. In connection therewith, (x) upon the request
of EIS or EIM the Company shall cause to be filed, within 10 days of the date
hereof, with the Secretary of State of the State of Utah a Form UCC I in
customary form and a counterpart of this Agreement with the United States
Patent and Trademark Office, and (y) the holder of the B Note shall be entitled
to all of the rights and remedies of a secured creditor under
4
|160339.1||
<PAGE> 5
applicable law, including the Uniform Commercial Code of the States of Utah and
New York, including the right to foreclose, take possession of and sell or use,
such Iontophoretic Intellectual Property; provided, that if any event giving
rise to the exercise of such rights and remedies shall have occurred, the
holder of the B Note shall not exercise such foreclosure or similar rights for
a period of six months from the occurrence of such event, during which period
each of the Company and such holder shall use commercially reasonable good
faith efforts to enter into appropriate arrangements to repay the B Outstanding
Amount in a reasonable and expeditious manner.
1.6 Certain Provisions Relating to New Stock. Notwithstanding the other
provisions of this Section I or the Warrant in the event that, at any time,
EIS's and its affiliates' aggregate ownership of securities representing
outstanding, voting equity securities of the Company (on an as converted basis)
may exceed 19.9% of the aggregate outstanding shares of Common Stock, EIS may
elect in its sole discretion, that in lieu of receiving Conversion Shares in
connection with any repayment of the Notes or purchasing Common Stock in
connection with the IPO or exercise of the Warrant it shall receive all of the
shares of a new series of Convertible Preferred Stock or second series of
Common Stock (collectively, the "New Stock') to be created by the Company, to
the extent of the excess of such ownership percentage over 19.9%. In such even4
the Common Stock issuable in ' connection with the repayment of the Note(s)
and/or Warrant (or portion thereof) elected by EIS shall be converted into such
New Stock. The New Stock, if issued, shall be in form and substance reasonably
satisfactory to EIS and shall (i) rank pari passu with the Common Stock, (ii)
have the benefit of the same registration rights as are granted to EIS as set
forth in the Registration Rights Agreement and other rights as holders of the
Common Stock, including rights to receive dividends and distributions and upon
liquidation, (iii) be convertible into shares of Common Stock, initially on a
share for share basis, subject to the Anti-dilution Adjustments, and (iv) be
nonvoting, except to the extent required by applicable law.
1.7 Anti-dilution Adjustments. The number of Conversion Shares issuable
to a Holder upon conversion of the A Note and the New Stock shall be subject to
the following anti-dilution adjustments (the "Anti-dilution Adjustments"):
(a) Reclassification, Merger, Etc. In case of (i) any reclassification,
reorganization, change or conversion of securities of the class issuable upon
conversion of the A Note or the New Stock (other than a change in par value, or
from par value to no par value), or (ii) any consolidation of the Company with
or into another corporation (other than a merger or consolidation with another
corporation in which the Company is the acquiring and the surviving corporation
and which does not result in any reclassification or change of outstanding
securities issuable upon conversion of the A Note or the New Stock), or (iii)
any sale of all or substantially all of the assets of the Company, then the
Company, or such successor or purchasing corporation, as the case may be, shall
daily execute and deliver to the holder(s) of the A Note and the New Stock a
new certificate or supplement thereto (in form and substance reasonably
satisfactory to such holder(s)), so that such holder(s) shall have the right to
receive, for no additional
5
|160339.1||
<PAGE> 6
consideration, and in lieu of the shares of Conversion Shares theretofore
issuable upon such conversion(s), the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification,
reorganization, change, conversion, merger or consolidation by a holder of the
number of shares of Conversion Shares into which the A Note and/or New Stock
are then convertible. Such new or supplemental certificate(s) shall provide
for adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 1.7. The provisions of this Section
1.7(a) shall similarly attach to successive reclassifications, reorganizations,
changes, mergers, consolidations and transfers.
(b) Subdivision or Combination of Shares. If the Company at any time
during which the A Note or New Stock is outstanding shall subdivide or combine
its Common Stock, (i) in the case of a subdivision, the conversion prices of
such securities shall be proportionately decreased and the number of Conversion
Shares purchasable hereunder shall be proportionately increased, and (ii) in
the case of a combination, the conversion prices of such securities shall be
proportionately increased and the number of Conversion Shares purchasable
hereunder shall be proportionately decreased.
(c) Stock Dividends; Etc. If the Company at any time while the A Note or
New Stock is outstanding shall (i) pay a dividend with respect to Common Stock
payable in Common Stock (or rights, options, warrants or similar instruments in
respect thereof (collectively, "Options")), or (ii) make any other distribution
with respect to Common Stock (except any distribution specifically provided for
in Sections 1.7(a) and (b) above), the conversion prices applicable to such
securities shall be adjusted by multiplying such conversion prices in effect
immediately prior to such date of determination of the holders of securities
entitled to receive such distribution, by a fraction (A) the numerator, of
which shall be the total number of shares of Common Stock outstanding
immediately prior to such dividend or distribution, and (B) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution, as if all of such Options had
been exercised and the Company received the consideration payable in respect
thereof. Upon each adjustment in the conversion prices pursuant to this
Section 1.7(c), the number of Conversion Shares issuable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by multiplying
the number of Conversion Shares issuable immediately prior to such adjustment
by a fraction, the numerator of which shall be the conversion price immediately
prior to such adjustment and the denominator of which shall be the conversion
price immediately thereafter.
(d) Repurchases or Redemptions of Common Stock or Options. If the Company
at any time while the A Note and/or New Stock is outstanding shall repurchase
or redeem any outstanding shares of Common Stock or any Options, at a price
which is greater than the then current conversion price(s), such conversion
price(s) shall thereupon be adjusted by multiplying the conversion price(s) in
effect at the time of such repurchase by a fraction (i) the numerator of which
shall be the conversion price(s) in effect immediately prior to such repurchase
or redemption and (ii) the denominator of which shall be the fair market value
of the consideration paid for the shares of Common Stock and/or Options at the
time of purchase. Upon each
6
|160339.1||
<PAGE> 7
adjustment in conversion prices pursuant to this Section 1.7(d), the number of
Conversion Shares issuable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Conversion Shares
purchasable immediately prior to such adjustment in the conversion price(s) by
a fraction, the numerator of which shall be the applicable conversion price
immediately prior to such adjustment and the denominator of which shall be the
applicable conversion price immediately thereafter. Notwithstanding the
foregoing, this Section 1.7(d) will not apply to redemptions of the Company's
Series C Preferred Stock made pursuant to existing Agreement.
(e) No Impairment. The Company will not, by amendment of its charter or
bylaws or through any reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company, but will at
all times in good faith assist in the carrying out of all the provisions of
this Section 1'.7 and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holders of this A Note and
New Stock against impairment.
(f) Notice of Adjustments. Whenever the conversion prices above or the
number of Conversion Shares purchasable hereunder shall be adjusted pursuant to
this Section 1.7, the Company shall prepare a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment the method by which such adjustment was calculated. Such
certificate shall be signed by its chief financial officer and shall be
delivered to the holders of the A Note and New Stock.
(g) Fractional Shares. No fractional Conversion Shares will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor based on the fair market value
of the Conversion Shares on the date of exercise as reasonably determined in
good faith by the Company's Board of Directors.
1.8 Certain Securities Laws Matters. Unless registered in the EPO or
another registered public offering, the certificates representing the
Securities shall bear appropriate and customary restrictive legends relating to
the restrictions on transfer applicable thereto.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to EIS and EIMI as follows:
2.1 Organization; etc. The Company is a corporation duly organized,
validly existing and is good standing under the laws of the State of Utah and
is qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business or financial condition of the Company. The
Company is not in default of its charter or bylaws, any applicable laws or
7
|160339.1||
<PAGE> 8
regulations or any contract or Agreement binding upon or affecting it or its
properties or assets and the execution, delivery and performance of this
Agreement and the transactions contemplated hereby will not result in any such
violation.
2.2 Authorization. The Company has full corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly authorized, executed and
delivered by the Company, and constitutes the valid and binding obligation of
the Company, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights and by general equitable principles.
2.3 Valid Issuance. The Securities have been duly and validly authorized
and, when issued, shall be fully paid and nonassessable and free from any and
all pre-emptive or similar rights, and any other options, warrants or rights.
2.4 No Violation. The execution, delivery and performance by the Company
of this Agreement and each of the other transaction documents, the issuance,
sale and delivery of the Securities and compliance with the provisions hereof
by the Company, will not (a) violate any provision of applicable law, statute,
rule or regulation applicable to the Company or any ruling, writ, injunction,
order, judgment or decree of any court arbitrator, administrative agency or
other governmental body applicable to the Company or any of its properties or
assets, or (b) conflict with or breach any of the terms, conditions or
provisions of, or constitute (with notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under,
or result in the creation of, any Encumbrance (as defined below) upon any of
the properties or assets of the Company under the Certificate of Incorporation,
as amended, or bylaws of the Company or any material contract to which the
Company is a party, except where such violation, conflict or breach would not,
individually or in the aggregate, have a material adverse effect on the
Company. As used herein, "Encumbrance" shall mean any liens, charges,
encumbrances, equities, claims, options proxies, pledges security interests, or
other similar rights of any nature, except for such conflicts, breaches or
defaults which would not, individually or in the aggregate, have a material
adverse effect on the Company.
2.5 Capitalization. (a) As of the date hereof, the authorized, issued and
outstanding capital stock of the Company consists solely of 15,040,455 shares
of Common Stock and 172,800 shares of Series C Preferred Stock. As of the date
hereof, options to purchase 1,585,493 shares of Common Stock, and warrants to
purchase 295,000 shares of Common Stock, are outstanding. Except for (a) the
options and warrants described above, and (b) an obligation to issue additional
shares of Common Stock (4,628 shares as of the date hereof) to Laboratories
Fournier, S.C.A. ("Fournier") pursuant to the adjustment provisions of the
Agreement between the Company and Fournier, dated February 20, 1996 (the
"Fournier Agreement"), the Company does not have outstanding any rights (except
pre-emptive or other) or options to subscribe for or purchase, or any warrants
or other agreement providing for or requiring the issuance by the
8
|160339.1||
<PAGE> 9
Company of, any capital stock or securities convertible into or exchangeable
for its capital stock.
(b) Schedule 2.5(b) hereto sets forth an accurate and complete list of all
holders of any equity interest in the Company (including Options,, with their
corresponding equity ownership interests; no other person or entity holds any
equity interest in the Company or any Option in respect thereof
(c) Except as set forth on Schedule 2.5(c) the Company does not own any
capital stock of, or other securities issued by, any other person or entity, or
interest in any joint venture or similar arrangement.
(d) Except for the filing of any notice subsequent to tire Closing which
may be required under applicable federal or state securities law (which, if
required, shall be filed on a timely basis as, may so be required), no permit
Authorization, consent or approval of or by, or any notification of or filing
with, any Person (governmental or private) is required in connection with the
execution, delivery or performance of this Agreement by the Company. There is
no approval of the Company's stockholders required under applicable laws,
regulations or stock exchange or listing authority rules or regulations in
connection with the execution and delivery of the Closing Agreements or the
consummation of the transactions contemplated herein, including the issuance of
the Securities.
2.6 Litigation. The Company is not a party, nor has it been threatened in
writing to be made a party, to any charge, complaint action, suit proceeding,
hearing or investigation of or in any court of quasi-judicial or administrative
agency of any federal, state local or foreign jurisdiction or before any
arbitrator, which could result in any material adverse change in the assets,
liabilities, business, financial condition, operations, results of operations
or future prospects of the Company.
2.7 Reports and Financial Statements, etc. (a) EIS has heretofore been
furnished with complete and correct copies of the unaudited consolidated
balance sheet of the Company as of December 31, 1996 and of the unaudited
consolidated statements of income and operations and cash flow for the six
month period then ended (collectively, the Financial Statements") set forth on
Schedule 2.7(a).
(b) Each of the Financial Statements was prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
prior periods, subject to normal yearend adjustments (which are not material)
and is accurate and complete in all material respects. Each of the balance
sheets included in such financial statements fairly presents the financial
condition of the Company as of the close of business on the date thereof, and
each of the statements of income included in such Financial Statements fairly
presents the results of operations of the Company for the fiscal period then
ended.
9
|160339.1||
<PAGE> 10
(c) The Company owns all of its material properties and assets, including
all Intellectual Property as summarized on Schedule 2.7(c).
(d) Other than as set forth in the Financial Statements, the Company has
no outstanding liabilities or obligations, contingent or otherwise, dm those
incurred in the normal course of business, which have or may have a materially
adverse effect on the financial condition of the Company.
2.8 Material Adverse Change. There has been no material adverse change in
the business condition (financial or otherwise) of the Company since December
31, 1996.
2.9 Material Contracts. All of the Company's material contracts and
agreements are listed on Schedule 2.9 (the "Material Contracts"). There is no
default or violation thereunder by any party thereto, and the consummation of
the Closing Agreements and transactions contemplated hereby will not cause the
Company or any party to a Material Contract to be in default or violation
thereof.
2.10 Disclosure. This Agreement and the other Closing Agreements do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements contained herein and therein not
misleading. The Company is not aware of any material contingency, event or
circumstance relating to its business or prospects, which could have a material
adverse effect thereon, in order for the disclosure herein relating to the
Company not to be misleading in any material respect.
2.11 Brokers or Finders. The Company has not retained any investment
banker, broker or finder in connection with the transactions contemplated by
this Agreement and the other Closing Agreements. The Company agrees to
indemnify and hold EIS and EIM harmless against any liability, settlement or
expense arising out of, or in connection with, any such claim.
ARTICLE 3
REPRESENTATIONS AND WARRANTEES OF EIS AND EIM
EIS and EIM hereby represent and warrant to the Company as follows:
3.1 Organization and Authority. (a) Each of EIM and EIS is a Bermuda
corporation and has full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly authorized, executed and delivered by each
of EIS and EIM, and constitutes the valid and binding obligation of each,
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights and by general equitable principles.
(b) Each of EIS and EEIM has full corporate authority to execute and
deliver this
10
|160339.1||
<PAGE> 11
Agreement and the Closing Agreements and to consummate the transactions
contemplated hereby and thereby; this Agreement has been duly executed and
delivered by each of EIS and EIM and constitutes the legal and valid
obligations of each and is enforceable against each in accordance with its
terms, and the execution, delivery and performance of this Agreement and the
transactions contemplated hereby will not violate or result in a default under
or creation of a lien or encumbrance under EIS's or EIM's memorandum and
articles of association or other organic documents, any material agreement or
instrument binding upon or affecting it or its properties or assets or any
applicable laws, rules, regulations or orders affecting it or its properties or
assets.
(c) Neither EIS nor EIM is now in material default of its charter or
bylaws or similar organic documents, any applicable material laws or
regulations or any contract or agreement binding upon or affecting them or
their properties or assets and the execution delivery and performance of this
Agreement and the transactions contemplated hereby will not result in such
violation.
3.2 Investment Intent; Etc. EIM and EIS are each acquiring the
Securities, for its own account and not with a present view to, or in
connection with, any distribution. Both understand that the Securities have
not been registered under the Securities Act, by reason of a specific exemption
from the registration requirements of the Act which depends upon, among other
things, the bona fide nature of the investment intent as expressed herein, and
that, accordingly, they may be required to hold such Securities for an
indefinite period.
3.3 Disclosure. No representation or warranty by EIS or EEIM contained in
this Agreement contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements contained herein not
misleading in light of the circumstances under which they were made.
3.4 Reliance, Neither EIS nor EIM has relied on any representations,
warranties, covenants or information in making its investment decision in
regard to the Securities, except for those provided by the Company and set
forth in this Agreement or the Closing Agreements.
ARTICLE 4
COVENANTS OF THE COMPANY
The Company hereby covenants that:
4.1 Board Seat. Until such time as EIS and its affiliates collectively
own securities representing less than 10% of the Common Stock or equivalents,
on an as converted and fully diluted basis (i.e., assuming conversion of the
Notes and exercise of the Warrant, but excluding conversion or exercise of all
options) the Company shall use its best efforts to cause EIS to designate one
member of the Company's Board of Directors.
11
|160339.1||
<PAGE> 12
4.2 [INTENTIONALLY OMITTED]
4.3 Financial Statements. For so long as the covenants contained in
Section 4.1 are in effect, the Company shall deliver to EIMI:
(a) as soon as available and in any event within 90 days after the end of
each fiscal year of the Company, beginning with the fiscal year ending June 30,
1997, audited financial statements of the Company for such year, accompanied by
a report thereon of independent public accountants of recognized national
standing, which report shall state that such financial statements fairly
present the financial condition and results of operations of the Company as at
the end of, and for, such fiscal year, and
(b) as soon as available and in any event within 45 days after the end of
each fiscal quarter of the Company (other dm the last fiscal quarter in each
fiscal year) unaudited financial statements of the Company for such fiscal
quarter accompanied, in each case, by a certificate of the chief financial
officer of the Company, which certificate shall state that such financial
statements fairly present the financial position and results of operations of
the Company in accordance with generally accepted accounting principles,
subject to changes resulting from yearend audit adjustments.
4.4 Operating Covenants. From the date hereof, and until the B Note is
repaid in full, without the prior written consent of EIM, the Company shall
not:
(a) dispose of any material asset or business, including any intellectual
property rights;
(b) make pay or declare any dividend or distribution to any equity holder
(in such capacity) or redeem any of its capital stock; except that the Company
shall be permitted to redeem shares of its Series C Preferred Stock pursuant to
previously existing contractual arrangements;
(c) consummate any joint venture, equity investment in an unaffiliated
entity or similar transaction; or
(d) vary its business plan or practices, in any material respect, from
past practices.
4.5 Post-Closing. From the date hereof, and until the B Note is repaid in
full, the Company agrees to do or cause to be done such further acts and
things, and deliver or cause to be delivered to EIM such additional
assignments, agreements, powers and instruments as EIM may reasonably require
or deem advisable to carry into effect the purposes of this Agreement and the
Closing Agreements, or better to assure and confirm unto EIN4 and EIS their
rights powers and remedies hereunder and thereunder.
12
|160339.1||
<PAGE> 13
4.6 Indemnification, (a) In addition to all rights and remedies available
to the parties hereunder at law or in equity, the Company shall indemnify EIS,
EEIM and their respective affiliates, stockholders, directors, officers,
employees, agents, representatives, successors and permitted assigns
(collectively, the "Elan Indemnified Persons") and save and hold each of them
harmless against and pay on behalf of or reimburse each Elan Indemnified Person
as and when incurred for any loss, liability, demand, claim, action, cause of
action, cost, damage, deficiency, tax, penalty, fine or expense, whether or not
arising out of any claims by or on behalf of the Company or any third party,
including interest, penalties, reasonable attorney's fees, and expenses and all
amounts paid in investigation defense or settlement of any of the foregoing
(collectively, "Losses') which any such Elan Indemnified Person may suffer,
sustain or become subject to, as a result of, in connection with, relating to
or incidental to, or by virtue of.
(i) any misrepresentation or breach of warranty on the part of the Company
under Article 2 of this Agreement; or
(ii) any nonfulfillment or breach of any covenant or agreement on the part
of the Company under this Agreement.
(b) The maximum recovery of an Elan Indemnified Person under this Section
4.6 shall not exceed $1 5,000,000. An Elan Indemnified Person shall not assert
a claim unless the Losses, when aggregated with all previous Losses hereunder,
equal or exceed $50,000, but at such time that such indemnified Person is
permitted to assert a claim, such claim shall include all Losses covered by
this Section 4.6.
(c) In addition to all rights and remedies available to the parties
hereunder at law or in equity, EIS and EIM shall indemnify the Company and its
respective affiliates, stockholders, directors, officers, Employees, agents,
representatives, successors and permitted assigns (collectively, the "Company
Indemnified Persons") and save and hold each of them harmless against and pay
on behalf of or reimburse each Company Indemnified Person as and when incurred
for any Losses which any Company Indemnified Person may suffer, sustain or
become subject to, as a result of, in connection with, relating to, incidental
to or by virtue of
(i) any misrepresentation or breach of warranty on the part of EIS and/or
EIM under Article 3 of this Agreement; or
(ii) any nonfulfillment or breach of any covenant or agreement on the part
of EIS and/or EIM under this Agreement; or
(iii) any taxes, or related obligations, for which the Company may be
liable as a result of this Agreement or the transactions contemplated hereby.
In the event that EIS or EIN4 reorganizes its assets or business such that
all or a substantial portion of its assets are transferred to another entity
which is affiliated with them,
13
|160339.1||
<PAGE> 14
such entity shall be liable for EIS's or EIM's indemnification obligations
hereunder.
(d) The maximum recovery of a Company Indemnified Person under this
Section 4.6 shall not exceed $1,500,000. A Company Indemnified Person shall
not assert a claim unless the Losses, when aggregated with all previous Losses
hereunder, equal or exceed $50,000, but at such time that such Company
Indemnified Person is permitted to assert a claim, such claim shall include all
Losses covered by this Section 4.6.
(e) Notwithstanding the foregoing, and subject to the following sentence,
upon judicial determination which is final and no longer appealable, that the
act or omission giving rise to either indemnification set forth above resulted
primarily out of or was based primarily upon an Elan Indemnified Person's or a
Company Indemnified Person's (each, as applicable, an "I.P.") gross negligence,
fraud, or willful misconduct by an I.P. (unless such action was based on that
I.P.'s reliance in good faith upon any representation, warranty or promise made
by a counter-party to this Agreement (a "Counter-Party") herein), the
Counter-Party shall not be responsible for any Losses sought to be indemnified
in connection therewith, and that Counter-Party shall be entitled to recover
from such I.P. all amounts previously paid in full or partial satisfaction of
such indemnity, together with all its costs and expenses reasonably incurred in
effecting such recovery, if any. In no event shall a failure by the Company to
withhold taxes and pay such amounts to the appropriate taxing authority
constitute gross negligence, fraud or willful misconduct by the Company.
(f) All indemnification rights hereunder shall survive the execution and
delivery of this Agreement and the consummation of the transactions
contemplated herein to the extent provided above. All indemnification rights
hereunder shall terminate 27 months after the Closing, except for claims made
in writing prior to such time.
(g) If for any reason the indemnity provided for in this Section 4.6 is
unavailable to an I.P. or is insufficient to hold such I.P. harmless from all
such Losses arising with respect to the transactions contemplated herein, then
the Counter-Party and the I.P. shall each contribute to the amount paid or
payable by such Loss in such proportion as is appropriate to reflect the
relative benefits received by the Counter-Party and the I.P. as well as any
relevant equitable considerations. The indemnity, contribution and expense
reimbursement obligations that any Counter-Party has under this Section 4.6
shall be in addition to any liability that the respective Counter-Party may
otherwise have. The Company, EIM and EIS further agree that the
indemnification and reimbursement commitments set forth in this Agreement shall
apply whether or not the they are formal parties to any such lawsuits, claims
or other proceedings.
ARTICLE 5
MISCELLANEOUS
5.1 Notices. Any notice or other communication required or permitted
hereunder must be in writing, and shall be delivered personally, by facsimile
or by certified,
14
|160339.1||
<PAGE> 15
registered, or express mail, postage prepaid and return receipt requested.
Such notice shall be deemed given when so delivered personally or when sent by
confirmed facsimile transmission on a business day to the party in question or,
if mailed, three business days after the date of deposit into the United States
mail, as follows:
(a) if to the Company:
IOMED, Inc.
3385 West 1820 South
Salt Lake City, Utah 84104
Attention: President
Fax No. (801) 972-9072
with a copy to:
Parsons Behle & Latimer
201 South Main Street Suite 1800
Salt Lake City, Utah 84111
Attention: Robert C. Delahunty
Fax No. (801) 536-6111
(b) if to EIS or EIM, to:
Elan, International Services, Ltd.,
102 St. James Court
Flatts Smiths FLO4 Bermuda
Attention: President
Fax No.
or
Elan International Management, Ltd.
102 St. James Court
Flatts Smiths FLO4 Bermuda
Attention: President
Fax No.
with a copy to:
Brock Fensterstock Silverstein McAuliffe & Wade, LLC
153 East 53rd Street
New York, New York 10022-4611
Attention: David Robbins
Fax No. (212) 371-5500
15
|160339.1||
<PAGE> 16
5.2 Governing Law. This Agreement shall be governed by the laws of the
State of New York, without giving effect to the choice of law provisions
thereof.
5.3 Public Disclosure. Each of EIM, EIS and the Company agrees that,
neither party will make any public disclosure of this Agreement or any of the
transactions or agreements contemplated hereby without the consent of the other
after appropriate notice has been given thereto, except to the extent as
required by applicable law or judicial or administrative process; provided
however, that either party shall have the right to make such disclosure to
potential financing sources and governmental regulatory agencies, including the
Securities and Exchange Commission.
5.4 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
5.5 Entire Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
5.6 Exchanges; Lost, Stolen or Mutilated Certificates. Upon surrender by
EIM or EIS to the Company of a certificate representing any Securities acquired
by EIM or EIS hereunder, as applicable, the Company at its expense will issue
in exchange therefor and deliver to EIM or EIS as applicable, a new certificate
or certificates representing such Securities, in such denomination or
denominations, aggregating the number of shares of Common Stock underlying such
Securities represented by the certificate so surrendered, as may be requested
by EIM or EIS. Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of any certificate representing any
Security acquired hereunder and in the case of any loss or theft or
destruction, upon delivery of an indemnity agreement reasonably satisfactory to
the Company or in the case of any mutilation upon surrender of the certificate,
the Company, at its expense, will issue and deliver to EIM or EIS a new
certificate representing such Securities.
5.7 Expenses. Each party shall bear and be responsible for its own costs
and expenses incurred in connection with this Agreement and the other Closing
Agreements and the transactions contemplated herein and thereby.
5.8 Restrictions on Transfer. Neither EIM, EIS, Elan nor the Company
shall transfer or assign their respective rights or interests acquired under
this Agreement, the Notes or the Closing Agreements (other than to any of their
respective affiliates (as defined in the regulations promulgated under the
Securities Exchange Act of 1934)); provided that (a) EIM shall have the right to
transfer or assign an amount up to 50% of its interest in the A Note without the
prior consent of the Company, and an amount greater than 50% of its interest in
the A Note with the consent of the Company, which will not be unreasonably
withheld, so long as, in the case of any such assignment or transfer, the
assignee or transferee is not a competitor in any material respect with the
Company on the date of such proposed transfer, and EIM shall act as
16
|160339.1||
<PAGE> 17
agent for the assignee for giving and/or receiving notices or waivers relating
to the A Note, (b) EIS shall be permitted to transfer or assign its rights as
described in the Registration Rights Agreement, and (c) the transferee has
agreed in writing in form reasonably satisfactory to the Company to be bound by
the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
IOMED, Inc.
By:
Name: Ned M. Weinshenker
Title:
Elan International Services, Ltd.
By:
Name: Kevin Insley
Title: President
Elan International Management, Ltd.
By:
Name: Kevin Insley
Title: Vice President
17
|160339.1||
<PAGE> 18
SCHEDULE 2.5(b)
RECORD HOLDERS OF EQUITY INTERESTS
- - Common Stockholders 2.5(b)(i)
- - Series C Preferred Stockholders 2.5(b)(ii)
- - Stock Options Outstanding 2.5(b)(iii)
- - Warrant to purchase 215,000 shares of Common Stock granted in favor of the
Alliance of Children's Hospitals, Inc., dated as of December 1, 1996.
- - Warrant to Purchase 10,000 shares of Common Stock granted in favor of Silicon
Valley Bank dated as of June 25, 1992.
- - Obligation to Laboratories Fournier S.C.A. ("Fournier") pursuant to the
adjustment provisions of the agreement between the IOMED and Fournier, dated
February 20, 1996. (4,628 shares of Common Stock as of the date hereof.)
<PAGE> 19
EXHIBIT 2.5(b)(i)
<PAGE> 20
IOMED / JMW / MOTION CONTROL COMMON SHAREHOLDERS
@ April 11, 1997
<TABLE>
<CAPTION>
DATE SHARES CERTIFICATE NUMBER OF
NAME ISSUED NUMBER SHARES
---- ------ ------ ------
<S> <C> <C> <C>
AhSing, Terrence P. 05/05/95 122(I) 2,500
Alberding, Terrie Lee 06/19/90 3(I) 1,992
Andrew, J. Thomas 08/04/87 10 35,000
Andrew, J. Thomas 05/31/94 106(I) 19,462
Ashauer, Carolyn E. 09/09/92 55(I) 1,826
Balego, Garhardt C. 11/20/95 134(I) 2,332
Balego, Garhardt C. 06/26/96 144(I) 581
Balego, Garhardt C. 02/14/97 163(I) 664
Barker, Reese H. 12/15/92 73(I) 166
Baum, Andrew M. 08/04/87 11 250
Baum, David A. 08/04/87 12 250
Baum, Joel R. 08/04/87 13 250
Baum, Sanford & Hanni 08/04/87 14 4,000
Bezzant, Barbara 08/09/94 108(I) 3,000
Bezzant, John L. 08/09/94 107(I) 3,000
Blackett, Mary D. 09/06/90 6(I) 256
Bodfish, Timothy S. 09/03/96 146(I) 3,333
Bodfish, Todd M. 09/03/96 148(I) 3,334
Branom, Roger A. 06/16/95 124(I) 9,132
Brinkerhoff, Marlene 01/18/93 74(I) 16
Bund, Ian R.N. 07/15/92 47(I) 2,650
Bund, Ian R.N. 10/19/95 132(I) 7,952
Bund, Ian R.N. 10/18/96 158(I) 2,650
Bush, David 08/04/87 16 5,000
Carroll, Julie 08/04/87 17 5,000
Carter, Anne T and Tara, John M & Lois M. 12/12/91 22(I) 10,000
Carter, Anne T and Tara, John M & Lois M. 03/02/92 28(I) 3,500
Carter, Anne T. 06/06/96 142(I) 1,000
Carter, Anne T. 06/06/96 143(I) 25,160
Caviness, Curtis W. 10/04/91 17(I) 10,000
Caviness, Curtis W. 12/13/94 114(I) 5,000
Caviness, Curtis W. 06/06/96 140(I) 162,000
Child Health Investment Corporation 12/12/96 162(I) 178,571
CIT Group/Venture Capital, Inc. 03/11/93 90(I) 500,000
CIT Group/Venture Capital, Inc. 04/27/94 101(I) 500,000
Crowther, Mary A. 10/14/92 67(I) 20,000
Curry, Suzanne Gail Laveson 08/04/87 54 380
Curry, Suzanne Gail Laveson 05/14/93 95(I) 3,000
Dane, Henry J. 08/04/87 20 10,000
Dane, Maxwell 08/04/87 21 10,000
Doolan, Kim 12/11/96 161(I) 1,825
Dreyfous, Brooke F. 04/04/92 36(I) 1,500
</TABLE>
Page 1
<PAGE> 21
IOMED / JMW / MOTION CONTROL COMMON SHAREHOLDERS
@ April 11, 1997
<TABLE>
<CAPTION>
DATE SHARES CERTIFICATE NUMBER OF
NAME ISSUED NUMBER SHARES
---- ------ ------ ------
<S> <C> <C> <C>
Dreyfous, James C., Jr. 04/04/92 37(I) 1,500
Dyck, Arthur D. 11/20/95 135(I) 10,000
Fattaleh, Nancy 08/04/87 22 10,000
Freeman, Belva, Trustee of the
Belva Freeman Trust 03/19/92 32(I) 2,500
Freeman, Karl Franklin, Trustee of the
Karl Franklin Freeman Trust 03/19/92 30(I) 5,000
Freeman, Karl Franklin, Trustee of the
Karl Franklin Freeman Trust 12/15/92 71(I) 900
Freeman, Keith Ward, Trustee of the
Keith Ward Freeman Trust 03/19/92 31(I) 2,500
Freeman, Melvin R. 12/25/92 70(I) 1,000
Gamble, Ann - Revocable Trust 05/24/88 98 5,000
Gee, Mary E. 02/10/95 120(I) 9,630
Giordono, Matthew J. 07/25/89 1(I) 500
Glass, Josanne Marie 01/11/94 99(I) 1,750
Goldstein, Jerome 08/04/87 24 13,500
Goldstein, Richard 11/28/77 68(M) 10,000
Griffin, Robert 08/04/87 25 500
Hanover, Barry K. 08/04/87 26 50,000
Hansen, J. Gordon 08/04/87 27 10,000
Hansen, Peter 12/13/94 115(I) 1,100
Harrington, Robert J. 01/17/96 136(I) 2,120
Harrington, Robert J. 11/07/96 160(I) 530
Harrow, Jeff 08/04/87 28 5,000
Hays, Kevin B. 12/15/92 72(I) 1,503
Hinkle Trust (The) 10/13/77 59(M) 10,000
Hisatake, James Allan 06/06/96 141(I) 500
Hoag, William J. 01/29/93 75(I) 5,175
Hone, Dolores J. 08/04/87 29 2,000
Hufferd, Marie E. 08/04/87 30 5,625
Iversen, Ed 08/04/87 32 15,000
Jacobsen, Genevieve 08/04/87 33 5,000
Jacobsen, Peter 08/04/87 34 5,000
Jacobsen, Stephen C. 08/04/87 4 13,864
Jacobsen, Stephen C. 05/15/91 7(I) 908,000
Jacobsen, Stephen C. 01/26/87 2 346,136
Jacobs, Tony 02/25/88 91 2,000
Janata, Jiri 08/04/87 35 10,000
Jerard, Robert 08/04/87 36 5,300
Johnson, Mary Family Protection Trust 09/12/91 15(I) 1,000
Johnson, R. Todd 08/04/87 38 45,000
</TABLE>
Page 2
<PAGE> 22
IOMED/JMW/MOTION CONTROL COMMON SHAREHOLDERS
@ APRIL 11, 1997
<TABLE>
<CAPTION>
DATE SHARES CERTIFICATE NUMBER OF
NAME ISSUED NUMBER SHARES
---- ------ ------ ------
<S> <C> <C> <C>
Kablitz, Carl 08/04/87 39 8,000
Kaldhusdal, Sandra 05/14/93 91(I) 544
Kam, Audrey 09/03/96 147(I) 3,333
Kann, David J. 12/21/77 72(M) 2,500
Kann, James 12/21/77 74(M) 2,500
Kann, Peter E. 12/21/77 73(M) 2,500
Kann, Thomas J. 12/21/77 75(M) 2,500
Kellman, Joel D. 08/04/87 40 44,000
Kellman, Joel D. 08/04/87 41 31,000
Kempin, Ronald A. 08/04/87 42 5,000
Klebingot, George C. 08/04/87 43 10,000
Klebingot, George C. 11/01/95 133(I) 3,000
Klebingot, George C. 06/16/95 123(I) 31,000
Klebingot, George C. 01/24/96 138(I) 4,583
Knutti, David 08/04/87 44 40,000
Kolff, Cornelius & Helen Hall 08/04/87 45 5,000
Kolff, The Jacob C. Family Living Trust 08/04/87 46 15,000
Kolff, Willem J. Children and
Grandchildren Limited Partnership 02/23/89 100 84,000
Koschinsky, Ralph K. 07/26/96 145(I) 1,000
Kuflik, Freida 08/04/87 48 250
Laboratoires Fournier, S.C.A. 02/29/96 139(I) 1,621,622
Laveson, Amanda Jo 08/04/87 52 380
Laveson, Amanda 05/14/93 92(I) 3,000
Laveson, Sandra 04/16/80 ? 120(M) 6,430
Laveson, Stacy Allyn 08/04/87 53 380
Laveson, Stacy 05/14/93 94(I) 3,000
Laveson, Stephen D. 08/04/87 51 6,430
Laveson, Stephen D. 05/14/93 93(I) 1,000
Lollini, Robert J. 01/25/95 118(I) 7,500
Lollini, Robert J. 02/14/97 167(I) 3,333
Lucas, Timothy 10/31/94 112(I) 3,000
Lucas, Timothy 01/25/95 119(I) 5,000
Luethmers, Mary Jo 10/05/89 2(I) 80
Luntz, Richard D. 04/27/88 97 50,000
MBW Venture Partners 05/15/91 13(I) 61,599
MBW Venture Partners 07/15/92 48(I) 270,408
MBW Venture Partners 09/04/92 58(I) 259,372
MBW Venture Partners 02/18/93 80(I) 199,106
MBW Venture Partners 02/19/93 84(I) 48,125
MBW Venture Partners 02/19/93 85(I) 144,375
MBW Venture Partners 04/24/94 105(I) 192,500
</TABLE>
Page 3
<PAGE> 23
IOMED/JMW/MOTION CONTROL COMMON SHAREHOLDERS
@ APRIL 11, 1997
<TABLE>
<CAPTION>
DATE SHARES CERTIFICATE NUMBER OF
NAME ISSUED NUMBER SHARES
---- ------ ------ ------
<S> <C> <C> <C>
MBW Venture Partners 10/19/95 126(I) 811,225
MBW Venture Partners 09/27/96 155(I) 270,409
Martin, Bocka Jo 06/26/92 43(I) 5,000
Massey, Elizabeth D. 06/03/92 41 30,000
Massey, Jonathan Edward 06/03/92 39 15,000
Massey, Sara Lindsay 06/03/92 40 15,000
Massey, W. Edward 08/04/87 8 341,136
Massey, W. Edward 06/03/92 42 93,864
Meek, Sanford G. 08/04/87 57 10,000
Michigan Investment Fund, L.P. 05/15/91 12(I) 18,400
Michigan Investment Fund, L.P. 07/15/92 49(I) 80,771
Michigan Investment Fund, L.P. 09/04/92 59(I) 77,475
Michigan Investment Fund, L.P. 02/18/93 81(I) 59,474
Michigan Investment Fund, L.P. 02/19/93 86(I) 14,375
Michigan Investment Fund, L.P. 02/19/93 87(I) 43,125
Michigan Investment Fund, L.P. 04/27/94 104(I) 57,500
Michigan Investment Fund, L.P. 10/19/95 127(I) 242,314
Michigan Investment Fund, L.P. 09/27/96 156(I) 80,772
Miller, James Rex or Margaret L.
Miller, Trustees of the James Rex
Miller Family Trust dtd 9/17/92 09/23/92 60(I) 5,000
Miller, W. Tim 02/14/97 166(I) 3,333
Moorehead, Harvey 08/04/87 59 5,000
Moyer, James E. 08/04/87 60 5,000
Murphy, Beverly 08/04/87 61 15,000
Murphy, Beverly 02/25/88 94 10,000
Murphy, William P. 08/04/87 62 15,000
Murphy, William P. 02/25/88 96 10,000
Newtek Ventures 05/15/91 10(I) 79,999
Newtek Ventures 07/15/92 44(I) 357,805
Newtek Ventures 09/04/92 56(I) 340,867
Newtek Ventures 02/18/93 79(I) 258,579
Newtek Ventures 02/19/93 82(I) 62,500
Newtek Ventures 02/19/93 83(I) 187,500
Newtek Ventures 04/27/94 103(I) 250,000
Newtek Ventures 10/19/95 129(I) 1,073,418
Newtek Ventures 09/20/96 150(I) 357,805
Ober, Karen S. 09/23/92 61(I) 80,000
Ober, Karen S. 09/23/92 63(I) 70,000
Ober, Stephen H. 09/23/92 62(I) 45,000
Ober, Stephen H. 09/23/92 64(I) 166,532
Ober, Stephen H. 09/23/92 65(I) 303,468
</TABLE>
Page 4
<PAGE> 24
IOMED/JMW/MOTION CONTROL COMMON SHAREHOLDERS
@ APRIL 11, 1997
<TABLE>
<CAPTION>
DATE SHARES CERTIFICATE NUMBER OF
NAME ISSUED NUMBER SHARES
---- ------ ------ ------
<S> <C> <C> <C>
Petelenz, Tomasz 08/04/87 63 75,000
Petelenz, Tomasz 09/06/94 109(I) 10,000
Peterson, David J. 06/04/93 96(I) 5,648
Prince, Yeates and Geldzahler 08/04/87 64 2,700
Pritchard-Hoback, Cille 06/23/93 97(I) 8,818
Radford, Sharon L. 08/04/87 66 5,000
Richards, Victor, M.D. 08/04/87 67 5,000
Riches, Ross 08/04/87 68 9,000
Rossi, Cino A. 08/04/87 69 20,000
Sabodski, David J. 10/19/95 125(I) 10,000
Sayer, Jeffery L. 03/09/93 76(I) 1,250
Seare, William J., M.D. 08/04/87 70 8,000
Sears, Harold H. 08/04/87 71 60,000
Simon, Eric 08/04/87 72 10,000
Smolenski, Mark P. & Mary M. 10/15/91 18(I) 155,843
Smolenski, Mary M. 03/09/93 77(I) 5,000
Smolenski, Eric M. & Mary M. 10/15/91 19(I) 5,000
Smolenski, Mathew S. & Mary M. 10/15/91 21(I) 5,000
Steele, Harold J. 08/04/87 73 10,000
Stephen, Lauraine 08/04/87 74 2,500
Strauss, Peter 08/04/87 76 10,000
Swanson, Nancy V. 08/04/87 77 5,000
Szlek, Margaret 04/24/92 38(I) 96
University of Utah Research
Foundation 08/04/87 78 5,000
Utah Ventures 05/15/91 11(I) 80,002
Utah Ventures 07/15/92 46(I) 79,512
Utah Ventures 09/04/92 57(I) 340,867
Utah Ventures 02/18/93 78(I) 258,579
Utah Ventures 10/19/95 131(I) 238,538
Utah Ventures 10/11/96 157(I) 79,512
Vadex-Panama, S.A. 02/19/93 88(I) 325,000
Vadex-Panama, S.A. 02/19/93 89(I) 175,000
Vadex-Panama, S.A. 04/27/94 102(I) 500,000
Van Pelt, Jan 10/14/92 68(I) 2,000
Van Ry, J.J. 08/04/87 79 10,000
Watson, Betty J. 12/15/93 98(I) 8,964
Wedbush, Noble, Cook, Inc. 08/04/87 80 2,500
Weersing, James R. & Mary H.
Weersing, Trustees of the Weersing
Family Trust 07/15/92 45(I) 2,650
Weersing, James R. & Mary H
</TABLE>
Page 5
<PAGE> 25
IOMED/JMW/MOTION CONTROL COMMON SHAREHOLDERS
@ APRIL 11, 1997
<TABLE>
<CAPTION>
DATE SHARES CERTIFICATE NUMBER OF
NAME ISSUED NUMBER SHARES
---- ------ ------ ------
<S> <C> <C> <C>
Weersing, Trustees of the Weersing
Family Trust 09/27/96 154(I) 10,602
Weinshenker, Ned Money Purchase
Pension Plan 02/15/92 27(I) 25,000
Weinshenker, Ned Money Purchase
Pension Plan 03/19/92 33(I) 65,998
Weinshenker, Ned Money Purchase
Pension Plan 09/27/96 153(I) 3,975
Whittemore, Ralph C. 09/05/96 149(I) 23,000
Wideman, Richard W. 10/01/92 66(I) 5,000
Wideman, Richard W. 10/14/92 69(I) 3,000
Wiggens, Finnis 08/04/87 81 10,000
Wiita, Thomas A. 08/04/87 9 96,000
Wilhelmsen, Karl 08/04/87 82 4,000
Williamson, Anna 02/14/97 164(I) 2,000
Williamson, Anna 01/16/95 116(I) 5,000
Wolfe, Allan M. 04/04/92 35(I) 2,000
Yanaki, Jamal 10/29/96 159(I) 2,000
Yanaki, Jamal 02/14/97 165(I) 3,334
Yokum Connie R., Trustee of the
CONNIE R. YOKUM FAMILY TRUST
dated the 21st of February 1995 03/13/95 121(I) 4,406
Zulch, Alma Laverne 08/04/87 84 7,500
----------
Total Outstanding 15,040,455
</TABLE>
I = IOMED
M = Motion Control
<TABLE>
<S> <C> <C> <C>
TREASURY (COMMON):
Luntz, Richard D. (5/88) 97 50,000
----------
Total 15,090,455
==========
</TABLE>
Page 6
<PAGE> 26
EXHIBIT 2.5(b)(ii)
<PAGE> 27
PREFERRED SHAREHOLDERS
AS OF APRIL 11, 1997
<TABLE>
<CAPTION>
CERTIFICATE NUMBER OF
NAME NUMBER SHARES SERIES
- ---------------------------------- ------------ ---------- ------
<S> <C> <C> <C>
Cordis Corporation 1 (JMW) 172,800 Series C
14201 NW 60th Avenue
Miami Lakes, FL 33014-2894
TOTAL PREFERRED SHARES 172,800
</TABLE>
<PAGE> 28
EXHIBIT 2.5(b)(iii)
<PAGE> 29
****
<PAGE> 30
****
<PAGE> 31
****
<PAGE> 32
****
<PAGE> 33
****
<PAGE> 34
****
<PAGE> 35
SCHEDULE 2.5(c)
RECORD HOLDERS OF EQUITY INTERESTS
* 800,000 shares of Common Stock of Dermion, Inc.
<PAGE> 36
SCHEDULE 2.7(a)
IOMED, Inc.
INTEROFFICE MEMO
To: Ned Weinshenker Tim Miller Tom Parkinson
From: Robert J. Lollini
Date: January 27, 1997
cc: Mary Crowther, Susie Stevens,
Subject: YTD-DECEMBER 1996 OPERATING RESULTS
Attached are the consolidated financial statements of Iomed, Inc. for the period
ending December 31, 1996. These statements are comprised of the following:
* Consolidated Income Statements - Actual vs. Budget and Prior Year for
both the current month and year-to-date period ended December 31, 1996.
* Consolidated Balance Sheet for the period ended December 31, 1996 vs.
June 30, 1996.
* Consolidated Statement of Cash Flows for the month and year-to-date
periods ended December 31, 1996.
Should you have any questions regarding the information contained within these
unaudited financial statements, please do not hesitate to give me a call.
Regards,
/s/ R. J. Lollini
<PAGE> 37
IOMED, INC.
CONSOLIDATED INCOME STATEMENTS
ACTUAL v BUDGET and PRIOR YEAR
Period Ending December 31, 1996
(In Thousands)
<TABLE>
<CAPTION>
CURRENT MONTH YEAR-TO-DATE
ACTUAL BUDGET PRIOR YEAR ACTUAL BUDGET PRIOR YEAR
<S> <C> <C> <C> <C> <C> <C>
SALES REVENUE;
****
Total Sales Revenue 809 876 569 5,607 5,722 5,455
COST OF SALES:
****
Total Cost of Sales 353 362 293 2,171 2,229 2,200
OPERATING EXPENSES;
Research and Development 161 151 83 848 986 637
Administration 127 118 228 715 725 865
Sales and Marketing Expense:
****
Total Operating Expenses 495 504 455 2,627 2,916 2,421
OPERATING INCOME (39) 10 (179) 809 577 834
OTHER (INCOME) EXPENSE:
Minority Interest in Subsidiary (2) -- -- 38 -- --
Interest (Income), net (6) (12) (97) (90) (75) (152)
Income Taxes 22 14 -- 22 14 --
---- ---- ---- ------ ------ ------
NET INCOME (LOSS) $(53) $ 8 $(82) $839 $ 638 $ 986
==== ==== ==== ====== ====== ======
</TABLE>
<PAGE> 38
IOMED, INC.
CONSOLIDATED BALANCE SHEET
As of
<TABLE>
<CAPTION>
DEC 31, JUNE 30,
1996 1996
------- --------
(In Thousands)
<S> <C> <C>
ASSETS
CASH & EQUIVALENTS 5,039 4,507
ACCOUNTS RECEIVABLE 911 1,054
INVENTORY 1,385 1,162
PREPAID ASSETS -- 5
------ ------
TOTAL CURRENT ASSETS 7,335 6,728
EQUIPMENT & FURNITURE, NET 395 477
OTHER ASSETS, NET 33 46
------ ------
7,763 7,251
====== ======
LIABILITIES & EQUITY
NOTES PAYABLE -- --
TRADE ACCOUNTS PAYABLE 306 118
ACCRUED LIABILITIES 236 952
CURRENT PORTION OF L/T OBLIGATIONS 203 111
------ ------
TOTAL CURRENT LIABILITIES 745 1,181
CAPITAL LEASE OBLIGATIONS -- --
NOTES PAYABLE -- 3
MINORITY INTEREST IN SUBSIDIARY 913 875
SUBORDINATED DEBT -- --
REDEEMABLE PREFERRED STOCK 720 1,200
COMMON STOCK 15 14
ADDITIONAL PAID IN CAPITAL 12,031 11,478
ACCUMULATED DEFICIT (6,661) (7,500)
------ ------
TOTAL SHAREHOLDER'S EQUITY 5,385 3,992
------ ------
7,763 7,251
====== ======
</TABLE>
<PAGE> 39
IOMED, INC.
STATEMENT OF CASH FLOW
For the Period Ended December 31, 1996
<TABLE>
<CAPTION>
Dec. 31, Dec. 31,
MONTH Y-T-D
-------- --------
(In Thousands)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
NET INCOME (LOSS) $ (53) $ 839
DEPRECIATION 27 169
AMORTIZATION -- --
(INC) DEC IN CURRENT ASSETS 27 (73)
INC (DEC) IN CURRENT LIABILITIES (177) (531)
------ ------
NET CASH USED IN OPERATIONS (176) 404
CASH FLOW FROM INVESTING ACTIVITIES
PURCHASES OF EQUIPMENT (16) (87)
------ ------
NET CASH INVESTED (16) (87)
CASH FLOW FROM FINANCING ACTIVITIES
PROCEEDS FROM TERM LOAN 255 255
REPAYMENT OF SILICON VALLEY LINE (4) (21)
PAYMENTS ON CAPITAL LEASES -- --
REDEMPTION OF PREFERRED STOCK -- (70)
INCREASE IN MINORITY INTERESTS (3) 38
OTHER (4) 13
------ ------
NET CASH FROM FINANCING ACTIVITIES 244 215
------ ------
NET INCREASE (DECREASE) IN CASH 52 532
CASH BEGINNING OF PERIOD 4,987 4,507
------ ------
CASH END OF PERIOD $5,039 $5,039
====== ======
</TABLE>
<PAGE> 40
****
<PAGE> 41
****
<PAGE> 42
****
<PAGE> 43
****
<PAGE> 44
****
<PAGE> 45
****
<PAGE> 46
****
<PAGE> 47
****
<PAGE> 48
****
<PAGE> 49
SCHEDULE 2.7(c).1
Page 1 of 2
IOMED TECHNOLOGY
1. PRIOR TECHNOLOGY
Patents
- U.S. Patent 4,141,359 **** from ****
- U.S. Patent 4,383,529 ****
- U.S. Patent 4,416,274 ****
- U.S. Patent 4,752,285 ****
- U.S. Patents 4,474,819, 4,744,787, 5,135,477 ****
- U.S. Patent 4,915,685 ****
- U.S. Patents 5,087,242, 5,236,412, 5,328,455, 5,374,241, WO 9,210,235 and
EP 515667 ****
- U.S. Patent 5,037,380 ****
- U.S. Patent 4,968,297 ****
- U.S. Patent 5,248,295 ****
Also included are all foreign equivalents, PCT equivalents, and all
related CIP to the above patents.
Other Technology and know-how
****
<PAGE> 50
SCHEDULE 2.7(C).1
Page 2 of 2
IOMED TECHNOLOGY (continued)
****
<PAGE> 51
SCHEDULE 2.7(C).2
page 1 of 1
IOMED INVENTIONS
****
<PAGE> 52
SCHEDULE 2.9
MATERIAL CONTRACTS
1. Agreement by and between IOMED, Inc. and Laboratories Fournier, S.C.A.,
dated as of February 20, 1996
2. Agreement by and between Alza Corporation and IOMED, Inc., dated as of July
28, 1993
3. Research and Development Agreement among IOMED, Inc., Dermion, Inc. and
Ciba-Geigy Corporation, dated as of March 29, 1996
4. License Agreement between IOMED, Inc. and University of Utah Research
Foundation, dated as of October 1, 1992
5. Preferred Stock Purchase Agreement by and between JMW Acquisition Co. and
Motion Control, Inc., dated as of August 4, 1987
6. Stock Purchase Agreement by and between IOMED, Inc. and The CIT
Group/Venture Capital, Inc., dated as of March 8, 1993
7. Stock Purchase Agreement by and between IOMED, Inc., Newtek Ventures, MBW
Venture Partners, Michigan Investment Fund, L.P., Interhealth Limited
Partnership and Vadex-Panama, S.A., dated as of February 19, 1993
8. Assignment and Assumption Agreement among Vadex-Panama, S.A., Interhealth
Limited Partnership and IOMED, Inc., dated as of March 12, 1993
9. Warrant to Purchase Shares of Common Stock between Alliance of Children's
Hospital, Inc. and IOMED, Inc., dated as of December 1, 1996
10. Stock Purchase Agreement by and between IOMED, Inc. and Child Health
Investment Corporation, dated as of November 29, 1996
11. Warrant to Purchase Shares of Common Stock between Silicon Valley Bank and
IOMED, Inc., dated as of June 25, 1992
12. Supply Agreement by and between IOMED, Inc. and Abbott Laboratories, dated
as of April 27, 1993
13. Manufacturing Agreement between IOMED Clinical Systems and KWM Electronics
Corporation, dated as of November 1, 1995
<PAGE> 53
14. Lease Agreement dated March 1, 1994 between IOMED, Inc. and Hayter
Properties, Inc.
15. Lease Agreement dated October 1, 1986 by and between Stangl Alliance and
Motion Control, Inc. (the "Lease Agreement")
(a) First Amendment to the "Lease Agreement dated March 9, 1988 by and
between Textron Collective Investment Trust and IOMED, Inc.
(b) Second Amendment to the "Lease Agreement" dated May 5, 1989 by and
between Textron Collective Investment Trust and IOMED, Inc.
(c) Third Amendment to the "Lease Agreement dated July 10, 1989 by and
between Textron Collective Investment Trust and IOMED, Inc.
(d) Fourth Amendment to the "Lease Agreement" dated July 18, 1989 by and
between Textron Collective Investment Trust and IOMED, Inc.
(e) Fifth Amendment to the "Lease Agreement dated February 7, 1992 by and
between Textron Collective Investment Trust and IOMED, Inc.
(f) Sixth Amendment to the "Lease Agreement dated July 20, 1994 by and
between Textron Collective Investment Trust and IOMED, Inc.
16. Asset Acquisition Agreement dated December 27, 1996 by and between IOMED,
Inc. and Fillauer, Inc.
17. License Agreement dated December 27, 1996 by and between IOMED, Inc. and
Fillauer, Inc.
<PAGE> 1
EXHIBIT 10.7
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR
DISPOSITION OF THIS WARRANT OR OF ANY SHARES OF STOCK ISSUED PURSUANT HERETO
MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY IN FORM AND
CONTENT TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, OR (iii)
OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THIS WARRANT.
IOMED, INC.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
THIS CERTIFIES THAT, for value received, ELAN INTERNATIONAL SERVICES,
LTD., a Bermuda corporation, or its affiliates or assigns or any other holder
of this Warrant (each, a "Holder"), is entitled to subscribe for and purchase
up to 500,000 shares (as adjusted pursuant to Section 4 hereof, the "Shares")
of the fully paid and nonassessable common stock, par value $.001 (the "Common
Stock"), of IOMED, INC., a Utah corporation (the "Company"), at the price of
$4.50 per share (such price, and such other price as shall result, from time to
time, from the adjustments specified in Section 4 below, the "Warrant Price"),
subject to the provisions and upon the terms and conditions hereinafter set
forth.
1. Term. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time, and from time to time, from and after the
date hereof and until 5:00 p.m. Eastern Daylight Time April 14, 2002. To the
extent not exercised at 5:00 p.m. Eastern Daylight Time on April 14, 2002, this
Warrant shall completely and automatically terminate and expire, and thereafter
it shall be of no force or effect whatsoever.
2. Method of Exercise: Payment: Issuance of New Warrant. (a) The purchase
right represented by this Warrant may be exercised by the holder hereof, in
whole or in part and from time to time, by the surrender of this Warrant (with
the notice of exercise form attached hereto as Annex A duly executed) at the
principal office of the Company and by the payment to the Company of an amount,
in cash or other immediately available funds, equal to the then applicable
Warrant Price per Share multiplied by the number of Shares then being
purchased.
(b) The person or persons in whose name(s) any certificate(s) representing
shares of Common Stock shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the Shares represented thereby (and such
Shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is
|160830.1||
<PAGE> 2
exercised. Upon any exercise of the rights represented by this Warrant,
certificates for the Shares purchased shall be delivered to the holder hereof
as soon as possible and in any event within 30 days of receipt of such notice
and payment, and unless this Warrant has been fully exercised or expired, a new
Warrant representing the portion of Shares, if any, with respect to which this
Warrant shall not then have been exercised, shall also be issued to the holder
hereof as soon as possible and in any event within such 30-day period.
3. Stock Fully Paid, Reservation of Shares. All Shares that may be issued
upon the exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized, fu11y paid and nonassessable, and will be free
from all taxes, liens and charges with respect to the issue thereof. During
the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized, and reserved- for the
purpose of the issue upon the exercise of the purchase rights evidenced by this
Warrant, a sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to the adjustment from time to time upon the occurrence
of certain events, as follows:
(a) Reclassification, Merger, Etc. In case of (i) any reclassification,
reorganization, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value
to no par value), or (ii) any consolidation of the Company with or into another
corporation (other than a merger or consolidation with another corporation in
which the Company is the acquiring and the surviving corporation and which does
not result in any reclassification or change of outstanding securities issuable
upon exercise of this Warrant), or (iii) any sale of all or substantially all
of the assets of the Company, then the Company, or such successor or purchasing
corporation, as the case may be, shall duly execute and deliver to the holder
of this Warrant a new Warrant or a supplement hereto (in form and substance
reasonably satisfactory to the holder of this Warrant), so that the holder of
this Warrant shall have the right to receive, at a total purchase price not to
exceed that payable upon the exercise of the unexercised portion of this
Warrant, and in lieu of the shares of Common Stock theretofore issuable upon
the exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification,
reorganization, change, conversion, merger or consolidation by a holder of the
number of shares of Common Stock then purchasable under this Warrant. Such new
Warrant shall provide for adjustments that shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 4. The
provisions of this Section 4(a) shall similarly attach to successive
reclassifications, reorganizations, changes, mergers, consolidations and
transfers.
(b) Subdivision or Combination of Shares. If the Company at any time
during which this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, (i) in the case of a subdivision, the Warrant Price
shall be proportionately decreased and the number of Shares purchasable
hereunder shall be proportionately increased, and (ii) in the case of a
combination, the Warrant Price shall be proportionately increased and the
number of
2
|160830.1||
<PAGE> 3
Shares purchasable hereunder shall be proportionately decreased.
(c) Stock Dividends: Etc. If the Company at any time while this Warrant
is outstanding and unexpired shall (i) pay a dividend with respect to Common
Stock payable in Common Stock (or rights, options or warrants in respect
thereof (collectively, "Options")), or (ii) issue any Options to officers,
directors, employees or consultants to the Company, having an exercise price
(on a per-share basis) below the then-current fair market value of a share of
Common Stock (as determined in good faith by the Company's board of directors),
or (iii) make any other distribution with respect to Common Stock (except any
distribution specifically provided for in Sections 4(a) and (b) above), the
price at which the holder of this Warrant shall be able to purchase Shares
shall be adjusted by multiplying the Warrant Price in effect immediately prior
to such date of determination of the holders of securities entitled to receive
such distribution, by a fraction (A) the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to such dividend
or distribution, and (B) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution, as if all of such Options had been exercised, and the Company
received the consideration payable in respect thereof. Upon each adjustment in
the Warrant Price pursuant to this Section 4(c), the number of Shares of Common
Stock purchasable hereunder shall be adjusted, to the nearest whole share, to
the product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately prior to such
adjustment and the denominator of which shall be the Warrant Price immediately
thereafter.
(d) Repurchases or Redemptions of Common Stock or Options. If the Company
at any time while this Warrant is outstanding and unexpired shall repurchase or
redeem any outstanding shares of Common Stock or any Options, other than its
shares of Series C Preferred Stock, at a price which is greater than the
then-current Warrant Price, the Warrant Price shall thereupon be adjusted by
multiplying the Warrant Price in effect at the time of such repurchase by a
fraction (i) the numerator of which shall be Warrant Price in effect
immediately prior to such repurchase or redemption and (ii) the denominator of
which shall be the fair market value of the consideration paid for the shares
of Common Stock and/or Options at the time of purchase. Upon each adjustment
in the Warrant Price pursuant to this Section 4(d), the number of Shares of
Common Stock purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately prior to such
adjustment and the denominator of which shall be the Warrant Price immediately
thereafter.
(e) No Impairment. The Company will not, by amendment of its charter or
bylaws or through any reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company, but will at
all times in good faith assist in the carrying out of all the provisions of
this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to
3
|160830.1||
<PAGE> 4
protect the rights of the holder of this Warrant against impairment.
(f) Notice of Adjustments. Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to this Section 4, the
Company shall prepare a certificate setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated. Such certificate shall be signed by its
chief financial officer and shall be delivered to the holder of this Warrant.
(g) Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor based on the
fair market value of the Common Stock on the date of exercise as reasonably
determined in good faith by the Company's Board of Directors.
5. Compliance with Securities Act; Disposition of Warrant or Shares of
Common Stock. (a) The holder of this Warrant, by acceptance hereof, agrees
that this Warrant and the Shares to be issued upon exercise hereof are being
acquired for investment and that such holder will not offer, sell or otherwise
dispose of this Warrant or any Shares to be issued upon exercise hereof except
under circumstances which will not result in a violation of applicable
securities laws. Upon exercise of this Warrant, unless the Shares being
acquired are registered under the Securities Act of 1933, as amended (the
"Act"), or an exemption from the registration requirements of such Act is
available, the holder hereof shall confirm in writing, by executing an
instrument in form reasonably satisfactory to the Company, that the Shares so
purchased are being acquired for investment and not with a view toward
distribution or resale. This Warrant and all Shares issued upon exercise of
this Warrant (unless registered under the Act) shall be stamped or imprinted
with a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT RELATED THERETO, (ii) AN OPINION OF
COUNSEL FOR THE HOLDER, REASONABLY IN FORM AND CONTENT TO THE COMPANY, THAT
SUCH REGISTRATION IS NOT REQUIRED, OR (iii) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH THIS SECURITY WAS ISSUED."
(b) With respect to any offer, sale or other disposition of this Warrant
or any Shares acquired pursuant to the exercise of this Warrant prior to
registration of such Shares, the holder hereof and each subsequent holder of
this Warrant agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of such
holder's counsel, if requested by the Company, to the effect that such offer,
sale or other disposition may be effected without registration or qualification
(under the Act as then in effect or any federal or state law then in effect) of
this Warrant or such Shares and indicating whether or not under the Act
certificates for this Warrant or such Shares to be sold or otherwise disposed
of require any restrictive legend as to applicable restrictions on
transferability in order to ensure
4
|160830.1||
<PAGE> 5
compliance with the Act. Promptly upon receiving such written notice and
reasonably satisfactory opinion, if so requested, the Company, as promptly as
practicable, shall notify such holder that such holder may sell or otherwise
dispose of this Warrant or such Shares, all in accordance with the terms of the
notice delivered to the Company. Notwithstanding the foregoing, this Warrant
or such Shares may be offered, sold or otherwise disposed of in accordance with
Rule 144 as promulgated under the Act ("Rule 144"), provided that the Company
shall have been furnished with such information as the Company may reasonably
request to provide a reasonable assurance that the provisions of Rule 144 have
been satisfied. Each certificate representing this Warrant or the Shares thus
transferred (except a transfer pursuant to Rule 144) shall bear a legend as to
the applicable restrictions on transferability in order to insure compliance
with the Act, unless in the aforesaid opinion of counsel for the holder, such
legend is not required in order to insure compliance with the Act. The Company
may issue stop transfer instructions to its transfer agent in connection with
such restrictions.
This Warrant is entitled to the benefit of certain registration rights as
set forth in a Registration Rights Agreement dated as of the date hereof
between the Company and the initial Holder named herein.
6. Rights as Shareholders. No holder of this Warrant, as such, shall be
entitled to vote or receive dividends or be deemed the holder of Shares or any
other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to receive notice of meetings, or to receive dividends
or subscription rights or otherwise until this Warrant shall have been
exercised and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein.
7. Representations and Warranties. The Company represents and warrants to
the holder of this Warrant as follows:
(a) This Warrant has been duly authorized and executed by the Company and
is a valid and binding obligation of the Company enforceable in accordance with
its terms;
(b) The Shares have been duly authorized and reserved for issuance by the
Company and, when issued in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable; and
(c) The execution and delivery of this Warrant are not, and the issuance
of the Shares upon exercise of this Warrant in accordance with the terms hereof
will not be, inconsistent with the Company's charter or bylaws, as amended, or
by-laws, and do not and will not constitute a default under, any indenture,
mortgage, contract or other instrument of which the Company is a party or by
which it is bound.
4
|160830.1||
<PAGE> 6
8. Miscellaneous. (a) This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by both the Company and the holder of this Warrant.
(b) Any notice, request or other document required-or permitted to be
given or delivered to the holder hereof or the Company shall (i) be in writing,
(ii) be delivered personally or sent by mail or overnight courier to the
intended recipient to each such holder at its address as shown on the books of
the Company or to the Company at the address indicated therefor on the
signature page of this Warrant, unless the recipient has given notice of
another address, and (iii) be effective on receipt if delivered personally, two
business days after dispatch if mailed, and one business day after dispatch if
sent by overnight courier service.
(c) Subject to the satisfaction of all of the provisions of this Warrant
the holder hereof may transfer all or any portion of this Warrant at any time.
(d) The Company covenants to the holder hereof that upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of this Warrant and, in the case of any such loss,
theft or destruction, upon receipt of a bond or indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company will make and deliver a
new Warrant of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant.
(e) The descriptive headings of the several sections and paragraphs of
this Warrant arc inserted for convenience only and do not constitute a part of
this Warrant.
(f) This Warrant shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of the State of New
York giving effect to the choice of law rules thereof
IN WITNFSS WHEREOF, IOMED, Inc. has executed this Warrant as of the date
set forth below.
IOMED, INC.
By:___________________________________
Name: Ned M. Weinshenker
Title: President and Chief Executive Officer
Dated effective April 14, 1997
5
|160830.1||
<PAGE> 7
Annex A
NOTICE OF EXERCISE
To: IOMED, Inc.
1. The undersigned hereby elects to purchase ______ shares of Common
Stock of IOMED, INC. pursuant to the terms of the attached Warrant, and tenders
herewith full payment of the purchase price of such shares, in cash or other
immediately available funds.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below:
_______________________________ (Name)
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
Signature: ___________________________
Name: ________________________________
Address: _____________________________
_____________________________
_____________________________
Social Security or taxpayer identification
number:
______________________________________
<PAGE> 1
EXHIBIT 10.9
ASSET ACQUISITION AGREEMENT
THIS ASSET ACQUISITION AGREEMENT ("Agreement") is made and entered into
upon the 27th day of December, 1996 and shall be effective as of January 1,
1997, by and between IOMED, INC., ("Seller") and FILLAUER, INC., ("Purchaser").
WITNESSETH:
WHEREAS, Seller is a corporation, duly organized and existing under the
laws of the State of Utah, owning and operating a research, development,
manufacturing and selling division devoted to prosthetics and products derived
therefrom known as "Motion Control" located at 3385 West 1820 South, Salt Lake
City, Utah 84101 ("Location");
WHEREAS, Purchaser is a corporation, duly organized and existing under the
laws of the State of Delaware, and desires to purchase from Seller the assets
of Motion Control;
WHEREAS, Seller is willing to sell the assets of and associated with
Motion Control to Purchaser;
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
terms and conditions herein contained the parties hereto agree as follows:
ARTICLE I.
Purchase and Sale of Assets
1.1 Purchase and Sale of Assets. Subject to the terms and conditions set
forth in this Agreement, Seller shall sell, transfer and convey to Purchaser,
and Purchaser shall purchase and acquire from Seller, on the Effective Date (as
hereinafter defined), the following tangible assets of the Seller used by
Seller exclusively in the operation of Seller's Motion Control division (such
assets, excluding, however, those listed in Section 1.3 hereof, collectively,
the "Assets"), all said Assets being owned by Seller on the Effective Date:
(a) All Accounts Receivable as set forth on Schedule
1.1(a);
(b) All inventory of materials, work in process,
finished goods and overhead as set forth on Schedule 1.1(b);
(c) All machinery, equipment, furniture and fixtures
as set forth on Schedule 1.1(c);
(d) All demonstrators and loaners as set forth on
Schedule 1.1(e); and
(e) All customer files and records as set forth on Schedule 1.1(f).
160475.1
<PAGE> 2
1.2 Transfer of Government Equipment. The Seller has disclosed to the
Purchaser that Seller utilizes certain property and equipment owned by various
governmental agencies and authorities in connection with the business of Motion
Control. Such property and equipment is referred to herein as the "Government
Equipment" and is more particularly described on Schedule 1.2 hereto. On or
promptly after the Effective Date, the Seller will transfer control and
possession of the Government Equipment to the Purchaser; provided, however,
that the Seller makes no representation or warranty, whatsoever, concerning the
right of the Purchaser to retain possession of or to continue to use the
Government Equipment, and the Purchaser shall assume all risks associated with
or attributable to its possession of and continued use of the Government
Equipment. At the Purchaser's request, the Seller shall provide the Purchaser
with reasonable assistance in connection with any efforts undertaken by the
Purchaser to secure consents and approvals from the appropriate governmental
agencies for the continued possession and use of the Government Equipment. The
Seller shall have no obligation or liability to the Purchaser in regard to the
Government Equipment except as specifically set forth in this paragraph 1.2,
and it is specifically agreed that no adjustment in the Purchase Price (as
hereinafter defined) for the Assets shall be required in the event the
Purchaser is unable to continue to use all or any portion of the Government
Equipment.
1.3 Excluded Assets. Seller shall not sell or transfer and Purchaser
shall not purchase or accept any of the property or assets used in connection
with Motion Control which are set forth on Schedule 1.3 attached hereto and
incorporated herein, and which are specifically excluded from the Assets
(collectively, "Excluded Assets").
1.4 Consideration for Tangible Assets. As consideration for the Assets
purchased hereunder, Purchaser shall pay Seller the amount of One Million
Dollars, (the "Purchase Price"). The Purchase Price shall be paid at the
Signing (as hereinafter defined) by transfer of immediately available funds to
an account designated by Seller.
1.5 License Agreement. Purchaser and Seller have in good faith negotiated
a License Agreement in the form attached hereto as Schedule 1.5 and
incorporated herein by reference (the "License Agreement"), pursuant to which
the Seller will authorize the Purchaser to utilize certain proprietary,
intellectual property rights in connection with its continued operation of
Motion Control. As provided in paragraph 1.9 hereof, the Seller and the
Purchaser shall execute and deliver the License Agreement in connection with
the Signing.
1.6 Assumption of Obligations. Except as otherwise specifically provided
herein, Purchaser shall assume no liability or obligation whatsoever arising
out of or connected with the Assets or any other liabilities or obligations the
Seller, except for those liabilities set forth on Schedule 1.6 attached hereto
and incorporated herein ("Assumed Liabilities").
1.7 UCC Searches. Purchaser, at Seller's expense, shall obtain a report
of a recognized search firm of a search of the records of the Utah Secretary of
State and the appropriate county Recorder of Deeds regarding financing
statements and tax liens filed against the Assets and/or Seller in connection
with the Assets, (the "UCC Search").
160475.1
<PAGE> 3
ARTICLE II.
Signing and Effective Date
2.1 Time and Place. The execution and delivery of this Agreement (the
"Signing") will take place on the 27th day of December, 1996, at the offices of
Parsons, Behle & Latimer, located in Salt Lake City, Utah, at a time mutually
agreeable to the parties. The transactions contemplated by this Agreement
shall be effective upon January 1, 1997 (the "Effective Date").
2.2 Seller's Obligation at Signing. At the Signing, Seller shall deliver
or cause to be delivered to Purchaser executed counterparts of the following
instruments of transfer and other documents in form and substance reasonably
satisfactory to Purchaser's counsel, effectively vesting in Purchaser title to
the Assets upon the Effective Date and evidencing compliance with the terms and
conditions of this Agreement:
(a) A Bill of Sale conveying the Assets listed on
Schedule 1.1(a) through and including Schedule 1.l(e) to
Purchaser and a General Assignment; and
(b) Such other instruments of assignment, transfer,
conveyance, endorsement, direction or authorization as will be
sufficient or requisite to vest in Purchaser full, complete,
legal and equitable right, title and interest in and to all
the Assets to be acquired pursuant to this Agreement as may
reasonably be requested by Purchaser's counsel; and
(c) The License Agreement; and
(d) A Temporary Use Agreement with Purchaser for
Purchaser's continued operation of the Motion Control
operations at the Location, in the form of Schedule 2.2(d)
(the "Use Agreement"); and
(e) An Administrative Services Agreement, in the form
of Schedule 2.2(e) hereto, pursuant to which the Seller shall
provide the Purchaser with certain services in connection with
the Purchaser's operation of the business of Motion Control
(the "Administrative Services Agreement").
2.3 Purchaser's Obligations at Signing. At the Signing, Purchaser shall
deliver or cause to be delivered to Seller:
(a) The sum of $1,000,000 in immediately available
funds, by wire transfer, to an account designated by the
Seller; and
(b) An executed counterpart of the License
Agreement; and
(c) An executed counterpart of the Use Agreement;
and
160475.1
<PAGE> 4
(d) An executed counterpart of the Administrative
Services Agreement; and
(e) An Assumption Agreement in form and substance
reasonably satisfactory to Seller's counsel pursuant to which
the Purchaser specifically assumes those obligations and
liabilities of the Seller specified on Schedule 1.6 hereto.
2.4 Possession of the Assets. On the Effective Date the Seller shall
deliver possession and control of the Assets to the Purchaser, and the
Purchaser shall assume possession and control thereof.
ARTICLE III.
Representations and Warranties
3.1 Representation and Warranties of Seller. Seller represents and
warrants to Purchaser as follows:
(a) Authorization. This Agreement has been duly
authorized and approved by the Board of Directors of the
Seller in accordance with State law. No other approval or
authorization is necessary for Seller to execute, deliver and
perform this Agreement. The execution, delivery and
performance of this Agreement by Seller will not result in any
breach of or conflict with any of the terms, conditions or
provisions of the Articles of Incorporation or the Bylaws of
Seller, any material agreement, indenture, mortgage, lease,
license, research, development or other instrument by which
Seller is a party or by which Seller is bound.
(b) Customer Files and Records. To the knowledge of
Seller, the customer files and records specified on Schedule
1.1(e) contain materially complete records (including the
names, addresses, and telephone numbers) of all customers of
Motion Control for at least the twelve month period prior to
the Effective Date.
(c) Title to Assets. Seller has, and upon the
execution and delivery by Seller at the Signing of the
documents referred to in Section 2.2 hereof, Purchaser, upon
the Effective Date, will be vested with, good and marketable
title to the Assets, free and clear of all liens and charges
of encumbrance, other than the Assumed Liabilities set forth
on Schedule 1.6.
(d) Litigation and Violations. No claim, litigation,
investigation or other proceeding is pending, or to the best
knowledge of Seller, threatened against Seller, which relates
to or affects the Assets, or Motion Control, except as set
forth in Schedule 3.1(d).
160475.1
<PAGE> 5
(e) Employees. None of the employees of Seller who
are identified on Schedule 3.1(e) (the "Motion Control
Employees") are covered by or subject to any employment
contract, collective bargaining agreement, union contract,
labor agreement or conciliation agreement.
(f) Taxes. For all periods prior to the Effective
Date, proper and accurate amounts have been withheld by Seller
from the Motion Control Employees for all such periods to
insure full and complete compliance with tax withholding
provisions of applicable federal, State and local tax laws;
proper and accurate federal, State and local tax returns have
been filed by Seller for all periods for which returns were
due with respect to sales, withholding, F.I.C.A. and
unemployment taxes, in the amount shown thereunder to be due
and payable and all such amounts have been paid in full. For
all periods up to and including the Effective Date, Seller has
duly filed or will file when due all federal, State and local
tax returns and reports, and all tax returns and reports of
all government units having jurisdiction with respect to taxes
imposed on Seller which might create a lien or encumbrance on
any of the Assets, which would be a valid and subsisting lien
thereon after transfer thereof to Purchaser hereunder or
affect adversely Purchaser's ability to operate the business
of Motion Control through the use of the Assets after the
Effective Date, and Seller has paid or will pay when due all
such taxes shown thereon to be due and payable.
(g) Employee Benefit Plans. Seller has no unfunded
liabilities to the Motion Control Employees under any pension
or other employee benefit plan. Seller, not Purchaser, shall
make any required contribution to such plans as to the Motion
Control Employees. Seller, not Purchaser, is legally
responsible in regard to all matters involving such plans.
(h) Binding Effect. This Agreement has been duly
executed and delivered by Seller and constitutes the legal,
valid and binding obligation of Seller enforceable in
accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, or other laws affecting the rights
of creditors generally.
3.2 Representations and Warranties of Purchaser. Purchaser represents and
warrants to Seller as follows:
(a) Authorization. This Agreement has been duly
authorized and approved by the Board of Directors of the
Purchaser in accordance with State law. No other approval or
authorization is necessary for Purchaser to execute, deliver
and perform this Agreement. The execution, delivery and
performance of this Agreement by Purchaser will not result in
any breach of or conflict with any of the terms,
160475.1
<PAGE> 6
conditions or provisions of the Articles of Incorporation or
the Bylaws of Purchaser, any material agreement, indenture,
mortgage, lease, license, research, development or other
instrument by which Seller is a party or by which Purchaser
is bound.
(b) Binding Effect. This Agreement has been duly
executed and delivered by Purchaser and constitutes the legal,
valid and binding obligation of Purchaser enforceable in
accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, or other laws affecting the rights
of creditors generally.
ARTICLE IV.
Covenants, of Seller and Purchaser
4.1 Liability for Expenses.
(a) Seller. With the exception of the Assumed
Liabilities, Seller shall be responsible for the payment of
all liabilities incurred in connection with the operation of
Motion Control up to the Effective Date and shall promptly pay
all such obligations.
(b) Purchaser. Purchaser shall be responsible for
the payment of all liabilities incurred in connection with the
operations of Motion Control from and after the Effective Date
and shall promptly pay all such obligations. Additionally,
the Purchaser shall be responsible for and shall promptly pay
all of the Assumed Liabilities as set forth on Schedule 1.6.
4.2 Seller's Maintenance of Insurance. Seller shall maintain appropriate
insurance coverage which provides continuing coverage of its manufacturing and
product liability up to the Effective Date. Seller shall provide evidence of
such insurance to Purchaser upon request.
4.3 Collection of Accounts Receivable. Except as specifically provided in
the Administrative Services Agreement, the collection of all accounts
receivable specified on Schedule 1.l(a), and of all accounts receivable arising
on or after the Effective Date as the result of the Purchaser's operation of
Motion Control, shall, on and after the Effective Date be the sole
responsibility of Purchaser.
ARTICLE V.
Condition of Assets
5.1 AS-IS SALE. THE ASSETS BEING SOLD HEREUNDER ARE BEING SOLD AS-IS, AND
SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT
TO THE CONDITION OR FITNESS OF THE ASSETS.
160475.1
<PAGE> 7
ARTICLE VI.
Transition of Motion Control and Notice to Customers
6.1 Seller's Obligations. Seller will use reasonable efforts to transfer
the operations of Motion Control to Purchaser as soon as practicable following
the Effective Date by appropriate means, including the following:
(a) Notices to Customers. At Purchaser's direction
and expense, Seller and Purchaser will jointly author notices
to customers of Motion Control as soon as reasonably practical
after the Effective Date, informing them of Seller's transfer
of operations to Purchaser pursuant to the purchase and sale
of Assets hereunder (the "Notices").
(b) Notices to Other Interested Parties. At
Purchaser's direction and expense, Seller and Purchaser will
jointly author notices to other interested parties of Motion
Control as soon as reasonably practical after the Effective
Date, informing them of Seller's transfer to Purchaser
pursuant to the purchase and sale of Assets hereunder (the
"Notices").
ARTICLE VII.
Employees of Seller
7.1 Termination. Effective at the close of business on December 31, 1996,
Seller shall terminate the employment of all of the Motion Control Employees.
On the Effective Date, Purchaser shall offer employment to all of the Motion
Control Employees in the capacities, and for the compensation set forth
opposite their respective names on Schedule 3. l(e) hereto. Additionally, the
Purchaser shall provide the Motion Control Employees with benefits generally
comparable to those provided by the Seller. Purchaser shall not assume any
obligations and liabilities of Seller to any of the Motion Control Employees,
including, without limitation, any liability or obligation for wages, bonuses,
medical reimbursement, pension or profit sharing benefits, or any other
liability or obligation whatsoever of Seller to such employees arising out of
or in connection with their prior employment with Seller or with their
termination as employees of Seller. The Purchaser will not terminate the
employment of any of the Motion Control Employees, without good cause, for at
least 90 days following the Effective Date.
ARTICLE VIII.
Indemnification
8.1 Survival. The representations, warranties and covenants of each party
shall survive the Effective Date for a period of one year.
160475.1
<PAGE> 8
8.2 Of Purchaser.
(a) Seller hereby agrees to indemnify and hold
Purchaser harmless against each and every claim, demand, loss,
liability, damage, or expense (including, without limitation,
any settlement payment, reasonable attorneys' fees, and other
expenses incurred in litigation or settlement or any claims) of
whatever nature suffered by Purchaser or arising out of or in
connection with (i) the conduct of the business of Motion
Control up to the Effective Date (other than the Assumed
Liabilities set forth on Schedule 1.6), and (ii) any material
breach of warranty, covenant, or agreement or any material
misrepresentation of Seller contained in this Agreement or in
any Schedule or Exhibit attached-to or furnished pursuant to
this Agreement any other document furnished or required to be
furnished in connection with this Agreement or pursuant hereto.
(b) Seller hereby agrees to indemnify and hold
Purchaser harmless against each and every claim, demand, loss,
liability, damage, or expense, based on or rising out of
environmental matters attributable to Seller's operation of its
business, including Seller's use and occupation of the
Location, including, without limitation, contamination or
cleanup of contamination (also including, without limitation,
any settlement payment, reasonable attorney's fees, and other
expenses incurred in litigation or settlement of any claims)
that may occur prior to the Effective Date.
8.3 Of Seller.
(a) Purchaser hereby agrees to indemnify and hold
Seller harmless against each and every claim, demand, loss,
liability, damage, or expense (including, without limitation,
any settlement payment, reasonable attorney's fees, and other
expenses incurred in litigation or settlement of any claims)
of whatever nature suffered by Seller arising out of or in
connection with (i) the conduct by the Purchaser of the
business of Motion Control or the use of the Assets by
Purchaser from and after the Effective Date, (ii) any material
breach of warranty, covenant, or agreement or any material
misrepresentation of Purchaser contained in this Agreement, or
(iii) the failure of the Purchaser to timely pay or otherwise
satisfy its obligations in connection with the Assumed
Liabilities, set forth on Schedule 1.6.
(b) Purchaser hereby agrees to indemnify and hold the
Seller harmless against each and every claim, demand, loss,
liability, damage or expense, based on or arising out of
environmental matters attributable to the Purchaser's
operation of its business, including the business of Motion
Control and the Purchaser use and occupation of the Location,
160475.1
<PAGE> 9
including, without limitation, contamination or cleanup of
contamination (also including, without limitation, any
settlement payment, reasonable attorneys' fees and other
expenses incurred in any litigation or settlement of any
claims) that may occur on or after the Effective Date.
8.4 Notice and Participation. Upon receipt of written notice of any claim
or the service of a summons or other initial legal process upon it in any
action instituted against it in respect of which indemnity may be sought under
this Agreement, Purchaser, or Seller, as the case may be, shall promptly give
written notice of such claim, or the commencement of such action, or threat
thereof, to Seller or Purchaser, as the case may be. The party required
hereunder to provide indemnification in regard to such claim or action shall
assume the defense thereof, at its expense and with counsel of its choice.
Such party shall control the defense of such claim or action, as well as the
terms of its settlement or other termination. The indemnified party shall be
entitled, at its own expense, to participate in the defense of such claim or
action, but such participation shall not include the right to control the
defense or approve a settlement.
ARTICLE IX.
Other Agreements
9.1 License Agreement. Seller and Purchaser agree that the effectiveness
of this Agreement shall be contingent upon the execution and delivery by both
parties of the License Agreement.
9.2 Use Agreement. Seller and Purchaser agree that the effectiveness of
this Agreement shall further be contingent upon the execution and delivery by
both parties of the Use Agreement.
9.3 Administrative Services Agreement. The Seller and the Purchaser agree
that the effectiveness of this Agreement shall further be contingent upon the
execution and delivery by both parties of the Administrative Services
Agreement.
ARTICLE X.
Miscellaneous Provisions
10.1 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties hereto shall pay the fees and
expenses incurred by their own respective legal counsel, accountants, other
experts and all other expenses incurred by such party incidental to the
negotiation, preparation and execution of this Agreement.
10.2 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of all of the parties hereto and their successors in interest;
provided, however, that this Agreement may not be assigned by either party
without the prior written consent of the other.
160475.1
<PAGE> 10
10.3 Amendments. This Agreement may not be amended in whole or in part at
any time except by a written instrument setting forth such changes and signed
by each of the parties hereto.
10.4 Entire Agreement. This Agreement, the Schedules and the Exhibits
hereto, and the License Agreement, the Use Agreement and the Administrative
Services Agreement set forth the entire understanding between the parties
relating to the transactions described herein, there being no terms,
conditions, warranties or representations, other than those contained herein,
and no change or modification hereto shall be valid unless made in writing and
signed by the parties hereto.
10.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed-an original, but all of which
shall constitute one and the same instrument.
10.6 Governing Law. This Agreement shall be governed by the laws of the
State of Utah.
10.7 Headings. The headings contained herein are for reference only, are
not a part of this Agreement and shall have no substantive meaning.
10.8 Notices. All notices, requests or demands and other communications
from any of the parties hereto to the other shall be sufficient and shall be
deemed given, made or served, on personal delivery or seventy-two (72) hours
after deposit with the U.S. Postal Service if sent by certified mail, postage
prepaid, return receipt requested, to the other party at the address set forth
below, or at any other address as any party may later designate by written
notice.
As to Purchaser: Attn: President and Chief Operating Officer
FILLAUER, INC.
2710 Amnicola Highway
P.O. Box 5189
Chattanooga, TN 37406-0189
with a copy to Steven K. Bowling, Esquire
Shumate & Bowling
The Financial Center at Capital Place
9950 Kingston Pike, Suite 200
Knoxville, TN 37922
As to Seller: Attn: President and Chief Executive Officer
IOMED, INC.
3385 West 1820 South
Salt Lake City, Utah 84104
160475.1
<PAGE> 11
with a copy to: Robert C. Delahunty, Esquire
Parsons, Behle & Latimer
One Utah Center
201 South Main Street, Suite 1800
P.O. Box 46898
Salt Lake City, Utah 84145-0898
10.9 Severability. If any portion or portions of this Agreement shall be,
for any reason, invalid or unenforceable, the remaining portion or portions
shall nevertheless be valid, enforceable and carried into effect, unless to do
so would clearly violate the present legal and valid intention of the parties
hereto.
10.10 Further Assurances. Seller agrees that after the Closing Date it
will execute and deliver such further instruments of conveyance and transfer as
Purchaser may reasonably request to effect the transfer of the Assets to
Purchaser.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year first written above.
IOMED, INC. FILLAUER, INC.
By: By:
------------------------- -----------------------------
Title: Title:
------------------------- -----------------------------
SELLER'S FEIN: 87-0441272 PURCHASER'S FEIN: 62-1474076'
160475.1
<PAGE> 12
SCHEDULE 1.1(a)
Accounts Receivable
<PAGE> 13
SCHEDULE 1.1(a)
MOTION CONTROL
Division of Iomed, Inc.
ACCOUNTS RECEIVABLE
The attached schedule totaling **** represents the balance of the accounts
receivable of Motion Control as of December 18, 1996 and subject to adjustments
for cash receipts and sales activity through the end of business on December 31,
1996, represents the accounts receivable to be sold to the Purchaser pursuant to
the Asset Acquisition Agreement effective January 1, 1997.
<PAGE> 14
SCHEDULE 1.1(a)
****
<PAGE> 15
Schedule 1.1(a)
****
<PAGE> 16
SCHEDULE 1.1(a)
****
<PAGE> 17
****
<PAGE> 18
****
<PAGE> 19
****
<PAGE> 20
****
<PAGE> 21
****
<PAGE> 22
****
<PAGE> 23
****
<PAGE> 24
SCHEDULE 1.1(b)
---------------
Inventory of Materials, Work-in-Progress,
Finished Goods and Overhead
<PAGE> 25
SCHEDULE 1.1(b)
****
<PAGE> 26
SCHEDULE 1.1(b)
RAW MATERIAL - INSPECTION
****
<PAGE> 27
****
<PAGE> 28
****
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<PAGE> 40
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<PAGE> 44
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<PAGE> 45
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<PAGE> 47
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<PAGE> 48
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<PAGE> 49
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<PAGE> 50
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<PAGE> 51
SCHEDULE 1.1 (b)
FINISH GOODS
****
<PAGE> 52
SCHEDULE 1.1 (b)
OVERHEAD - WIP & FINISHED GOODS
IOMED, INC.
FY '96 OVERHEAD ALLOCATION
PROSTHETICS WIP & FINISHED GOODS
<TABLE>
<CAPTION>
RATE OVERHEAD OVERHEAD IN
CALCULATION RATE INVENTORY
----------- -------- -----------
<S> <C> <C> <C>
Total Prosthetics Indirect Costs 432,454
Less: Arm 1A Project (95,654)
-----------
NET PROSTHETICS INDIRECT COSTS 336,800
Divided by:
TOTAL DIRECT LABOR DOLLARS 182,090
-----------
$1.85
========
DIRECT LABOR $ IN INVENTORY:
Raw Material (WIP) 37,224
WIP 4,697
Finished Goods 13,965
-----------
Total Labor in Ending Inventory 55,885 $1.85 103,000
=========== ======== ===========
</TABLE>
Revised allocation of overhead to Prosthetics based on Labor dollars in
Inventory.
<PAGE> 53
SCHEDULE 1.1(b)
RAW MATERIAL - HOLD LOCATION
****
<PAGE> 54
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<PAGE> 55
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<PAGE> 56
****
<PAGE> 57
****
<PAGE> 58
IOMED, INC. SCHEDULE 1.1(b)
WORK-IN-PROCESS - INTERNAL WORK IN PROCESS
FOR PERIOD ENDED: DECEMBER 20, 1996
****
<PAGE> 59
****
<PAGE> 60
IOMED, INC.
WORK-IN-PROCESS-INTERNAL
FOR PERIOD ENDED: DECEMBER 20, 1996
****
<PAGE> 61
SCHEDULE 1.1(b)
****
<PAGE> 62
SCHEDULE 1.1(c)
Machinery, Equipment, Furniture and Fixtures
<PAGE> 63
SCHEDULE 1.1 (c)
Motion Control - Asset Identification Sheet
****
Page 1
<PAGE> 64
SCHEDULE 1.1 (c)
Motion Control-Asset Identification Sheet
****
Page 2
<PAGE> 65
SCHEDULE 1.1.(c)
Motion Control - Asset Identification Sheet
Instruction: Dated: 11-19-96
****
Page 3
<PAGE> 66
SCHEDULE 1.1
Motion Control - Asset Identification Sheet
Instruction: Dated: 11/19/96
****
Page 4
<PAGE> 67
SCHEDULE 1.1 (c)
Motion Control-Asset Identification Sheet
****
Page 5
<PAGE> 68
SCHEDULE 1.1(d)
Demonstrators and Loaners
<PAGE> 69
SCHEDULE 1.1 (d)
DEMO INVENTORY LIST
UTAH ARM DEMOS
<TABLE>
<CAPTION>
Arm# Socket Wrist Flex Circuit Hand Circuit Hand Glove Plastic Servopro Batt Date Status
----- ------ ----- ------------ ------------ ---- ----- ------- -------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 102 bad no servo servo left good Nelson Deluccia, Mar. 1997
2 193 good yes servo h & w left good 8/6/96
3 245 good no servo servo left good Brillinger, Nov. 1996
4 296 bad no no no left good
5 312 good no servo servo right good yes
6 340 clear yes h & w new right good yes 7/29/96 Harold's arm
7 359 good yes servo servo left good yes
8 360 good no servo servo left good yes 8/2/96
9 391 good no servo servo good 9/4/96
10 476 no yes no no left no 8/11/96
11 481 good yes servo servo right damaged yes 7/20/96
12 550 no yes servo servo left no yes
13 583 no servo servo left good yes
14 590 yes h & w left good
15 599 good yes servo servo right
16 734 no no servo servo Bob Goodman-Field Trial
</TABLE>
PROCONTROL DEMOS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 P2 bad yes n/a n/a right good n/a n/a n/a Kansas University-Med. Ctr.
2 104 good yes n/a n/a right good n/a n/a n/a
3 115 bad yes n/a n/a right good n/a n/a n/a
4 479 good yes n/a n/a right good n/a n/a n/a Harold's arm
5 644 good yes n/a n/a right good n/a n/a n/a
</TABLE>
MYOLAB II DEMOS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 263 n/a n/a n/a n/a n/a n/a n/a n/a n/a In-House
2 270 In-House
3 274 In-House
4 287 In-House
5 379 Brillinger 12/96
6 391 In-House
7 407 Snyder L & B (rental)
8 431 In-House
9 492 RIC (rental)
</TABLE>
<PAGE> 70
SCHEDULE 1.1.(d)
DEMO INVENTORY LIST
<TABLE>
<CAPTION>
ARM# SOCKET WRIST FLEX CIRCUIT HAND CIRCUIT HAND GLOVE PLASTIC SERVOPRO BATT DATE STATUS
MYOLAB II DEMOS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 546 n/a n/a n/a n/a n/a n/a n/a n/a n/a In-House
11 579 In-House
12 663 In-House
13 688 KU Med Center 12/96
14 702 In-House
15 703 In-House
16 704 In-House
17 705 In-House
18 706 In-House
19 720 In-House
20 731 In-House
21 738 In-House
22 771 In-House
23 804 RIC (rental)
24 805 Precision O & P (rental)
25 806 High Tech. Therapy
(consignment)
26 810 In-House
27 811 Riverside Pros. (Rental)
</TABLE>
<PAGE> 71
SCHEDULE 1.1(e)
Customer Files and Records
<PAGE> 72
SCHEDULE 1.1(e)
MOTION CONTROL
Division of Iomed, Inc.
CUSTOMER FILES AND RECORDS
- -- Utah Artificial Arm, ServoPro and ProControl Historic Sales Log
- -- Customer Service Files.
- -- International Customer Service Files.
- -- NovaCare Files.
- -- List of Prosthetists Trained in the Fitting of the Utah Artificial Arm.
- -- Customer Order Files for the Fiscal Year to Date December 31, 1997.
<PAGE> 73
SCHEDULE 1.2
Government Equipment
<PAGE> 74
SCHEDULE 1.2
MOTION CONTROL
Division of Iomed, Inc.
GOVERNMENT OWNED ASSETS
<TABLE>
<CAPTION>
Asset # Description Make Model Comment
- ------- ----------- ---- ----- -------
<S> <C> <C> <C> <C>
0003 15" X 40" Lathe Osama Sr. SJ-15406 purchased under NIH overhead pool
0143 Prom Programmer Parvus PRV-0339A-02 R&D asset
0144 6805 Series Emulator Motorola 68HC05PFB R&D asset
0145 486 Computer w/17" Compunet custom blt 486-100 R&D asset
NEC monitor
</TABLE>
<PAGE> 75
SCHEDULE 1.3
Excluded Assets
<PAGE> 76
SCHEDULE 1.3
MOTION CONTROL
Division of Iomed, Inc.
EXCLUDED ASSETS
DESCRIPTION
Corporate records
All accounting records
All customer invoice records
All accounts payable records
All cash receipt records
All personnel and payroll records
All administrative support equipment shared with Iomed including, copy machines,
paper shredders, telephones and telephone systems, facsimile machines, common
area network printers and scanners, postage meters and scales, automated
manifest systems,
Common area inventory shelving, ladders, forklifts etc.
Common area cubicles and partitions
Network computer systems, software and software licenses (including 4th shift)
All Intangible assets, including but not limited to, Patens, Patents Pending,
Trade names, Trademarks, Research and Development records, proprietary know-how
including manufacturing, assembly and test processes, procedures, drawings,
schematics, and test procedures
<PAGE> 77
SCHEDULE 1.5
License Agreement
<PAGE> 78
SCHEDULE 1.6
Assumed Liabilities
<PAGE> 79
SCHEDULE 1.6
MOTION CONTROL
Division of Iomed, Inc.
ASSUMED LIABILITIES
<TABLE>
<CAPTION>
SERIAL #'s ESTIMATED # OF UNITS
DESCRIPTION FROM TO UNDER WARRANTY
<S> <C> <C> <C>
2 year Limited Warranty Obligations
as outlined on Schedule 1.6(a)
(sales from 1/1/95 to 12/31/96)
Utah Arms #815 and
#817 #966 151
ProControls #571
#573
#574 and
#578 #732 158
Myolabs Not available 42
EMG's Not available 611
2 year Limited Extended Warranty
Obligations as outlined on
Schedule 1.6(b) [Utah Arms,
ProControls and Servopro's only]
Utah Arms
(sales from 1/1/95 to 12/31/96) see above Less than 10 units
(sales from 1/1/93 to 12/31/96) #816 and
#697 #814 Less than 10 units
ProControls
(sales from 1/1/95 to 12/31/96) see above Less than 10 units
(sales from 1/1/93 to 12/31/96) #576
#577 and Less than 10 units
</TABLE>
<PAGE> 80
SCHEDULE 1.6(A)
LIMITED WARRANTY FOR PROSTHETIC PRODUCTS
Seller warrants to Buyer that the equipment delivered hereunder will be free
from defects in materials and manufacturing workmanship, that it will be of the
kind and quality described and that it will perform as specified in Seller's
written quotation. The preceding limited warranties shall apply only to failures
to meet said warranties that appear within the effective period of this
Agreement. THE EFFECTIVE PERIOD SHALL BE 2 YEARS (24 MONTHS) FROM THE DATE OF
DELIVERY TO THE FITTING CENTER WHICH HAS PURCHASED THE COMPONENTS.
The conditions of any tests to determine failures to meet the above limited
warranties shall be mutually agreed upon between Buyer & Seller. Seller must
be notified of and may be represented at all tests that may be made. If any
equipment fails to meet the foregoing limited warranties, Seller shall correct
any such failure at Seller's option either by: 1) repairing any defective or
damaged part, or parts; or, 2) by making available via collect shipment to the
Buyer any necessary repaired or replacement parts or assemblies.
Except as set forth in any applicable patient indemnity, the foregoing limited
warranties are exclusive and in lieu of all warranties, whether written, oral,
implied or statutory. NO IMPLIED WARRANTY OR MERCHANTABILITY OR FITNESS FOR
PURPOSE SHALL APPLY. Seller does not warranty any products of others where the
Seller serves solely as a distributor or reseller, in particular the Otto Bock
Hand, Otto Bock Greifer, Otto Bock Wrist Rotator or other devices not
manufactured by Motion Control. The limited warranties and remedies set forth
herein are conditioned: 1) upon inspection of the equipment by Motion Control
or its representative before the initiation of the Limited Warranty, and
verification that the equipment is in good working order and free of damage;
2) upon proper use and maintenance of the equipment and conformance with any
applicable recommendations of Seller; 3) upon buyer promptly notifying Seller
in writing within the Limited Warranty period of 2 years (24 months) of any
defects; 4) upon the Buyer making the equipment available for correction, by
prepaid shipment to the Seller at Seller's option; and, 5) upon receipt of the
fees quoted at the time of the Agreement for the Limited Warranty. In no event
shall Seller be liable for special or consequential damages.
THIS AGREEMENT DOES NOT INCLUDE:
1. Prosthetic services for fitting and maintaining the prosthesis made with
the equipment;
2. Damage caused by neglect, misuse or improper operation by anyone other
than the Seller;
3. Damage due to accident, fire, water, vandalism, unsuitable environmental
conditions or replacement parts not approved or recommended by Motion
Control;
4. Damage or defects occurring prior to the beginning of this Agreement,
except as covered under a previous warranty agreement;
5. Modifications to the equipment which occur during the period of the
Agreement except by mutual consent of the parties in writing, including
payment of additional charges as specified by the Seller.
DETERMINATION OF THE DAMAGES OR DEFECTS TO BE COVERED UNDER THE LIMITED
WARRANTY SHALL BE MADE BY MOTION CONTROL PERSONNEL.
Utah Artificial Arm or ProControl System # _______________________.
Battery Pack #'s _________ _________ _________ _________ _________.
Two Year (24 months's) Limited Warranty Beginning Date _____________________.
Month Day Year
<PAGE> 81
SCHEDULE 1.6
MOTION CONTROL LIMITED EXTENDED WARRANTY
Allows you to provide a total of 4 years of limited warranty
service:
COVERAGE: Extends the usual coverage against failures in normal use,
including circuit boards, motor, etc., for two years. Battery
packs may be replaced under the warranty, after testing.
-- Coverage is available for Motion Control manufactured
products only. No warranty, express or implied, is provided
for prosthetic services for fitting, repairing or adjusting
a prosthesis, and is limited to repair and replacement of
materials.
-- Fitting centers may choose to offer their clients a
""service contract'' for a prosthesis, which includes
prosthesis services, along with the Extended Limited
Warranty. The details and pricing for this type of contract
are up to each fitting center.
-- Motion Control does not offer the extended limited warranty
for other manufacturer's components, such as the Otto Bock
Hand, Greifer, Wrist Rotator, etc.
<TABLE>
<CAPTION>
PRICE:
<S> <C> <C> <C>
-- 2 Year Warranty - Utah Artificial Arm............ $3000
-- 2 Year Warranty - ProControl..................... $ 640
-- 2 Year Warranty - ServoPro....................... $ 500
</TABLE>
TERMS: For continuous coverage, the limited extended warranty must be
purchased before expiration of the original two year warranty.
-- If the initial warranty has expired already, an additional
$235 for inspection/rework will be required for the Utah
Arm. Components more than six months out of warranty will
not be eligible for the limited warranty extension.
Exceptions will be considered only on a case-by-case basis.
-- Repairs which are not eligible for warranty service (i.e.,
occurring outside of normal usage, or occurring after
expiration of the initial warranty) must be performed
before the Extended Limited Warranty starts, and will be
billed at the usual repair rates.
-- Coverage may be purchased by the fitting center,
prosthetist, arm user, or a third party agency.
REGISTER: To register for the limited extended warranty, the prosthetist
or the arm wearer must fill out the limited extended warranty
agreement (provided to the prosthetist) and return it to Motion
Control with a check or Purchase Order number; we will complete
it an return a copy for your records. For a copy of the
agreement, please contact Motion Control directly.
We suggest that the extended limited warranty be arranged when
the prosthesis is purchased to insure continuous warranty
coverage.
<PAGE> 82
SCHEDULE 2.2 (d)
TEMPORARY USE AGREEMENT
<PAGE> 83
TEMPORARY USE AGREEMENT
THIS TEMPORARY USE AGREEMENT ("Agreement") is entered on December 27,
1996 and shall be effective upon January 1, 1997, by and between Iomed, Inc., a
Utah corporation ("Iomed"), and Fillauer, Inc., a Delaware corporation
("Fillauer"), with reference to the following:
A. Iomed, through various of its divisions and departments,
occupies approximately 17,986.94 square feet of office, manufacturing, assembly
and warehouse space located at 3385-3395 West 1820 South, Salt Lake City, Utah
("Premises"), pursuant to the terms of a Lease Agreement ("Lease") dated March
1, 1994, between Iomed, as tenant, and Hayter Properties, Inc. ("Hayter"), as
landlord. A copy of the Lease is attached hereto as Exhibit "A" and made a part
hereof.
B. Contemporaneous with the effectiveness of this Agreement, Iomed
is selling its Motion Control division to Fillauer. The Motion Control division
operates within the Premises and, to facilitate the smooth transfer of the
Motion Control division from Iomed to Fillauer, Iomed and Fillauer have agreed
that Iomed shall allow Fillauer to temporarily use a portion of the Premises in
accordance with the terms of this Agreement.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, Iomed and Fillauer hereby covenant and agree as
follows:
1. Definitions. Unless otherwise indicated herein, all capitalized
terms used in this Agreement shall have the definitions assigned to them in the
Lease.
2. Fillauer use Area. Iomed hereby consents to Fillauer's use of
approximately 4,800 square feet of space within the Premises ("Fillauer Use
Area"). The Fillauer Use Area shall not constitute specifically designated areas
within the Premises, but shall be that portion of the Premises previously used
by the Motion Control division in common with other departments and divisions of
Iomed. Fillauer has inspected the Premises, including all equipment which is a
part thereof, and accepts the Premises in the condition it is in at the time of
the commencement of the this Agreement, without any representation expressed or
implied on the part of Iomed or its agents as to the condition of the Premises.
3. Use Period. Fillauer's right to use the Fillauer Use Area shall
commence on and as of the effective date of this Agreement ("Commencement
Date"), and shall end on August 31, 1997, unless sooner terminated pursuant to
this Agreement or the Lease. Fillauer shall have the right to cease using the
Fillauer Use Area by providing Iomed with at least 30 days prior written
notice. If Fillauer continues to use the Fillauer Use Area after August 31,
1997, Fillauer shall do so on a month to month basis.
<PAGE> 84
4. Use Payment. As consideration for its right to use the Fillauer
Use Area, Fillauer shall pay to Iomed $5,600.00 per month ("Use Fee"). The
Use Fee shall be paid in advance on the first day of each and every month
during the use period, without deduction or offset. If the Commencement Date is
not the first day of a month, the Use Fee due on the Commencement Date shall be
a prorata share of a full month's Use Fee. Fillauer shall be in default under
this Agreement if any Use Fee payment is not made by the fifth day of the month
it is due.
5. Use. The Fillauer Use Area shall be used solely for uses
permitted by the Lease.
6. Assignment; Subletting. Fillauer shall not assign this Agreement
nor the right to use the Fillauer Use Area, in whole or in part, and shall not
permit Fillauer's interest in this Agreement or the Fillauer Use Area to be
vested in any third party by operation of law or otherwise. Notwithstanding the
foregoing, Fillauer may assign its rights hereunder to Motion Control, Inc., a
Delaware corporation and wholly owned subsidiary of Fillauer. Such assignment
shall not modify or limit the duties or obligations of Fillauer under this
Agreement.
7. Subordination. This Agreement is subject and subordinate to the
Lease. Except as may be inconsistent with the terms hereof, all the terms,
covenants and conditions in the Lease shall be applicable to this Agreement with
the same force and effect as if Iomed were the landlord under the Lease and
Fillauer were the tenant thereunder; and in case of any breach hereof by
Fillauer, Iomed shall have all the rights against Fillauer as would be available
to the landlord against the tenant under the Lease if such breach were by the
tenant thereunder.
8. Fillauer's Right. Notwithstanding anything to the contrary
contained herein, the only services or rights to which Fillauer is entitled
under this Agreement are those to which Iomed is entitled under the Lease.
9. Insurance. During the term of this Agreement, Iomed shall keep
and maintain in full force, at its sole cost and expense, the insurance
required by the Lease. During the term of this Agreement, Fillauer shall keep
and maintain in full force, at its sole cost and expense, (i) worker's
compensation insurance in a form and amount required by Utah law, and
(ii) insurance against loss or damage to Fillauer's equipment, personal
property and any improvements owned by Fillauer and located within the Premises.
10. Hold Harmless. Fillauer shall neither do nor permit anything to
be done which would cause the Lease to be terminated or forfeited by reason of
any right of termination or forfeiture reserved or vested in the landlord under
the Lease, and Fillauer shall indemnify and hold Iomed and Hayter harmless from
and against all claims of any kind whatsoever by reason of any breach or
default on the part of Fillauer by reason of which the Lease may be terminated
or forfeited.
2
<PAGE> 85
11. Lease. Fillauer represents that it has read and is familiar
with the terms of the Lease.
12. Taxes and Utilities; Maintenance; Services. All taxes,
assessments and utilities for the Fillauer Use Area shall be paid by Iomed.
Fillauer shall keep the Fillauer Use Area in good condition and repair
throughout the term of this Agreement.
13. Surrender. Upon the expiration or earlier termination of this
Agreement, Fillauer shall deliver the Fillauer Use Area to Iomed in the
same condition as of the date hereof, reasonable wear and tear excepted.
14. Notices. Any notice or demand which either party may or must
give to the other hereunder shall be in writing and delivered personally or
sent by certified mail, return receipt requested, postage prepaid,
addressed as follows:
To Iomed: Iomed Inc.
3385 West 1820 South
Salt Lake City, Utah 84104
Attention: President
To Fillauer: Fillauer Inc.
2710 Amnicola Highway
P.O. Box 5189
Chattanooga, TN 37406-0189
Attention: President
Either party may, by notice in writing, direct that future notices or demands
be sent to a different address.
15. Successors and Assigns. The covenants and agreements herein
contained shall bind and inure to the benefit of Iomed and Fillauer, and
their respective executors, administrators, successors and permitted
assigns.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed the day and year first above written.
IOMED:
Iomed Inc.,
a Utah corporation
By:____________________________________
3
<PAGE> 86
Print Name:____________________________
Title:_________________________________
FILLAUER:
Fillauer, Inc.,
a Delaware corporation
By:____________________________________
Print:_________________________________
Title:_________________________________
4
<PAGE> 87
EXHIBIT "A"
TO
TEMPORARY USE AGREEMENT
LEASE
THE LEASE AGREEMENT REFERENCED IN THE FOREGOING INSTRUMENT IS ATTACHED HERETO.
<PAGE> 88
LEASE AGREEMENT
THIS LEASE AGREEMENT, modifying and amending that certain Lease
Agreement dated June 7, 1991, is executed in duplicate as of this 1st day
of March, 1994, between HAYTER PROPERTIES, INC., a Utah corporation
("Landlord"), and IOMED, INC., a Utah corporation ("Tenant").
WITNESSETH:
In consideration of the mutual covenants and agreements of the parties
hereinafter set forth, it is agreed as follows:
1. LEASED PREMISES. Landlord has and does hereby lease to Tenant,
the entire premises, including all appurtenances and improvements located at
3385-3395 West 1820 South, Salt Lake City, Utah, comprised of approximately
17,986.94 square feet of office, manufacturing, assembly and warehouse space,
for the term and upon the rental, conditions and covenants as the parties
herein set forth.
2. TERM. The term of this lease shall be seventeen (17) months,
commencing March 1, 1994, and ending at midnight, August 31, 1995. Tenant shall
have the option to extend this lease for two (2) successive one-year options
(option periods) upon giving landlord six months prior written notice. All
terms and conditions for the option periods shall be the same as the initial
term, as provided herein, except that the rent for said option periods shall be
as set forth in paragraph 3 below.
3. RENT. Rent hereunder shall be comprised of a base rent, payable
as set out in paragraphs 3(a) and 3(b), plus property taxes and insurance,
payable as set out in paragraph 3(c):
(a) BASE RENT OVER INITIAL TERM: Tenant agrees to pay as
base rent to Landlord the sum of One Hundred Ten Thousand Five Hundred and
No/100 Dollars ($110,500.00) payable at the rate of Six Thousand Five Hundred
and No/100 Dollars ($6,500.00) per month over the initial lease term;
(b) BASE RENT OVER OPTION PERIODS: The base rent payable
during the option periods shall be as follows:
(1) For the first option period (September 1, 1995
to August 31, 1996), the sum of Eighty Thousand Six Hundred Forty
and no/100 Dollars ($80,640.00), payable at a monthly rate of
Six Thousand Seven Hundred Twenty and No/100 Dollars ($6,720.20)
over the option period; and
(2) For the second option period (September 1, 1996
to August 31, 1997), the sum of Eighty-One Thousand Fifty-Nine
and 20/100 Dollars ($81,059.20), payable at a monthly rate of
Six Thousand Seven Hundred Fifty-Three and 05/100 Dollars
($6,921.60) over the option period.
<PAGE> 89
(c) SUPPLEMENTAL MONTHLY RENT: In addition to base rent,
Tenant shall pay, monthly, over the lease term, an amount equal to one-twelfth
of the annual real property taxes and assessments and one-twelfth of the yearly
insurance premiums for insurance procured by Landlord under paragraph 16(a) of
the Lease. Tenant's monthly supplemental payments shall be adjusted in January
of each year for the twelve months following, based, at Landlord's option,
either on the total of the previous year's real property taxes, assessments and
insurance premiums actually paid, or based on escrow amounts required of
Landlord by Landlord's Lender. In either event, Tenant's responsibility for
taxes, assessments, insurance payable as supplemental monthly rent shall not be
greater than or less than one hundred percent (100%) of the total of taxes,
assessments, and insurance premiums actually paid by Landlord.
(c) All rent shall be paid in legal tender of the United
States, deposited to the account of Hayter Properties, Inc., at First Security
Bank of Utah, account no. 051-017-9856, or at such other place or by such other
method as landlord may direct in writing. Each payment hereunder is due on the
first day of each calendar month of the term herein.
4. AUTHORIZED USES. Tenant shall use the leased premises to conduct
business in medical and consumer product research, development and
manufacturing, and for no other purposes without the written consent of Landlord
first being had and obtained, which consent shall not be unreasonably withheld
or delayed. All such use shall be subject to restrictions of applicable zoning
ordinances and restrictions and all relevant codes, laws and statutes.
5. PROHIBITED USES. Tenant will not keep, use or sell, or allow to
be kept, used or sold in or about the leased premises, any article or material
which is prohibited by law or which would render the fire insurance policies in
force with respect to the premises void or voidable. Tenant will further
strictly observe all environmental laws and regulations, together with all other
laws and regulations governing the storage of toxic substances and will not
dispose of such substances on or near the leased premises.
6. REPAIR AND CARE OF BUILDING.
(a) Tenant will not commit any waste of the demised premises,
nor shall it use or permit the use of the premises in violation of any present
or future law of the United States or of the State of Utah, or in violation of
any municipal ordinance or regulation applicable thereto.
(b) Tenant agrees to keep and maintain the interior and
exterior of the building and all the improvements on the premises and the
grounds, including sprinklers, landscaping and asphalt surfacing, in good
condition and repair, and, at its cost, to effect any necessary repairs to the
electrical wiring, heating, ventilation, air conditioning and plumbing systems,
and to clean and paint the interior and exterior of the leased premises as the
same may or might be necessary in order to maintain said premises in a clean,
attractive and sanitary condition. Tenant shall keep all driveways reasonably
free from ice and snow and shall maintain all lawns and landscaping, except as
hereinafter expressly set forth. Any alterations or improvements to the leased
premises shall become the property of Landlord at the expiration or sooner
termination of the lease, except as herein otherwise provided.
(c) Tenant agrees to repair all damage to the premises,
including any damage to foundation, roof or structure, resulting from acts of
the Tenant or Tenant's representatives. Except for Tenant's maintenance
obligations contained in paragraphs 6(b) and 6(c), Landlord agrees
-2-
<PAGE> 90
to maintain the roof and the structure and foundation of the building in good
condition and repair. Tenant shall promptly notify Landlord of any repairs to
roof, structure or foundation arising from other than acts of Tenant or
Tenant's representatives and which Tenant believes are necessary. Landlord, at
its discretion, and from time to time as it receives notice of needed repairs
within the scope of its obligation, as Landlord, may request and authorize
Tenant to obtain bids and to contract directly for any such necessary repairs
and to credit the cost of such repairs against lease payments due hereunder.
Absent such specific authorization, however, or unless otherwise agreed in
writing, Tenant shall have no authority to undertake repairs for or on behalf
of Landlord or to otherwise credit lease payments for the costs of any repairs.
(d) Landlord and Tenant acknowledge that the roof on the
premises is approaching the end of its serviceable period and may require
replacement prior to the expiration of the lease period and option period
hereunder. Landlord therefore agrees to undertake responsibility for repair and
maintenance thereof as outlined in subparagraph (c) above. To that end, Tenant
agrees to keep Landlord reasonably advised, in writing, of the condition of the
roof and to allow representatives of Landlord reasonable access thereto, for
purposes of inspection, repair or replacement, as Landlord may, in its
discretion, require. Landlord will be responsible for the costs of roof
replacement caused by other than alterations, installations or other acts by
Tenant or Tenant's representatives.
7. ERECTION OF PARTITIONS, FIXTURES AND OTHER APPURTENANCES;
ALTERATIONS AND CONSTRUCTION.
(a) Tenant shall have the right to erect at Tenant's sole
cost and expense such temporary partitions, including office partitions, and to
alter partitions and to erect shelves, bins, fixtures, machinery, electrical
fixtures, additional lights and wiring and other trade appliances, all as may
be necessary to facilitate the handling of Tenant's business. With the
exception of open office modules, movable partitions, tools, machinery,
specialized environmental control systems, deionized water systems, specialty
production and plumbing fixtures and other specialty manufacturing fixtures,
any such partitions or fixtures installed by Tenant shall remain with the
leased premises and become the property of Landlord upon expiration of the
lease. Damage caused by removal of tools and machinery shall be repaired by
Tenant so as to return the premises to the condition and configuration existing
before installation of said fixtures.
(b) Tenant, at its own cost or expense, may make such
additional alterations in the building as Tenant may reasonably require to
conduct its business, subject to the following conditions: (i) no such
improvements may materially alter the basic character of the building or
existing improvements or weaken any structure of the premises; (ii) all such
construction shall be done in good and workmanlike manner and in accordance
with plans and specifications having the prior written approval of Landlord,
which consent shall not be unreasonably withheld; (iii) all such construction
shall be done free of any liens for labor or materials; and (iv) Tenant shall
indemnify, save hold Landlord harmless from, and defend Landlord against, and
loss, liability, damage or lien resulting from such construction.
8. ERECTION AND REMOVAL OF SIGNS. Tenant shall have the nonexclusive
right to place suitable signs on the leased premises in areas designated by
Landlord for the purpose of identifying Tenant or otherwise indicating the
nature of the business carried on by the Tenant in said premises; provided,
however, that such signs and their locations shall be in keeping with other
signs in the district where the leased premises are located, and shall be
subject to the prior approval of
<PAGE> 91
Landlord, which shall not be unreasonably withheld. Damage to the leased
premises caused by the removal of such signs shall be repaired by Tenant.
9. GLASS. Tenant agrees to replace all glass broken or damaged
during the term of its lease with glass of the same quality as that broken or
damaged.
10. RIGHT OF THE ENTRY BY LANDLORD. Tenant at any time during the
term of this lease shall permit inspection of the demised premises during normal
business hours by Landlord or Landlord's agents or representatives for the
purpose of ascertaining the condition of the demised premises. One Hundred
Eighty (180) days prior to the expiration of this lease, Landlord may post
suitable notice on the demised premises that the same are "for sale" or are
"for rent or lease" and may show the premises to prospective tenants or
purchasers at reasonable times. Landlord shall not, however, thereby
unnecessarily interfere with the use of the demised premises by Tenant.
11. PAYMENT OF UTILITIES. Tenant shall pay all charges for water,
heat, gas, sewer, electricity, telephone and any and all other utilities used
on the leased premises.
12. PAYMENT OF TAXES AND OTHER ASSESSMENTS. Tenant shall pay the
general real property taxes, as well as all other taxes, assessments, license
fees and charges related to the leased premises or incidental to the conduct of
Tenant's business on the leased premises during the term of this lease,
including taxes on Tenant's personal property situated on the premises;
provided, however, that Tenant may contest or dispute any such tax, or the
amount thereof, upon providing sufficient surety for the payment thereof. Taxes
shall be paid on to Landlord as part of the monthly rental payments as provided
in paragraph 3(b) above.
13. ASSIGNMENT AND SUBLETTING. Neither this lease nor any interest
herein may be assigned by Tenant voluntarily, or by operation of law, without
the prior written consent of Landlord, and neither all nor any part of the
leased premises shall be sublet by Tenant without the prior written consent of
Landlord. However, Landlord agrees not to withhold or delay its consent
unreasonably. Landlord further agrees not to withhold or delay its consent to an
assignment if the proposed assignee's financial standing and responsibility at
the time of the proposed assignment is sufficient to give Landlord reasonable
assurance of the payment of all rents and other amounts required under this
lease, and of compliance with all of the terms, covenants, provisions, and
conditions hereof. Upon such assignment, Tenant shall be released from all
liability arising or accruing hereunder after the effective date of the
assignment, provided that the assignee shall execute, acknowledge and deliver
to Landlord an assumption agreement, in form and substance satisfactory to
Landlord in the good faith exercise of its reasonable judgement, whereby such
assignee agrees to observe, perform, and keep all of the terms, provisions,
covenants and conditions required to be observed, performed and kept as tenant
hereunder.
14. DAMAGE, DESTRUCTION OR CONDEMNATION. If the demised premises or
any part thereof shall be damaged or destroyed by fire or other casualty,
Landlord, to the extent of available insurance proceeds, shall promptly repair
all such damage and restore the demised premises without expense to Tenant,
subject to delays due to adjustment of insurance claims, strikes and other
causes beyond Landlord's control. If such damage or destruction shall render
the premises untenantable in whole or in part, the rent shall be abated wholly
or proportionately as the case may be until the damage shall be repaired and
the premises restored, unless such damage or destruction shall have been caused
or actively contributed to by Tenant, its agents, servants, employees,
invitees or licensees, in which case the rent shall not be abated to any
extent whatsoever, If the
<PAGE> 92
damage or destruction shall be so extensive as to require the substantial
rebuilding (i.e., expenditure of fifty percent (50%) or more of replacement
cost) of the building or buildings on the demised premises, Landlord may elect
to terminate this lease by written notice to Tenant given within thirty (30)
days after the occurrence of such damage or destruction. If in the judgment of
Landlord such damage or destruction cannot be repaired and restored within
ninety (90) days from date of destruction, Tenant shall have the right to
terminate this lease upon written notice given within thirty (30) days following
such date of destruction, providing that, Tenant shall have no right of
termination if such damage or destruction has been caused or actively
contributed to by Tenant, its agents, servants, employees, invitees or
licensees. In the event of condemnation, by any governmental authority, of the
leased premises or such part thereof as shall substantially impair the ability
of Tenant to conduct its business, this lease and the obligations of the parties
hereto shall terminate as of the date of occupancy by such governmental
authority. All proceeds and awards of condemnation, whether received or judgment
of any court, shall be exclusively paid to and owned by Landlord, who shall have
the sole right to negotiate and conclude a settlement of the condemnation award
or to litigate such award, in its sole discretion, provided, however, that
Tenant shall be entitled to make claim in its own name to the condemning
authority for the value of loss of business (to the extent that it does not
reduce Landlord's award) and for the costs of relocating its business and of any
moveable furniture, items of personal property, and other items belonging to
Tenant that can be removed from the premises without in anyway altering or
damaging the lease premises.
15. INJURIES AND PROPERTY DAMAGE. Tenant agrees to indemnify, hold
harmless and defend Landlord from any and all claims of any kind or nature
arising from Tenant's use of the demised premises during the term hereof,
except for such claims that may arise by virtue of the acts of Landlord, its
agents or contractors, and Tenant hereby waives all claims against Landlord for
damages to goods, wares or merchandise or for injury to persons in and upon the
premises from any cause whatsoever, except such as might result from the
negligence of Landlord to perform its obligations hereunder within a reasonable
time after notice in writing by Tenant requiring such performance by Landlord.
16. INSURANCE.
(a) Landlord shall procure and keep in force fire and
extended coverage insurance insuring Landlord and Tenant against loss of, or
damage to, the building or other improvements on the demised premises, such
insurance shall be equivalent to the replacement value of the building on the
date of this lease as is agreed. The agreed value of the building for these
purposes and as of the date hereof, is $775,000, exclusive of the land. Said
policy shall include an endorsement or term requiring the amount of such
insurance to be increased on a regular basis to maintain the insurance in an
amount equal to the value of the building.
(b) Tenant shall procure and keep in force insurance against
loss of or damage to Tenants improvements or betterments, trade fixtures,
furnishings, equipment, machinery, inventory and contents, which is caused by
fire and other casualties. Such insurance shall be underwritten by a
responsible insurance company or companies qualified to do business in the
State of Utah and such insurance shall be in an amount equal to the full
replacement value of such building and other improvements. Such insurance shall
cover: (1) loss or damage by fire; (2) loss or damage arising from the normal
extended coverage perils which presently are windstorm, hail, explosion, riot,
riot attending a strike, civil commotion, aircraft, vehicles and smoke; (3)
loss or damage arising from vandalism and malicious mischief; and (4) if the
premises contain a fire
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sprinkler system, damage resulting from sprinkler leakage or malfunction.
Landlord (and, at Landlord's option, the lender interested under any mortgage
or similar instrument then affecting the demised premises) shall be named as an
insured on each such policy. The proceeds of insurance in case of loss or
damage to the demised premises shall be paid to Landlord to be applied on
account of the obligations of Landlord to repair and/or rebuild the Premises
pursuant to Section 14 hereunder. Tenant shall pay one-twelfth of the cost of
insurance purchased by Landlord each month with its rental payment.
(c) Tenant agrees to secure and keep in force throughout the
lease term, at Tenant's own cost and expense, comprehensive general liability
insurance covering Tenant against death, bodily or personal injury or property
damage in the combined single limit amount of at least Five Hundred Thousand
Dollars ($500,000.00). Such insurance coverage shall include a contractual
liability endorsement covering Tenant's obligations of indemnity for death,
bodily injury to persons and damage to property set forth in Section 15 hereof
and a personal injury endorsement covering such wrongful acts as false arrest,
false imprisonment, malicious prosecution and libel and slander. Tenant shall
require any contractor of Tenant performing work within the demised premises to
maintain workmen's compensation or similar insurance required by law and
comprehensive general liability insurance including contractor's liability
covering with broad form property damage endorsement.
(d) All insurance for Tenant is responsible under this lease
shall be effected under enforceable policies issued by insurers either
(i) approved by Landlord, or (ii) having a key guide general policy holders'
rating of "B+" or above and a financial category rating of "Class XI" or above
in the most recent edition of "Best's Insurance Reports" and a copy of the
policy or a certificate of insurance shall be delivered to Landlord on or
before the commencement date of this lease. Each policy shall provide by its
terms that it is noncancellable except upon twenty (20) days prior written
notice to Landlord. At least twenty (20) days prior to the expiration date of
any policy, the original renewal policy, a binder for such insurance or an
effective certificate of insurance, shall be delivered by Tenant to Landlord
evidencing compliance with the provisions of this Section 16. All policies
shall name Landlord, Landlord's lender(s), and Tenant as insureds. All policies
shall be written as primary policies, not contributing with and not in excess
of coverage which Landlord may carry. All such policies shall contain a
provision that Landlord, although named as insured, shall nevertheless be
entitled to recover under such policies for any loss occasioned to it, its
servants, agents, and employees by reason of the negligence of Tenant.
(e) Landlord hereby waives, and Tenant hereby waives, any
rights it may have against the other party on account of any loss or damage
(i) to the demised premises and its contents and (ii) arising from any risk
generally covered by fire and extended coverage insurance. Tenant and Landlord
shall obtain a clause or endorsement in the policies of such insurance which
Landlord and Tenant obtains in connection with the demised premises to the
effect that the insurer waives, or shall otherwise be denied, the right of
subrogation against the other party for loss covered by such insurance. It is
understood that such subrogation against the other party for loss covered by
such insurance. It is understood that such subrogation waivers may be operative
only as long as such waivers are available in the State of Utah and do not
invalidate any such policies. If such subrogation waivers are allegedly not
operative in the State of Utah notice of such fact shall be promptly given by
Tenant to Landlord.
(f) Any mortgage lender interested in any part of the demised
premises may, at Landlord's option, be afforded coverage under any policy
required to be secured by Landlord or Tenant hereunder, by use of a named
mortgagee's endorsement to the policy concerned.
<PAGE> 94
17. SURRENDER OF PREMISES. Tenant agrees to surrender up the leased
premises at the expiration, or sooner termination, of this lease, or any
extension thereof, in the same condition, or as altered pursuant to the
provisions of this lease, ordinary wear, tear and damage by the elements
excepted.
18. QUIET ENJOYMENT. If and so long as Tenant pays the rent reserved
by this lease and performs and observes all the covenants and provisions
hereof, Tenant shall quietly enjoy the demised premises, subject however, to
the terms of this lease, and Landlord will warrant and defend Tenant in the
enjoyment and peaceful possession of the demised premises throughout the term
of this lease.
19. WAIVER OF COVENANTS OR CONDITIONS. It is agreed that the waiving
of any of the covenants or conditions of this lease agreement by either party
shall be limited to the particular instance and shall not be deemed to waive
any other breaches of such covenant, condition, or any provision herein
contained.
20. DEFAULT (OTHER THAN IN PAYMENT OF RENT).
(a) If Tenant shall fail or otherwise default in the
fulfillment of any of the covenants and conditions hereof except default in
payment of rent, Landlord may, at its option, after thirty (30) days' prior
written notice to Tenant, make performance for Tenant and for that purpose
advance such amounts as may be necessary. Any amounts so advanced or any
expense incurred or sum of money paid by Landlord by reason of the failure of
Tenant to comply with any covenant, agreement, obligation or provisions of this
lease or in defending any action to which Landlord may be subject by reason of
any such failure or any reason of this lease or in defending any action to
which Landlord may be subject by reason of any such failure or any reason of
this lease, shall be deemed to be additional rent for the leased premises and
shall be due and payable to Landlord on demand. The receipt by Landlord of any
installment of fixed rent or of any additional rent hereunder shall not be a
waiver of any other rent then due.
(b) If Tenant shall default in fulfillment of any of the
covenants or conditions of this lease (other than the covenants for the
payment of rent or other amounts) and any such defaults shall continue for a
period of thirty (30) days after notice, then Landlord may, at its option,
terminate this lease by giving Tenant notice of such termination and,
thereupon, this lease shall expire as fully and completely as if that day were
the date definitely fixed for the expiration of the term of this lease and
Tenant shall then quit and surrender the leased premises. If such default
cannot be remedied within the period of thirty (30) days by use of reasonable
diligence, then such additional time shall be granted as may be necessary,
provided Tenant takes immediate action on receipt of the notice and proceeds
diligently to remedy the default.
21. DEFAULT IN RENT, INSOLVENCY OF TENANT. If Tenant shall: (i)
default in the payment of the rent reserved hereunder, or any part thereof, or
in making any other payment therein provided for, and any such default shall
continue for a period of fifteen (15) days after the date when payable; (ii)
abandon or vacate the leased premises or any part thereof; (iii) be
dispossessed therefrom by or under any authority other than Landlord; (iv) file
a voluntary petition in bankruptcy; (v) be subjected to any petition to
institute any involuntary proceeding under any insolvency or bankruptcy act or
a composition with creditors or if a receiver or trustee shall be appointed for
Tenant through involuntary bankruptcy proceedings, including an attempted
assumption of this lease by said trustee under Section 365 of Title 11, United
States Code, which
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<PAGE> 95
condition is not abated or discharged by Tenant within sixty (60) days; or,
(vi) admit in writing its inability to pay its obligations generally as they
become due; or (vii) if the leasehold estate created hereby shall be taken on
execution or by any process of law and not abated, discharged or redeemed by
Tenant within sixty (60) days; or (viii) by word or action, indicate a clear
intent not to continue with performance of this lease; then Landlord may, as
its option, take any or all of the following actions, without further notice or
demand of any kind to Tenant, or to any guarantor of this lease, or to any
other person:
(a) Landlord may immediately reenter and remove all persons
and property from the leased premises, storing such property in a public
place, warehouse, or elsewhere for the account of, and at the risk of
Tenant, all without service of notice or resort to legal process (unless
required by law) and without being deemed guilty of, or liable in,
trespass, forcible entry or in damages resulting from such reentry and
removal. No such reentry or taking possession of the leased premises by
Landlord shall be construed as an election on its part to terminate this
lease unless a written notice of such intention is given by Landlord to
Tenant. All property of Tenant which is stored by Landlord pursuant
hereto may be redeemed by Tenant within thirty (30) days after Landlord
takes possession thereof upon payment to Landlord in full of all
obligations then due from Tenant to Landlord hereunder and of all costs
incurred by Landlord in moving such property and providing such storage.
If Tenant fails to redeem such property within said thirty (30) day
period, Landlord may sell such property in any reasonable manner and
shall apply the proceeds of such sale actually collected first against
the costs of moving, storage and sale and then against any other
obligation due from Tenant under this lease with any remaining surplus
being remitted to Tenant.
(b) Landlord may relet the leased premises or any portion
thereof at any time or from time to time and for such term or terms and
upon such conditions and at such rentals as are reasonably prudent under
the circumstances. Whether or not the leased premises, or any portion
thereof, are relet by Landlord, Tenant shall pay to Landlord all amounts
required to be paid by Tenant hereunder up to the date that Landlord
removes Tenant from the leased premises, and thereafter Tenant shall pay
to Landlord, until the end of the term, the amount of rent and other
amounts required to be paid by Tenant pursuant to this lease. Such
payments by Tenant shall be due at such times as are provided elsewhere
in this lease, and Landlord need not wait until the termination of this
lease, through expiration of the term or otherwise, to recover such
payments by legal action or in any other manner. If Landlord relets the
leased premises, or any portion thereof, such reletting shall not
relieve Tenant of any obligation hereunder, except that Landlord shall
apply the rent or other proceeds actually collected by it as a result of
such reletting (i) against the costs of removing Tenant and its
property, (ii) against the costs of reletting including the cost of
clean-up, repair or modification of the leased premises and the fee of
any realtor, (iii) against any amount due from Tenant hereunder to the
extent that such rent or other proceeds compensate Landlord for the
nonperformance of any obligation of Tenant hereunder and (iv) any
residue shall be held by Landlord and applied in payment of future rent
as such may become due and payable hereunder. Landlord may execute any
lease made pursuant hereto in its own name, and the tenant thereunder
shall be under no obligation to control or monitor the application by
Landlord of any rent or other proceeds paid to Landlord thereunder nor
shall Tenant have any right to collect any portion of such rent or other
proceeds. Landlord shall not by any reentry or other act be deemed to
have accepted any surrender by Tenant of the leased premises, or any
portion
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thereof or Tenant's interest therein, or be deemed to have otherwise
terminated this lease, or to have relieved tenant of any obligation
hereunder, unless Landlord shall have given tenant express written
notice of Landlord's election to do so. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter
elect to terminate this lease for any previous breach by Tenant.
(c) Landlord may collect by suit or otherwise, without
reletting the leased premises, each installment of rent or other sum as
it becomes due hereunder, or enforce, by suit or otherwise, any other
covenant or obligation which is required to be performed by Tenant or
cure any default on behalf of Tenant and thereafter bill Tenant for the
reasonable costs so incurred.
(d) Landlord may terminate this lease by written notice to
Tenant. In the event of such termination, Tenant agrees to immediately
surrender possession of the leased premises. Such termination shall not
relieve Tenant of any obligation hereunder which has accrued prior to
the date of such termination and Landlord may recover from Tenant all
damages it has incurred by reason of Tenant's breach, including the cost
of recovering the leased premises, reasonable attorneys' fees, and the
worth (or present value) at the time of such termination of the excess,
if any, of the amount of rent and charges equivalent to rent reserved
under this lease for the remainder of the stated term over the then
rental value of the leased premises for the reminder of the stated term,
all of which amounts shall be immediately due and payable from Tenant to
Landlord. The "worth or present value" shall be determined by using an
interest rate of ten percent (10%) per annum or the legal rate permitted
by law, whichever is lower. In determining the amount of rent reserved
under this lease subsequent to such termination, the rent which would
have been paid for each year of the unexpired term shall be deemed to
equal the average yearly minimum, percentage and additional rents paid
by Tenant hereunder from the commencement date to the time of default.
22. FAILURE TO PERFORM COVENANT. Any failure on the part of either
party to this lease to perform any obligation hereunder, and any delay in doing
any act required hereby shall be excused if such failure or delay is caused by
any strike, lockout, governmental restriction or any other similar cause beyond
the control of the party so failing to perform, to the extent and for the
period that such cause continues, save and except that provisions of this
paragraph shall not excuse a nonpayment of rent or other sums on due date.
23. TIME. Time is of the essence of this lease and every term,
covenant and condition herein contained.
24. LIENS. Tenant agrees not to permit any lien for moneys owing by
Tenant to remain against the leased premises for a period of more than thirty
(30) days. Should any such lien be filed and not released or discharged within
that time, unless Tenant shall contest the same and provide sufficient surety
for the payment thereof, Landlord may, at Landlord's option (but without any
obligation to do so), pay or discharge such lien and may likewise pay and
discharge any taxes, assessments or other charges against the leased premises
which Tenant is obligated hereunder to pay and which may or might become a lien
on said premises. Tenant agrees to repay any such sums so paid by Landlord upon
demand therefor, together with interest at the rate of eighteen percent (18%)
per annum from the date any such payment is made.
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25. NOTICES. Any notice required or permitted to be given hereunder
shall be deemed sufficient, if given by a communication in writing, by United
States mail, postage prepaid, and addressed as follows:
If to Landlord, at the following address:
Hayter Properties, Inc.
c/o David W. Slaughter, Esq.
Snow, Christensen & Martineau
10 Exchange Place, Eleventh Floor
P.O. Box 45000
Salt Lake City, Utah 84145-5000
If to Tenant, at the following address:
IOMED, Inc.
Attn: Stephen H. Ober, President
3385 West 1820 South
Salt Lake City, Utah 84104
With a copy thereof to
Robert C. Delahunty
Parsons Behle & Latimer
201 South Main Street, Suite 1800
P.O. Box 11898
Salt Lake City, Utah 84147-0892
26. RIGHTS OF SUCCESSORS AND ASSIGNS. The covenants and agreements
contained in the within lease shall apply to, inure to the benefit of, and be
binding upon the parties hereto and upon their respective successor in interest
and legal representatives, except as expressly otherwise provided hereinbefore.
28. SECURITY.
(a) Concurrently with execution hereof, Tenant will provide
to Landlord, an Irrevocable Letter of Credit in the amount of Twelve Thousand
Dollars ($12,000.00), issued in favor of Landlord, in form and by a financial
institution acceptable to Landlord, as security for the full and faithful
performance by Tenant of each and every term, provision, covenant and condition
of this lease. Said Irrevocable Letter of Credit shall be maintained or renewed
over the entire period of this lease, and over any option period. If tenant
defaults in respect of any of the terms, provisions, covenants and conditions
of this lease, including but not limited to payment of rent, and renewal of the
Letter of Credit, Landlord may, but shall not be required to, issue its draft
against said Letter of Credit, and may use, apply or retain the whole or any
part of said security for the payment of any rent and additional rent in
default or for any other sum which Landlord may expend or be required to expend
by reason of Tenant's default, including any damages or deficiency in the
reletting of the premises, whether such damages or deficiency accrue before or
after summary proceedings or other re-entry by Landlord. If Tenant shall fully
and faithfully comply with all the terms, provisions, covenants and conditions
of this lease, and after the time
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fixed as the expiration of the demand term, including any renewal options that
are exercised by tenant and after the removal of Tenant and surrender of
possession of the demised premises to Landlord, the Irrevocable Letter of
Credit, or any balance thereof, shall be surrendered. Whenever and as often as
the amount of the security held by Landlord shall be diminished by Landlord's
application thereof, Tenant shall, within 10 days after Landlord's request
therefor deposit additional security in a form permissible hereunder, with
Landlord sufficient to restore the security to its original amount of
$12,000.00. In the absence of evidence satisfactory to Landlord of an assignment
of the right to receive the security, or the remaining balance thereof, Landlord
may return the security to the original Tenant, regardless of one or more
assignments of the lease itself. In case of a sale or transfer of the fee of the
demised premises, or any cessation of Landlord's interest therein, whether in
whole or in part, Landlord may assign its rights under the Irrevocable Letter of
Credit, or may require that said Irrevocable Letter of Credit be reissued to the
benefit of the succeeding owner of the demised premises and from and after such
assignment or transfer, Landlord shall be relieved of all liability with respect
thereto. The provisions of the preceding sentence shall apply to every
subsequent sale or transfer of the fee of the demised premises, and any
successor of Landlord may, upon a sale, transfer, or other cessation of the
interest of such successor in the demised premises, whether in whole or in part,
assign over any unapplied part of said security to the successor owner of the
demised premises and shall thereupon be relieved of all liability with respect
thereto.
(b) Tenant may at any time substitute, in whole or in part,
for such Irrevocable Letter of Credit, cash, bonds of the United States
Government, or other securities satisfactory to Landlord, provided the amount of
such cash or the market value of such bonds or securities, shall at all times
aggregate at least $12,000.00. Such cash, bonds or securities shall be held by
Landlord subject to all the rights and obligations hereinabove set forth with
respect to the Irrevocable Letter of Credit. Whenever and as often as the
aggregate market value of any such bonds, securities and cash falls below said
sum, either by drop in market value or by Landlord's application thereof, Tenant
shall deliver additional cash, bonds or securities of the character hereinabove
mentioned in order that Landlord shall at all times have, for the purposes in
this Article set forth, cash, bonds and securities of the aggregate market value
of at least $12,000.00. During such time as no default in the payment of rent
and/or other money payments shall exist under this lease, any income from the
Certificate of Deposit and/or such bonds and securities shall be paid to Tenant
promptly after the receipt thereof but whenever any such default shall exist the
entire income from such bonds or securities shall be added to the funds so held
by Landlord. At any time or times when, pursuant to the provisions of this
Article, Landlord shall be entitled to apply any of the aforesaid cash, Landlord
is hereby irrevocably authorized, without further notice, to sell the whole or
any part of said bonds or other securities for such purposes at prices deemed
proper by Landlord, which sale may be public or private, and Tenant hereby
consents that Landlord may become the purchaser at any such sale. Landlord shall
be authorized to deduct from the proceeds of any such sale the reasonable
expenses thereof, including attorney's fees. Should Tenant's limitation
hereunder exceed the amount of the security, Tenant shall remain responsible for
any additional amounts.
(c) Absent a default, the security deposit shall be returned
or released to Tenant at the expiration of the lease term or of any extension
thereto granted or exercised hereunder and upon full and complete satisfaction
by Tenant of all covenants and obligations hereunder, except that, at Landlord's
own sole option and upon written notice to Tenant, Landlord may apply any cash
held as security deposit against the final month's lease payment due hereunder,
plus applicable tax and insurance payments ("Remaining Rent"). If the cash
security
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is not sufficient to pay the Remaining Rent in full, Tenant shall promptly pay
any additional amounts required.
28. SURRENDER OF PREMISES. At the expiration of this lease, Tenant
shall surrender the leased premises in the same condition as existed on the
commencement date of this lease, approved alterations and reasonable wear and
tear excepted. Before surrendering the leased premises, Tenant shall remove all
of its personal property and trade fixtures and such alterations or additions
to the leased premises made by Tenant as may be specified for removal by
Landlord, and shall repair any damage caused by such property or the removal
thereof and shall leave the leased premises in a clean and orderly condition.
If Tenant fails to remove its personal property and fixtures on or prior to the
expiration date of this lease, Landlord may either (i) deem such to be
abandoned in which case it shall become the property of Landlord or (ii) remove
and dispose of such at Tenant's expense. On or prior to the expiration date of
this lease, Tenant shall surrender to Landlord all keys to the leased premises.
29. HOLDING OVER. Any holding over after the expiration of the term
hereof shall be construed to be a tenancy from month to month at the rents in
effect on such expiration date (prorated on a monthly basis) and on the other
terms and conditions herein set forth except for those which are inconsistent
with a month to month tenancy. Landlord reserves the right to adjust base rent
amounts payable monthly over the period of any such month-to-month tenancy, on
advance notice of not less than thirty (30) days.
30. ATTORNEYS' FEES. If either party to this lease is required to
initiate or defend litigation in any way connected with this lease, the
prevailing party in such litigation in addition to any other relief which may be
granted, whether legal or equitable, shall be entitled to reasonable attorney
fees. If either party to this lease is required to initiate or defend litigation
with a third party because of the violation by the other party of any term,
provision or obligation contained in this lease, then the party so litigating
shall be entitled to reasonable attorneys' fees from the other party to this
lease. Attorneys' fees shall include attorneys' fees on any appeal, and in
addition a party entitled to attorneys' fees shall also be entitled to all
other reasonable costs for investigating such action, taking depositions and
the discovery, travel, and all other necessary costs incurred in such
litigation. All fees due hereunder shall be paid whether or not any such
litigation is prosecuted to judgement.
31. PAST DUE SUMS. If Tenant fails to pay, when the same is due and
payable, any minimum rent, additional rent, or other sum required to be paid by
it hereunder, such unpaid amounts shall bear interest from the due date thereof
to the date of payment at the rate of one and one-half percent (1-1/2%) per
month, for an annual rate of eighteen percent (18%).
32. GOVERNING LAW; VENUE. This lease shall be deemed to have
been executed in Salt Lake City, Utah, and the laws of the State of Utah shall
govern the validity, performance and enforcement of any obligation contained
herein. Should either party institute a legal suit or action for enforcement of
any obligation contained in this lease, it is agreed that the venue of such
suit or action shall be in the County of Salt Lake, State of Utah.
33. ACCORD AND SATISFACTION. No payment by Tenant or receipt by
Landlord of an amount less than is due hereunder shall be deemed to be other
than payment towards or on account of the earliest portion of the amount then
due, nor shall any endorsement or statement on any check or payment (or any
letter accompanying any check or payment) be deemed an "accord
-12-
<PAGE> 100
and satisfaction" (or payment in full), and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
amount or pursue any other remedy provided herein.
34. ALL PRIOR AGREEMENTS SUPERSEDED. This lease modifies and
replaces, as of August 1, 1993, all prior leases and agreements executed
between the parties hereto, which leases are void and unenforceable as of the
first day of the lease term hereunder.
IN WITNESS WHEREOF, the parties hereto caused these presents to be
executed the day and year first above written.
LANDLORD: TENANT:
HAYTER PROPERTIES, INC. IOMED, INC.
By /s/ M. HAYBER By /s/ ROBERT J. LOLLINI
---------------------------- -------------------------------
Its Company Secretary Its Vice President and CFO
---------------------------- -------------------------------
<PAGE> 101
SCHEDULE 2.2(e)
Administrative Services Agreement
<PAGE> 102
Exhibit 2.2 (e)
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (the "Agreement"), dated as of
January 1, 1997, is made by and between Iomed, Inc., a Utah corporation
("Iomed") and Fillauer, Inc., a Delaware corporation (the "Company").
WHEREAS, pursuant to that certain Asset Acquisition Agreement and that certain
License Agreement between the Company and loomed, both of even date herewith,
the Company has purchased and licensed from Iomed certain assets of Iomed's
Motion Control Division and
WHEREAS, in furtherance of the objectives of the parties pursuant to these
transactions, the Company and Iomed desire to enter into this Agreement in
order to provide for the provision by Iomed to the Company certain
administrative services in connection with the conduct of the business of the
Motion Control Division by the Company, all on the terms and subject to the
conditions set forth herein.
NOW THEREFORE, the Company and Iomed agree as follows:
1. Services Provided by loomed. During the term of this Agreement, in
connection with the Company's conduct of the business of the Motion Control
Division, Iomed agrees to provide the Company with the following support
services, in a manner consistent with current practices, policies and its
conduct of the business prior to the date hereof (collectively the
"Administrative Services"):
PURCHASING / RECEIVING AND MATERIALS MANAGEMENT:
-- Placement of orders for raw materials pursuant to properly authorized
purchase orders submitted by the Company.
-- Track and follow-up on orders placed.
-- Receive all incoming raw materials and match to PO and submit
documentation for payment.
-- Provide MRP and other inventory stock status reports on a monthly
basis.
-- Allow access to 4th Shift MRP, manufacturing order tracking, and
inventory tracking functions.
-- Allow access to 4th shift Standard Cost modules, including Bill of
Material functions.
-- Assist in physical inventory.
-- Process shipping transactions.
<PAGE> 103
ADMINISTRATIVE ASSISTANCE:
-- Telephone/reception service (at Iomed West location only) scheduled
access to conference room facilities.
-- Distribution of both internal and external mail.
-- Access to copy, fax and postage machines, scanners, network printers
etc. At Iomed West facility only.
-- Access to human resource consultation, recruiting assistance and
personnel records maintenance.
ACCOUNTING SERVICES:
-- Access to 4th Shift for customer order processing.
-- Customer invoicing pursuant to sales orders submitted by the
Company.
-- Application of cash receipts to customer accounts.
-- Maintenance of the aging and assistance in the collection of
accounts receivable.
-- Process accounts payable for all vendor invoices approved by the
Company.
-- Maintain vendor accounts payable records and aging.
-- Preparation of accounts payable checks for signature by authorized
Company employees.
-- Assistance in the establishment of bank accounts as needed.
-- Assistance in the monthly reconciliation of established bank
accounts.
-- Issue monthly financial reports
-- Provide other financial reports as reasonably requested by the
Company.
-- Maintain fixed asset and depreciation records.
-- Process payroll and make all necessary withholding tax payments.
-- Process and make all necessary sales and use tax payments.
-- Review and match all expense reports.
-- Maintain independent accounting records and files.
2. Standard of Care. IOMED shall provide all Administrative Services in
compliance with applicable law, and in a manner and of a quality consistent
with the analogous services carried out by Iomed in connection with its
operation of the business of Motion Control prior to the date hereof. Iomed
does not undertake any special or fiduciary duties to the Company in connection
with the performance of the Administrative Services, and its conduct shall not
be judged by or subject to any such special standards.
3. Compensation. In consideration for the Administrative Services, the
Company shall pay IOMED each month an amount equal to $4,200 for personnel and
overhead costs. In addition, IOMED shall charge to the Company, any direct out
of pocket costs incurred in connection with the provision of such services
directly to the Company (including, but not limited to printing costs for
invoices, checks, purchase orders, stationary, postage, files etc.)
2
<PAGE> 104
4. Invoices Payment Terms. IOMED shall charge the Company once each month
for Administrative Services rendered hereunder, and each such invoice shall be
payable in full by the Company within thirty (30) days of the invoice date.
Each invoice submitted by IOMED shall be accompanied by reasonably detailed
records, including, where applicable, original invoices or copies thereof,
supporting the out of pocket costs being submitted to the Company for payment.
5. Term. Unless otherwise agreed to in writing, the term of this Agreement
shall commence on the date hereof and shall terminate on June 30, 1997;
provided, however, that upon thirty (30) days written notice to the other
party; a) the Company shall have the right to terminate this Agreement in whole
or in part and b) Iomed shall have the right to terminate this Agreement in
whole or in part upon failure of the Company to make any payment pursuant to
the provisions of paragraph 4 hereof. Notwithstanding anything to the contrary
contained herein, the obligation of the Company to pay for Support Services
rendered under this Agreement prior to a termination shall survive any such
termination.
6. Relationship of the Parties. In providing the Administrative Services,
Iomed shall be deemed, for all purposes, to be an independent contractor.
Neither this Agreement nor the provision of the Administrative Services shall be
deemed or construed to create between Iomed and the Company the relationship of
principal and agent, joint venturers, co-partners, employer or employee, master
or servant, or any other similar relationship.
7. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Utah, without reference to
its conflict of law rules.
8. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given when
delivered by hand, three (3) business days after mailing by certified or
registered mail, return receipt requested and postage prepaid, and one (1)
business day after transmittal by overnight courier.
9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
10. Waiver. No waiver of any provision of this Agreement or any right or
obligation of any party hereunder shall be effective unless set forth in a
writing, specifying such waiver, signed by the party against which such waiver
is being enforced. Any such waiver shall be effective only in the specific
instance and for the specific purpose stated in such writing.
3
<PAGE> 105
11. Entire Agreement: Amendments. This Agreement sets forth the entire
understanding between the parties with respect to the subject matter hereof and
supersedes any prior oral or written communications, representations,
understandings or agreements existing between the parties with respect to such
subject matter. This Agreement may not be amended, in whole or in part, except
by a writing, specifying such amendment, signed by both parties.
12. Assignment. Neither the rights nor obligations of any party under this
Agreement may be transferred or assigned, directly or indirectly, without the
prior written consent of the other party, which consent will not be unreasonably
withheld; provided, however, that each party may freely assign its rights and
obligations hereunder to any Affiliate. As used in this Agreement, "Affiliate"
means, with respect to any person, a person controlling, controlled by or under
common control with such person, and "control" means ownership of a majority of
the outstanding voting securities of such person.
13. Attorney's Fees. If any legal action is brought for the enforcement of
this Agreement in connection with this Agreement, the prevailing party shall be
entitled to recover reasonable attorney's fees and other costs incurred in such
action or proceeding, in addition to any other relief to which it amy be
entitled.
14. Binding Agreement. The terms of this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be executed
on the date first written above.
IOMED, INC., a Utah corporation
By:
--------------------------------
Its:
-------------------------------
FILLAUER, INC., a Delaware corporation
By:
--------------------------------
Its:-------------------------------
<PAGE> 106
SCHEDULE 3.1(d)
LITIGATION
<PAGE> 107
SCHEDULE 3.1(d)
MOTION CONTROL
Division of Iomed, Inc.
LITIGATION PROCEEDINGS
- -- None.
<PAGE> 108
SCHEDULE 3.1(e)
Motion Control Employees
<PAGE> 109
SCHEDULE 3.1(e)
MOTION CONTROL EMPLOYEES
<TABLE>
<CAPTION>
LAST NAME FIRST NAME POSITION BASE PAY (1)
- --------- ---------- -------- -----------
<S> <C> <C> <C>
AU CHAU TECHNICIAN 1, ELECTRONIC ****
BLANDING TERRY ASSEMBLER, LEAD ELECTRO-MECH ****
COOPER LYNNETTE ASSEMBLER 2, ELECTRO-MECH ****
DENNIS RHONDA CO ORDINATOR, REPAIRS ****
HATHAWAY SUSANNE ASSEMBLER 2, ELECTRO-MECH ****
HAYS KEVIN TECHNICIAN 3, ELECTRONIC ****
KUNZ STEVEN MACHINIST, PRINCIPAL ****
LAITINEN LYNNE ASSEMBLER 2, ELECTRO-MECH ****
LINDER JAMES MACHINIST, ASSOCIATE ****
RIVERA CAESAR TECHNICIAN 3, ELECTRONIC ****
RUTLAND MONIQUE AST, ADMIN-MOTION CONTROL ****
SUBHANI TARIQ TECHNICIAN 2, ELECTRONIC ****
WHITE HAROLD TECHNICIAN 2, ELECTRONIC ****
</TABLE>
<TABLE>
<CAPTION>
LAST NAME FIRST NAME POSITION BASE PAY (2)
- --------- ---------- -------- -----------
<S> <C> <C> <C>
DYCK ARTHUR DIRECTOR, PRODUCTION/TECHNICAL ****
IVERSEN EDWIN ENGINEER, DEVELOPMENT ****
SEARS HARDOLD VP & GM, MOTION CONTROL ****
</TABLE>
(1) Plus bonus potential for hourly employees in an amount consistent with
that previously attained under employment with Iomed.
(2) Plus bonus potential and other benefits as set forth in the individual
offer letters dated 10/15/96 presented to the respective employees.
<PAGE> 1
EXHIBIT 10.10
LICENSE AGREEMENT
THIS AGREEMENT is made upon the 27th day of December, 1996 and shall be
effective as of January 1, 1997, by and between IOMED, INC., a Utah corporation
("Iomed"), and FILLAUER, INC., a Delaware corporation (the "Licensee"). Iomed
and the Licensee are referred to herein individually as a "Party," and
collectively as the "Parties".
RECITALS:
A. On the effective date of that certain Asset Acquisition Agreement
between the Parties, of even date herewith (the "Purchase Agreement"), the
Licensee has purchased from Iomed certain assets of Iomed's Motion Control
Division ("Motion Control").
B. Iomed is the exclusive licensee or the owner of certain patented and
unpatented technology, trade secrets, trademarks and trade names which are
utilized by Motion Control in connection with its business ***************
************************************* (the "Business").
C. The Purchase Agreement contemplates that Iomed will grant to the
Licensee an exclusive license to such technology, trademarks and trade names,
in order to permit the Licensee to continue to operate the Business.
D. The Parties desire to enter into this Agreement in order to fulfill the
requirements of the Purchase Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing Recitals and the
covenants and agreements set forth herein, together with other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
160812.1
<PAGE> 2
1. LICENSES.
(a) On the effective date of this Agreement, Iomed herewith grants to the
Licensee an *********************, royalty bearing sublicense in and to the
rights of Iomed to utilize the United States Letters Patent identified on
Exhibit "A" hereto (which is incorporated herein by reference), for the use,
manufacture and sale of those prosthetic devices described on Exhibit "B"
hereto (which is incorporated herein by reference), as granted to Iomed by that
certain License Agreement, dated October 1, 1992 (the "University License"),
between Iomed and the University of Utah Research Foundation. The United
States Letters Patent described on Exhibit "A" hereto are referred to herein as
the "University Patents," the products described on Exhibit "B" hereto,
together with any improvements or additions thereto developed by the Licensee
or its "Sublicensees" (as hereinafter defined) after the effective date of this
Agreement, are referred to herein as the "University Products," and the
sublicense granted by this paragraph 1(a) is referred to herein as the
"Sublicense." The Sublicense shall be exclusive even as to Iomed; provided,
however, that the Licensee acknowledges that the University License reserves to
the University of Utah Research Foundation the right to utilize the University
Patents for educational and research purposes at the University of Utah. In no
event shall any use of the University Patents by the University of Utah
Research Foundation be deemed or construed to constitute a breach of this
Agreement by Iomed.
(b) On the effective date of this Agreement, Iomed grants to the Licensee
an exclusive, world-wide, fee-bearing license (the "License") in and to all
patented and unpatented technology, trademarks, tradenames, know-how and trade
secrets owned or licensed by Iomed and which have been employed by Motion
Control in its conduct of the
2
160812.1
<PAGE> 3
Business, for the purpose of enabling the Licensee to develop, manufacture,
market and sell those products described on Exhibit "C" hereto (which is
incorporated herein by reference), together with any improvements or additions
thereto developed by the Licensee or its Sublicensees after the date of this
Agreement (collectively the "Iomed Products"). Such Iomed technology (the
"Iomed Technology") is more particularly described on Exhibit "D" hereto, which
is incorporated herein by reference. The License shall be exclusive even as to
Iomed.
(c) Pursuant to the Sublicense and the License, the Licensee shall have
the right to grant further sublicenses in and to the University Patents and the
Iomed Technology to persons or entities owned by, or under common control with,
the Licensee (collectively "Sublicensees"). Otherwise, the Licensee may not
sublicense, sell, assign or transfer the Sublicense or the License without the
prior written consent of Iomed. No Sublicensee shall have the right to further
sublicense its rights under either the University Patents or the Iomed
Technology.
2. ROYALTY AND LICENSE FEE.
(a) In consideration of the grant of the Sublicense, the Licensee shall
pay to Iomed an earned royalty of ******************************* (the
"Royalty") ************************** (as hereinafter defined) received by the
Licensee or its Sublicensees from all sales of the University Products which
are made between the effective date of this Agreement and ******************
(the "Royalty Period"). Following the Royalty Period, no royalties, fees or
other payments shall be due Iomed as the result of or in connection with the
sale by the Licensee or any of its Sublicensees, of the University Products or
any
3
160812.1
<PAGE> 4
other products which incorporate or utilize any of the technology which is the
subject of the University Patents or which is otherwise covered by the
Sublicense.
(b) As consideration for the License, the Licensee shall pay to Iomed, **
*************************************************** (the "License Fee") *****
************************************************************* received by the
Licensor, or its Sublicensees, from all sales of Iomed Products which are made
between the effective date of this Agreement and *************** (the "Fee
Period"). Following the Fee Period, no license fee or other payment (other
than the Royalty specified in paragraph 2(a) hereof to the extent applicable)
shall be due or payable to Iomed by the Licensee or any of its Sublicensees as
a result of or in connection with the manufacture or sale of the Iomed Products
or any other product which incorporates any of the Iomed Technology.
(c) As used in this Agreement, the term "Net Sales Proceeds" shall mean
***********************************************************************
****************************************************************************
***********************************************************************
****************************************************************************
************************************************************************
*********************************************************************
********************************************************
(d) In the event that a University Product or an Iomed Product is sold by
the Licensee or by one of its Sublicensees to a person, firm or entity which is
owned or controlled by or is under common control with the Licensee or such
Sublicensee, then the Royalty or the License Fee, as appropriate, which shall
be due and payable to Iomed as the result of such sale shall be calculated on
4
160812.1
<PAGE> 5
***************************************************************************
****************************, or (ii) **************************************
*************************************************************************
***************************************************************.
3. PAYMENT OF ROYALTY AND LICENSE FEE.
(a) The Royalty and the License Fee shall be paid to Iomed by the Licensee
*********. Payment of the Royalty and License Fee shall be made within *******
of the final day of each **************** during the Royalty Period or the
License Fee Period, as appropriate. Each such payment shall be accompanied by
a report, certified by the Chief Financial Officer of the Licensee setting
forth the total number of each of the University Products and the Iomed
Products sold by the Licensee or its Sublicensees during the ****************
in question, together with a statement as to the manner in which the Net Sales
Proceeds from such sales was calculated.
(b) All Royalty and License Fee payments shall be made in United States
Dollars. Any currency exchange adjustments required by reason of the sale of
the University Products or the Iomed Products outside the United States shall
be made as of the last business day of the **************** during which the
Royalty or License Fee was earned, and shall be based upon the exchange rate
for the currency in question quoted by The Wall Street Journal on the last
business day of such calendar quarter.
(c) Notwithstanding any provision of this Agreement to the contrary, in
the event that, on any of the first five anniversary dates of the effective
date of this Agreement, Iomed shall not have received, during the immediately
proceeding twelve-month period, License Fees in the amount of at least ****
********, the Licensee shall pay to Iomed,
5
160812.1
<PAGE> 6
within 30 days of such anniversary date, the difference between *************
and the amount of the License Fees actually received by Iomed during such
twelve-month period.
4. RECORDS AND AUDIT RIGHTS.
(a) The Licensee shall keep and maintain, and shall cause and require each
of its Sublicensees to keep and maintain, accurate books and records concerning
the manufacture and sale of the University Products and the Iomed Products,
including purchase orders, shipping invoices, records of returned goods, and
records detailing the costs incurred by the Licensee or its Sublicensees in
making such sales and all payments received by the Licensee and the
Sublicensees as a result of such sales. Such books and records shall be
sufficiently detailed to enable to Licensee to calculate, in accordance with
generally accepted accounting principles, the Net Sales Proceeds received by
the Licensee and the Sublicensees from their sale of the University Products
and the Iomed Products, and to determine the amount of the required Royalty and
License Fee payments. Iomed shall have access to and the right, upon
reasonable notice, to inspect and audit such books and records in order to
verify the correctness of the Royalty and License Fees paid by the Licensee.
Any such audit shall be conducted by an accounting firm selected by Iomed.
(b) If Iomed causes the books and records of the Licensee or of any of the
Sublicensees to be audited, and such audit establishes that the Licensee did
not pay to Iomed the full amount of the Royalty or License Fee actually due for
the period covered by such audit, the Licensee shall immediately pay to Iomed
all additional amounts due, plus interest thereon at the rate of *******
**********************************************************. If such audit
establishes that the Licensee has underpaid the Royalty or License
6
160812.1
<PAGE> 7
Fee by ***************** or more during the period covered by the audit, the
Licensee shall reimburse Iomed, upon demand, for all costs and expenses of such
audit.
5. PRODUCT LIABILITY INDEMNIFICATION. Iomed does not make or give, and
hereby specifically disclaims, any warranty, express or implied, concerning the
University Products or the Iomed Products, including but not limited to the
warranties of merchantability or fitness for a particular purpose. As to all
University Products and Iomed Products that are sold or distributed on or after
the effective date of this Agreement, the Licensee hereby agrees to indemnify
and hold Iomed harmless from and against, and hereby assumes liability for the
payment of, any loss, liability or damage and for all costs and expenses,
(including reasonable costs of investigation and reasonable attorneys,
accountants and expert witness fees) of whatever kind and type that may be
imposed upon, suffered or incurred by or asserted against Iomed as a
consequence of or in connection with any liability from or relating to the use
of the University Products or the Iomed Products by customers of the Licensee
or its Sublicensees, or by the ultimate end-users of such University Products
and Iomed Products.
6. PATENT AND TRADEMARK MATTERS.
(a) The Licensee shall diligently prosecute and maintain all of the
patents, trademarks and tradenames specified on Exhibits "A" and "D" hereto
(collectively, the "Patents and Marks") using counsel of its choice and at its
sole cost and expense. If, for any reason, the Licensee elects to abandon the
prosecution, maintenance or reinstatement of any of the Patents and Marks, it
will promptly notify Iomed of such election and, in any event, shall provide
such notice in sufficient time to allow Iomed to comply with its obligations
under Article 9 of the University License.
7
160812.1
<PAGE> 8
(b) If either Party learns that any claim or suit (an "Action") has been
made or brought for patent, trademark or other infringement as the result of
the manufacture or sale of the University Products or the Iomed Products, such
Party shall promptly notify the other Party of such action. The Licensee shall
have the first right, but not the obligation, to defend and to control the
defense of such Action, at its expense. Iomed will assist the Licensee,
without cost to the Licensee, in the defense of such Action by providing
information and fact witnesses to the extent reasonably available. Iomed shall
have the right to be represented in such Action by its own legal counsel, at
its own expense, provided that such legal counsel will act only in an advisory
capacity. If Licensee elects not to defend such claim, it shall so notify
Iomed, in writing, and Iomed shall, thereafter, have the right and option, but
not the obligation, to defend and control the defense of such Action or the
settlement thereof.
(c) If either Party learns of any infringement of the Patents and Marks by
a third party, or of another improper or illegal use of the technology covered
by the Sublicense or the License, such Party shall promptly notify the other of
the alleged infringement, in writing. The Licensee shall have the first right
to settle with or institute legal action against the alleged infringer. Any
monies or other benefits which are recovered through such settlement or legal
action shall be retained by the Licensee. If the Licensee does not initiate
settlement or legal action within 60 days after its receipt of notice of the
alleged infringement, then Iomed shall have the right to settle with or
institute legal action against the alleged infringer and to retain all monies
or other benefits which are recovered through such action.
8
160812.1
<PAGE> 9
7. REPRESENTATIONS AND WARRANTIES OF IOMED. Iomed represents and warrants
to the Licensee as follows:
(a) Iomed is a corporation duly organized, validly existing and in good
standing under the laws of the State of Utah, and has the full legal right and
corporate power and authority to enter into this Agreement and to perform all
of its obligations under this Agreement.
(b) Iomed has taken all corporate action which is necessary, required or
appropriate to authorize and enable it to enter into and perform this
Agreement.
(c) This Agreement, when executed and delivered by both of the Parties,
will constitute a valid and binding legal obligation of Iomed.
(d) The University License is in full force and effect upon the effective
date of this Agreement and, to the knowledge of Iomed, neither the grant of the
Sublicense nor the utilization of the Sublicense by the Licensee in the manner
contemplated herein will result in any breach or violation of the University
License.
(e) No person or entity has made any claims or threatened that Iomed's use
and application of the University Patents or the Iomed Technology in connection
with the Business is in violation or infringement of any patent, patent
license, trade name, trademark, servicemark, know-how, formula or other
proprietary or trade rights of such third party.
(f) To the best knowledge of Iomed, neither the University Patents nor the
Iomed Technology infringe any patent rights, copyrights, trade secret rights or
other proprietary rights of any third party.
9
160812.1
<PAGE> 10
8. REPRESENTATIONS AND WARRANTIES OF THE LICENSEE. The Licensee
represents and warrants to Iomed as follows:
(a) The Licensee is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the full legal
right and corporate power and authority to enter into this Agreement and to
perform all of its obligations under this Agreement.
(b) The Licensee has taken all corporate action which is necessary,
required or appropriate to authorize or enable it to enter into and perform
this Agreement.
(c) This Agreement, when executed and delivered by both of the Parties,
will constitute a valid and binding legal obligation of the Licensee.
(d) Prior to its execution and delivery of this Agreement, the Licensee
received from Iomed, and has had the opportunity to review, a copy of the
University License.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Iomed, as set forth in paragraph 7 hereof, and the
representations and warranties of the Licensee, as set forth in paragraph 8
hereof, are true, correct and accurate as of the effective date of this
Agreement, and shall survive the execution of this Agreement for a period of
one year.
10. ADDITIONAL COVENANTS OF IOMED.
(a) During the entirety of the Royalty Period, Iomed will carry out all of
its obligations under the University License in a timely fashion and shall
otherwise take such commercially reasonable actions as may be necessary to
maintain the University License in full force and effect.
10
160812.1
<PAGE> 11
(b) Iomed shall hold the Licensee and its Sublicensees harmless from and
against any and all claims of or liabilities to the University of Utah Research
Foundation for amounts due under the University License as a result of or in
connection with the manufacture and sale of the University Products by the
Licensee in accordance with the terms of this Agreement.
11. ADDITIONAL COVENANTS OF THE LICENSEE.
(a) Within five days of the effective date of the grant of any sublicense
under the Sublicense or the License, the Licensee shall provide Iomed with
written notice of such grant. Such written notice shall include a complete
copy of the sublicense in question, and a statement as to the nature of the
relationship between the Licensee and the Sublicensee. Each such sublicense
shall require the Sublicensee to maintain the books and records called for by
paragraph 4 hereof, shall authorize Iomed to inspect and audit such books and
records in the manner set forth in paragraph 4 hereof, and shall obligate the
Sublicensee to maintain the confidentiality of the Iomed Technology.
(b) The Licensee shall not take any action under the Sublicense or the
License, or otherwise take or omit to take any action, which could reasonably
be expected to result in the breach or violation of the University License.
(c) Prior to the end of the Fee Period, the Licensee shall not merge or
consolidate with any other person or sell all or substantially all of its
assets to any person if (i) the resulting, surviving transferee entity fails to
assume all obligations of Licensee under this Agreement by operation of law or
pursuant to an agreement reasonably satisfactory to Iomed and (ii) the
creditworthiness of the resulting, surviving or transferee
11
160812.1
<PAGE> 12
entity (determined by Iomed in a commercially reasonable manner) is materially
weaker than that of the Licensee immediately prior to such transaction.
(d) Until the expiration of the Fee Period, the Licensee shall not declare
or pay any dividend on any of its issued or outstanding equity securities
unless, prior to such declaration or payment, it shall have either (i) paid to
Iomed, since the immediately prior anniversary of the effective date of this
Agreement, License Fees equal to at least *************, or (ii) created and
set aside a reserve fund sufficient to enable the Licensee to pay to Iomed all
amounts required by paragraph 3(c) hereof for the ****** period during which
such dividend is declared or paid.
(e) The Licensee shall use reasonable efforts to manufacture and sell
University Products and Iomed Products, and to otherwise commercially develop
and exploit the technology covered by the Sublicense and the License.
12. TERMINATION.
(a) Licensee may, at its option, terminate this Agreement if any
representation or warranty of Iomed contained in this Agreement shall prove to
be false or inaccurate and a claim therefore is asserted within the survival
period provided by paragraph 9 hereof, or if Iomed shall be in material breach
of any of the other provisions of this Agreement, which breach shall continue
uncured for a period of 30 days after written notice thereof by the Licensee.
(b) Iomed may, at its option, terminate this Agreement for any of the
following reasons:
(i) If any of the representations or warranties of the Licensee contained
in this Agreement shall prove to be inaccurate or false and a claim therefore
is
12
160812.1
<PAGE> 13
asserted within the survival period provided in paragraph 9 hereof, or if the
Licensee shall be in material breach of any of the other provisions of this
Agreement, including but not limited to its obligations to pay the Royalty and
the Licensee Fee in accordance with the provisions of paragraphs 2 and 3
hereof, which breach shall continue uncured for a period of 30 days after
written notice thereof by Iomed.
(ii) If the Licensee shall be adjudicated bankrupt or insolvent by any
court of competent jurisdiction or shall be voluntarily or involuntarily placed
in reorganization under any bankruptcy law or shall make an assignment for the
benefit of creditors or shall consent to the appointment of a receiver,
liquidator or trustee for itself in any court whatsoever, seeking to take
advantage of any bankruptcy or insolvency act, or shall admit in writing its
inability to pay its debts as they mature.
13. EFFECT OF TERMINATION.
(a) Upon the termination of this Agreement, by either Party, pursuant to
the provisions of paragraph 12 hereof, any obligation which accrued prior to
the effective date of such termination shall continue in full force and effect
and shall not be terminated, reduced or otherwise altered as the result of or
in connection with such termination. Additionally, the rights and obligations
of the Parties set forth in paragraphs 5, 10(b) and 14 hereof shall survive the
termination of this Agreement.
(b) Upon the termination of this Agreement, by either Party, pursuant to
paragraph 12 hereof, the right of the Licensee and of its Sublicensees to
manufacture or sell the University Products, the Iomed Products or any other
products which incorporate or are based upon any of the technology covered by
the Sublicense or the License shall completely terminate. Following such
termination the Licensee shall, upon the written request of
13
160812.1
<PAGE> 14
Iomed, assign (and cause each Sublicensee to similarly assign) to Iomed all
improvements to the University Products and to the Iomed Products which are
developed by the Licensee and its Sublicensees after the effective date of this
Agreement.
14. CONFIDENTIALITY.
(a) The Licensee acknowledges that the Iomed Technology (the "Confidential
Information") constitutes the valuable, unique and proprietary asset of Iomed;
provided, however, that the term "Confidential Information", as used herein,
shall not include any information or data which (i) is in or becomes a part of
the public domain by any means other than the Licensee's breach of its
obligations hereunder or (ii) is rightfully known to the Licensee at the time
of disclosure by Iomed, as demonstrated by the contemporaneous written records
of the Licensee, or (iii) is, at any time, disclosed to the Licensee by a third
party who has received and disclosed such information without the breach of any
obligation of confidentiality to Iomed or to any third party. For purposes of
this paragraph 14, information shall not be deemed to be part of the public
domain or within the Licensee's knowledge merely because it may be embraced in
a more general disclosure, or because it may be derived from combinations of
information generally available to the public or otherwise within the
Licensee's knowledge.
(b) The Licensee shall maintain all of the Confidential Information in
confidence and shall not, except as specifically permitted herein, disclose the
same to any third party (including without limitation affiliates of the
Licensee who are not Sublicensees) unless required to do so by court order or
by law, in which case the Licensee shall notify Iomed, in writing, prior to
making such disclosure and shall cooperate with Iomed to preserve and protect
the confidentiality of the Confidential Information to the fullest extent
14
160812.1
<PAGE> 15
possible. The Confidential Information may be disclosed by the Licensee to
those of its employees who need to know the same in order to enable the
Licensee to utilize the Sublicense and the License, and to its permitted
Sublicensees; provided that each such person and entity is advised of the
obligations of confidentiality contained herein. Any breach of the provisions
of this Paragraph 14(b) by such employees or Sublicensees shall be deemed, for
all purposes, to constitute a breach hereof by the Licensee.
15. RELATIONSHIP OF THE PARTIES. This Agreement shall not be deemed or
construed to create between Iomed and the Licensee the relationship of
principal and agent, joint venturers, co-partners, employer or employee, master
or servant, or any other similar relationship. Neither Party shall have the
right or authority to bind or to act for or on behalf of the other Party.
Additionally, neither Party shall be liable to any third party, in any way, for
any engagement, obligation, contract, representation or transaction, or for any
negligent act or omission to act of the other Party, except as otherwise
specifically provided in this Agreement.
16. NOTICES. All notices, requests, consents, approvals and other
communications given pursuant to this Agreement shall be deemed given only if
reduced to writing and delivered personally, by United States mail with postage
prepaid and return receipt requested, by overnight delivery service, or by
telecopier (FAX) transmission, to the appropriate Party as set forth below:
Iomed: Iomed, Inc.
3385 West 1820 South
Salt Lake City, Utah 84104
Attn: President
FAX: (801) 972-9072
15
160812.1
<PAGE> 16
The Licensee: Fillauer, Inc.
2710 Amnicola Highway
Chattanooga, Tennessee 37406-0189
Attn: President
FAX: (423) 624-1402
Either Party may change its address by giving notice of such change in the
manner set forth herein. Any notice given to either Party by mail or by
overnight courier shall be deemed delivered two business days after such notice
is deposited in the United States mail or placed in the possession of a
nationally recognized overnight courier service, as appropriate, and any notice
given by FAX transmission shall be deemed delivered when sent by confirmed
transmission prior to 6 p.m. Eastern time on a business day.
17. REMEDIES. Should default occur in the performance of any obligation
set forth in this Agreement, the non-defaulting Party shall be entitled to
obtain an injunction compelling the specific performance of the obligations of
this Agreement, in addition to any action for damages or for other relief as
may be available to the non-defaulting Party at law or in equity. The
defaulting Party shall, in addition to any damages which may result from such
default, pay to the non-defaulting Party the costs, including reasonable
attorneys' fees, incurred by the non-defaulting Party in causing the cure of
such default or in otherwise enforcing its rights under this Agreement.
18. WAIVER. Any waiver by either Party of a breach of any term or
condition of this Agreement shall not constitute a waiver of any subsequent
breach of the same or any other term or condition of this Agreement.
19. ENTIRE AGREEMENT. With the exception of the Purchase Agreement and
the agreements contemplated thereby, this Agreement constitutes the entire
agreement and understanding between the Parties in regard to the subject matter
hereof and supersedes
16
160812.1
<PAGE> 17
any other understanding between the Parties, whether written or oral, as to
such subject matter. This Agreement may not be modified or amended orally, but
only by an agreement, in writing, executed by both of the Parties.
20. GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of Utah, without giving effect to the
choice of law rules thereof.
21. RECORDATION. The Licensee may record the grant of the License and the
Sublicense, as provided in this Agreement, with the United States Patent
Office, and Iomed shall execute and deliver such documents as may be reasonably
necessary to effect such recordation.
22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have caused this License Agreement to be
executed by their duly authorized representatives as of the date first herein
written.
IOMED:
IOMED, INC.
By:
Its:
THE LICENSEE:
FILLAUER, INC.
By:
Its:
17
160812.1
<PAGE> 18
EXHIBIT "A"
University Patents
<PAGE> 19
EXHIBIT A
MOTION CONTROL
Division of Iomed, Inc.
UNITED STATES LETTERS PATENT
(UNIVERSITY PATENTS)
****
<PAGE> 20
EXHIBIT "B"
UNIVERSITY PRODUCTS
<PAGE> 21
EXHIBIT B
MOTION CONTROL
Division of Iomed, Inc.
UNIVERSITY PRODUCTS
****
<PAGE> 1
EXHIBIT 10.11
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
NO SALE OR DISPOSITION OF THIS WARRANT OR OF ANY SHARES OF STOCK ISSUED
PURSUANT HERETO MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER,
SATISFACTORY IN FORM AND CONTENT TO THE COMPANY, THAT SUCH REGISTRATION
IS NOT REQUIRED, (iii) RECEIPT OF A NO-ACTION LETTER REASONABLY
SATISFACTORY TO THE COMPANY FROM THE SECURITIES AND EXCHANGE COMMISSION
TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUESTED, OR (iv) OTHERWISE
COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THIS WARRANT.
IOMED, INC.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
THIS CERTIFIES THAT, for value received, Alliance of Children's Hospitals,
Inc., ("Alliance") or its assigns is entitled to subscribe for and purchase up
to 215,000 shares (as adjusted pursuant to Paragraph 4 hereof, the "Shares") of
the fully paid and nonassessable common stock, par value $.001 (the "Common
Stock"), of IOMED, INC., a Utah corporation (together with its successors and
assigns, the "Company"), at the price of $1.85 per Share (such price, and such
other price as shall result, from time to time, from the adjustments specified
in Paragraph 4 hereof, is herein referred to as the "Warrant Price"), subject
to the provisions and upon the terms and conditions hereinafter set forth.
1. Term. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time, and from time to time, from and after
December 1, 1996 and until 5 p.m. Mountain Time on December 1, 2003. To the
extent not exercised at 5 p.m. Mountain Time on December 1, 2003, this Warrant
shall completely and automatically terminate and expire, and thereafter it
shall be of no force or effect whatsoever.
2. Method of Exercise; Payment; Issuance of New Warrant.
(a) The purchase right represented by this Warrant may be exercised by the
holder hereof, in whole or in part and from time to time, by the surrender of
this Warrant (with the notice of exercise form attached hereto as Exhibit "A"
duly executed) at the principal office of the Company and by the payment to the
Company of an amount, in cash or other immediately available funds, equal to
the then applicable Warrant Price per Share multiplied by the number of Shares
then being purchased.
|160918.1||
<PAGE> 2
(b) The person or persons in whose name(s) any certificate(s) representing
shares of Common Stock shall be issuable upon exercise of this Warrant shall be
deemed to have become the holder(s) of record of, and shall be treated for all
purposes as the record holder(s) of, the Shares represented thereby (and such
Shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised. Upon any
exercise of the rights represented by this Warrant, certificates for the Shares
purchased shall be delivered to the holder hereof as soon as possible and in
any event within thirty days of receipt of such notice and payment, and, unless
this Warrant has been fully exercised or expired, a new Warrant representing
the portion of the Shares, if any, with respect to which this Warrant shall not
then have been exercised, shall also be issued to the holder hereof as soon as
possible and in any event within such thirty day period.
1. Stock Fully Paid; Reservation of Shares. All Shares that may be issued
upon the exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized, fully paid and nonassessable, and will be free
from all taxes, liens and charges with respect to the issue thereof. During
the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized, and reserved for the
purpose of the issue upon exercise of the purchase rights evidenced by this
Warrant, a sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant.
2. Adjustment of Warrant Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Reclassification, Merger, Etc. In case of (i) any reclassification,
reorganization, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination), (ii) any merger or consolidation of the Company
with or into another corporation (other than a merger or consolidation with
another corporation in which the Company is the acquiring and the surviving
corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), or (iii) any
sale of all or substantially all of the assets of the Company, then the
Company, or such successor or purchasing corporation, as the case may be, shall
duly execute and deliver to the holder of this Warrant a new Warrant or a
supplement hereto (in form and substance reasonably satisfactory to the holder
of this Warrant), so that the holder of this Warrant shall have the right to
receive, at a total purchase price not to exceed that payable upon the exercise
of the unexercised portion of this Warrant, and in lieu of the shares of Common
Stock theretofore issuable upon exercise of this Warrant, the kind and amount
of shares of stock, other securities, money and property receivable upon such
reclassification, reorganization, change, conversion, merger or consolidation
by a holder of the number of shares of Common Stock then purchasable under this
Warrant. Such new Warrant shall provide for adjustments that shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Paragraph 4. The provisions of this subparagraph 4(a) shall similarly
2
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<PAGE> 3
apply to successive reclassifications, reorganizations, changes, mergers,
consolidations and transfers.
(b) Subdivision or Combination of Shares. If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or combine
its Common Stock, (i) in the case of a subdivision, the Warrant Price shall be
proportionately decreased and the number of Shares purchasable hereunder shall
be proportionately increased, and (ii) in the case of a combination, the
Warrant Price shall be proportionately increased and the number of Shares
purchasable hereunder shall be proportionately decreased.
(c) Stock Dividends. If the Company at any time while this Warrant is
outstanding and unexpired shall (i) pay a dividend with respect to Common Stock
payable in Common Stock, or (ii) make any other distribution with respect to
Common Stock (except any distribution specifically provided for in the
foregoing subparagraphs (a) and (b)) of Common Stock, then the Warrant Price
shall be adjusted, from and after the date of determination of shareholders
entitled to receive such dividend or distribution to a price determined by
multiplying the Warrant Price in effect immediately prior to such date of
determination by a fraction (i) the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to such dividend
or distribution, and (ii) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution. Upon each adjustment in the Warrant Price pursuant to this
Paragraph 4(c), the number of Shares of Common Stock purchasable hereunder
shall be adjusted, to the nearest whole share, to the product obtained by
multiplying the number of Shares purchasable immediately prior to such
adjustment in the Warrant Price by a fraction, the numerator of which shall be
the Warrant Price immediately prior to such adjustment and the denominator of
which shall be the Warrant Price immediately thereafter.
(d) No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all the provisions of
this Paragraph 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant
against impairment.
5. Notice of Adjustments. Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to Paragraph 4 hereof,
the Company shall prepare a certificate setting forth, in reasonable detail,
the event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated. Such certificate shall be signed by its
chief financial officer and shall be delivered to the holder of this Warrant.
3
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<PAGE> 4
6. Fractional Shares. No fractional shares of Common Stock will be issued
in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor based on the fair market
value of the Common Stock on the date of exercise as reasonably determined in
good faith by the Company's Board of Directors.
7. Compliance with Securities Act; Disposition of Warrant or Shares of
Common Stock.
(a) Compliance with Securities Act. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the Shares to be issued upon
exercise hereof are being acquired for investment and that such holder will not
offer, sell or otherwise dispose of this Warrant or any Shares to be issued
upon exercise hereof except under circumstances which will not result in a
violation of applicable securities laws. Upon exercise of this Warrant, unless
the Shares being acquired are registered under the Securities Act of 1933, as
amended (the "Act"), or an exemption from the registration requirements of such
Act is available, the holder hereof shall confirm in writing, by executing the
form attached as Schedule 1 to Exhibit "A" hereto, that the Shares so purchased
are being acquired for investment and not with a view toward distribution or
resale. This Warrant and all Shares issued upon exercise of this Warrant
(unless registered under the Act) shall be stamped or imprinted with a legend
in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT RELATED THERETO, (ii) AN
OPINION OF COUNSEL FOR THE HOLDER, REASONABLY IN FORM AND CONTENT TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF AN
APPROPRIATE NO-ACTION LETTER REASONABLY SATISFACTORY TO THE COMPANY FROM
THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED, OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH THIS SECURITY WAS
ISSUED."
(b) Disposition of Warrant or Shares. With respect to any offer, sale or
other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant prior to registration of such Shares, the holder
hereof and each subsequent holder of this Warrant agrees to give written notice
to the Company prior thereto, describing briefly the manner thereof, together
with a written opinion of such holder's counsel, if requested by the Company,
to the effect that such offer, sale or other disposition may be effected
without registration or qualification (under the Act as then in effect or any
federal or state law then in effect) of this Warrant or such Shares and
indicating whether or not under the Act certificates for this Warrant or such
Shares to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to
4
|160918.1||
<PAGE> 5
insure compliance with the Act. Promptly upon receiving such written notice
and reasonably satisfactory opinion, if so requested, the Company, as promptly
as practicable, shall notify such holder that such holder may sell or otherwise
dispose of this Warrant or such Shares, all in accordance with the terms of the
notice delivered to the Company. If a determination has been made pursuant to
this subparagraph (b) that the opinion of counsel for the holder is not
reasonably satisfactory to the Company, the Company shall so notify the holder
promptly after such determination has been made. Notwithstanding the
foregoing, this Warrant or such Shares may be offered, sold or otherwise
disposed of in accordance with Rule 144 as promulgated under the Act ("Rule
144"), provided that the Company shall have been furnished with such
information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 have been satisfied. Each
certificate representing this Warrant or the Shares thus transferred (except a
transfer pursuant to Rule 144) shall bear a legend as to the applicable
restrictions on transferability in order to insure compliance with the Act,
unless in the aforesaid opinion of counsel for the holder, such legend is not
required in order to insure compliance with the Act. The Company may issue
stop transfer instructions to its transfer agent in connection with such
restrictions.
8. Rights as Shareholders. No holder of this Warrant, as such, shall be
entitled to vote or receive dividends or be deemed the holder of Shares or any
other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to receive notice of meetings, or to receive dividends
or subscription rights or otherwise until this Warrant shall have been
exercised and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein.
9. Registration Rights.
(a) Definitions. As used in this paragraph 9:
(i) The term "Registrable Securities" means the Shares issued upon the
exercise of this Warrant, in whole or in part, in the manner described herein,
excluding in all cases, however, any Registrable Securities sold by a person in
a transaction in which his or its rights under this paragraph 9 are not
assigned to the purchaser; provided, however, that such Shares shall only be
treated as Registrable Securities if and so long as they have not been sold to
or through a broker or dealer or underwriter in a public distribution or a
public securities transaction.
(ii) The term "Holder" means Alliance and any other person or entity that
acquires at least 50,000 Registrable Securities in compliance with paragraphs
2, 7 and 9(e) hereof.
5
|160918.1||
<PAGE> 6
(iii) The term "SEC" means the Securities and Exchange Commission or any
successor agency thereto.
(b) Company Registration.
(i) If at any time, or from time to time, prior to the date seven (7)
years after the effective date of this Warrant, the Company shall determine to
register any of its securities, either for its own account or for the account
of a security holder or holders, other than a registration on Form S-1 or S-8
relating solely to employee benefit plans, or a registration on Form S-4
relating solely to an SEC Rule 145 transaction, or a registration on any other
form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of
Registrable Securities, the Company will:
(A) promptly give to each Holder written notice thereof; and
(B) include in such registration, and in any underwriting involved
therein, all the Registrable Securities specified in any written request or
requests by any Holder or Holders received by the Company within twenty (20)
days after the date of the written notice required by paragraph 9(b)(i)(A)
above, on the same terms and conditions as the shares of Common Stock, if any,
otherwise being sold through the underwriter in such registration.
(ii) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to paragraph
9(b)(i)(A) above. In such event the right of any Holder to registration
pursuant to this paragraph 9 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.
(iii) Notwithstanding any other provision of this paragraph 9, if the
underwriter determines that marketing factors require a limitation of the
number of shares of Common Stock to be underwritten, the underwriter may limit
the amount of Registrable Securities to be included in the registration and
underwriting. The Company shall so advise all Holders of Registrable
Securities which would otherwise be registered and underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be included
in the registration and underwriting shall be allocated among all of the
Holders, in proportion, as nearly as practicable, to the amounts of Registrable
Securities held by such Holders at the time of filing the registration
statement. No Registrable Securities excluded from the underwriting by reason
of the underwriter's marketing limitation shall be included in such
registration.
6
|160918.1||
<PAGE> 7
(iv) Notwithstanding any other provision of this paragraph 9, no Holder
shall be entitled to include any Registrable Securities in a registration
pursuant to this paragraph 9(b) if, and to the extent, that such inclusion
would reduce the number of shares of Registrable Securities entitled to
participate in such registration pursuant to Section 7.2, 7.3 or 7.4 of that
certain Preferred Stock Purchase Agreement, dated August 4, 1987, between the
Company and the Investors named therein. The Company shall so advise all
Holders of Registrable Securities which would otherwise be registered pursuant
hereto but for the foregoing sentence, and the number of shares of Registrable
Securities that may be included in the registration shall be allocated among
all of the Holders, in proportion, as nearly as practicable, to the amounts of
Registrable Securities held by such Holders at the time of filing the
registration statement.
(c) Expenses of Registration. All expenses incurred in connection with
any registration, qualification or compliance pursuant to this paragraph 9,
including without limitation, all registration, filing and qualification fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, accounting fees and expenses, and expenses of any special audits
incidental to or required by such registration, shall be borne by the Company;
provided, however, that the Company shall not be required to pay underwriters'
fees, discounts or commissions relating to Registrable Securities, or any fees
or expenses of counsel to any of the selling Holders.
(d) Information and Indemnification. It shall be a condition precedent to
the obligations of the Company hereunder in regard to Registerable Securities,
that each Holder participating in any registration under this paragraph 9
provide to the Company all information concerning such Holder and the
Registerable Securities to be included by such Holder in such registration, as
the Company, its legal counsel or any underwriter involved in such registration
reasonably requests. Additionally, each such Holder shall indemnify and hold
the Company harmless (to the full extent permitted by law) from and against any
losses, claims, damages or expenses which the Company may suffer or incur in
connection with such registration as the result of any omission or inaccuracy
in such requested information.
(e) Transfer of Registration Rights. The rights to cause the Company to
register securities granted by the Company under this paragraph 9 hereof may be
assigned in writing by any Holder of Registrable Securities to a transferee or
assignee of not less than fifty thousand (50,000) shares of the Registrable
Securities (as appropriately adjusted from time to time for stock splits and
the like); provided, that such transfer is effected in accordance with the
terms of this Warrant and applicable securities laws and, provided further,
that the Company is given written notice by such Holder of Registrable
Securities at the time of such transfer, stating the name and address of the
transferee or assignee and identifying the securities with respect to which
such registration rights are being assigned.
(f) "Market Stand-off" Agreement. The Holders hereby agree not to sell or
otherwise transfer or dispose of any Registrable Securities held by them during
the one hundred eighty (180) day period following the effective date of a
registration statement of the Company filed under the Act; provided that:
7
|160918.1||
<PAGE> 8
(i) such agreement shall only apply to the first such registration
statement of the Company including shares of Common Stock (or other securities)
to be sold on its behalf to the public in an underwritten offering;
(ii) such agreement shall not apply to any shares of Registrable
Securities that are included in such public offering; and
(iii) all executive officers and directors of the Company and all other
persons with registration rights (whether or not granted pursuant to this
Warrant) enter into similar agreements.
The Company may impose stop-transfer instructions with respect to the
Registrable Securities subject to the foregoing restriction until the end of
said one hundred eighty (180) day period.
(g) Limitations. The rights set forth in this paragraph 9 shall apply
only to Shares acquired through the exercise of this Warrant, and the Company
shall have no duty or obligation, whatsoever, to register this Warrant itself
under the Act.
10. Notice of Change-in-Control. If the Company receives notice that a
shareholder or group of shareholders, other than Alliance (collectively the
"Selling Shareholders") intend to sell or exchange all or a portion of their
common shares of the Company in a transaction or series of transactions which
will not be registered under the Act, and which will result in a
change-in-control of the Company, (a "Change-In-Control Transaction"), the
Company shall, to the extent it may do so without violating any other agreement
or obligation to which it is a party or by which it is bound (regardless of
when such agreement or obligation was undertaken or became effective), give
notice of such Change-In-Control Transaction to Alliance. Such notice shall
set forth, to the extent known by the Company, the identity of the Selling
Shareholders, the identity of the proposed buyer, and the general terms and
conditions of the proposed Change-In-Control Transaction. The notice
obligations of the Company, as set forth in this paragraph 10, shall apply only
to proposed sales or exchanges which take place prior to the issuance by the
Company of its securities in a registered, underwritten public offering in
which the Company receives at least $5,000,000 in gross proceeds.
Additionally, the Company shall have no obligation, whatsoever, under or
pursuant to this paragraph 10 unless, prior to the date of the notice
contemplated hereby, Alliance shall have exercised this Warrant as to at least
50,000 Shares.
For purposes of this paragraph 10, the term "change-in-control" shall mean a
transaction or series of transactions pursuant to which securities of the
Company representing 50% or more of the combined voting power of all of the
Company's issued and outstanding common shares (or securities convertible by
their terms into common shares) are transferred to a person or persons not
owned or controlled by, or under common control with, one or more of the
Selling Shareholders.
8
|160918.1||
<PAGE> 9
11. Representations and Warranties. The Company represents and warrants
to the holder of this Warrant as follows:
(a) This Warrant has been duly authorized and executed by the Company and
is a valid and binding obligation of the Company enforceable in accordance with
its terms;
(b) The Shares have been duly authorized and reserved for issuance by the
Company and, when issued in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable;
(c) The execution and delivery of this Warrant are not, and the issuance
of the Shares upon exercise of this Warrant in accordance with the terms hereof
will not be, inconsistent with the Company's Articles of Incorporation, as
amended, or by-laws, and do not and will not constitute a default under, any
indenture, mortgage, contract or other instrument of which the Company is a
party or by which it is bound.
12. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by both the Company and the holder of this Warrant.
13. Notices. Any notice, request or other document required or permitted
to be given or delivered to the holder hereof or the Company shall (a) be in
writing, (b) be delivered personally or sent by mail or overnight courier to
the intended recipient to each such holder at its address as shown on the books
of the Company or to the Company at the address indicated therefor on the
signature page of this Warrant, unless the recipient has given notice of
another address, and (c) be effective on receipt if delivered personally, two
(2) business days after dispatch if mailed, and one business day after dispatch
if sent by overnight courier service.
14. Transferability. Subject to the satisfaction of all of the provisions
of paragraph 7 thereof, the holder hereof may transfer this Warrant at any
time, but only in whole and not in part.
15. Lost Warrants. The Company covenants to the holder hereof that upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of this Warrant and, in the case of any such loss,
theft or destruction, upon receipt of a bond or indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company will make and deliver a
new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant.
16. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Warrant are inserted for convenience only and
do not constitute a part of this Warrant.
9
|160918.1||
<PAGE> 10
17. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws
of the State of Utah, without giving effect to the choice of law rules thereof.
IOMED, INC.
BY:__________________________________
Its:_______________________________
Address:
3385 West 1820 South
Salt Lake City, Utah 84104
Dated effective December 1, 1996
10
|160918.1||
<PAGE> 11
EXHIBIT "A"
-----------
NOTICE OF EXERCISE
To: IOMED, INC.
1. The undersigned hereby elects to purchase --- shares of Common Stock
of IOMED, INC. pursuant to the terms of the attached Warrant, and tenders
herewith full payment of the purchase price of such shares, in cash or other
immediately available funds.
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
--------------------------------------
(Name)
--------------------------------------
--------------------------------------
(Address)
3. The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or
for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof, the undersigned has executed an Investment Representation
Statement attached hereto as Schedule 1.
--------------------------------------
(Signature)
- --------------------
(Date)
11
<PAGE> 12
SCHEDULE 1
INVESTMENT REPRESENTATION STATEMENT
Purchaser:
Company: IOMED, INC.
Security: Common Stock
Amount:
Date:
In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to and agrees with
the Company as follows:
(a) The Purchaser is aware of the Company's business affairs and financial
condition, and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. The Purchaser is
purchasing the Securities for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933 ("Securities Act").
(b) The Purchaser understands that the Securities have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the
Purchaser's investment intent as expressed herein. In this connection, the
Purchaser understands that, in the view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
the Purchaser's representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future.
(c) The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, the Purchaser
understands that the Company is under no obligation to register the Securities.
In addition, the Purchaser understands that the certificate evidencing the
Securities will be imprinted with the legend referred to in the Warrant under
which the Securities are being purchased.
(d) The Purchaser is aware of the provisions of Rule 144, promulgated
under the Securities Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable,
12
<PAGE> 13
including, among other things: The availability of certain public information
about the Company; the resale occurring not less than two years after the party
has purchased and paid for the securities to be sold; the sale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934) and the amount of securities being sold during any
three-month period not exceeding the specified limitations stated therein.
(e) The Purchaser further understands that at the time it wishes to sell
the Securities there may be no public market upon which to make such a sale,
and that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144, and that,
in such event, the Purchaser may be precluded from selling the Securities under
Rule 144 even if the two-year minimum holding period had been satisfied.
(f) The Purchaser further understands that in the event all of the
requirements of Rule 144 are not satisfied and the provisions of Rule 144(k) do
not apply, registration under the Securities Act, compliance with Regulation A,
or some other registration exemption will be required; and that,
notwithstanding the fact that Rule 144 is not exclusive, the Staff of the SEC
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk.
(g) If all or any portion of the Warrant Price for the Securities is paid
by the Purchaser through the delivery of common shares of the Company owned by
the Purchaser, such common shares are free and clear of all liens and
encumbrances of every type and nature.
Purchaser:
___________________________________________
Date: ______________________________, 19___
13
<PAGE> 1
EXHIBIT 10.14
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement"), dated as of March 29,
1996, is made by and between IOMED, Inc., a Utah corporation ("IOMED"), and
Dermion, Inc., a Delaware corporation ("Dermion").
A. Dermion is a newly formed corporation, with no assets or liabilities as
of the date hereof.
B. IOMED desires to contribute certain assets to Dermion (the
"Contribution") in exchange for all of the issued and outstanding capital stock
of Dermion, all on their terms and subject to the conditions set forth in this
Agreement.
C. IOMED intends that the Contribution qualify as a nontaxable transfer
under Section 351 of the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, the parties hereto agree as follows:
1. Contribution of Assets. Upon execution of this Agreement:
(a) IOMED shall contribute to Dermion (i) the equipment set forth on
Exhibit A attached hereto (the "Equipment"), (ii) cash in the amount of
approximately **** (the "Cash"), (iii) all rights to receive royalties payable
by any person or entity with respect to the IOMED Technology (as defined below)
to the extent such royalties are payable in connection with the conduct by
Dermion of the Business (as defined below), and (iv) all books, records and
software necessary for the conduct by Dermion of the business of conducting
research with respect to or developing iontophoretic transdermal drug delivery
systems on its own behalf and/or on behalf of third parties, as such business
(the "Business") has previously been conducted by IOMED (the "Other Assets"). As
used herein, "IOMED Technology" means all right and interest of IOMED to and in
the following patents (including all substitutions, continuations,
continuations-in-part, divisions and renewals thereof, all letters patent
granted thereon, and all reissues, reexaminations and extensions thereof); ****
all of which have been licensed to IOMED pursuant to a **** Agreement, ****, by
and between IOMED and ****.
(b) IOMED shall contribute to Dermion certain intellectual property rights
by entering into a Patent License Agreement in the form of Exhibit B attached
hereto (the "License Agreement").
2. Issuance of Stock. In consideration for the assets contributed pursuant
to Section 1 above, upon execution of this Agreement Dermion will issue and
deliver Eight
1
<PAGE> 2
Hundred Thousand (800,000) shares of its validly issued, fully paid and
nonassessable Common Stock, $.001 par value per share, to IOMED (the "Shares").
3. DELIVERIES. Upon execution of this Agreement, the parties shall make the
respective deliveries set forth below:
(a) IOMED shall deliver to Dermion (i) possession of the Equipment, the
Cash and the Other Assets, (ii) a duly executed Bill of Sale in the form
attached hereto as EXHIBIT C (the "Bill of Sale") and (iii) a duly executed
License Agreement.
(b) Dermion shall deliver to IOMED (i) a duly executed certificate
representing the Shares, and (ii) a duly executed License Agreement.
4. REPRESENTATIONS AND WARRANTIES OF DERMION. Dermion hereby represents and
warrants to IOMED as follows:
(a) Dermion is a corporation duly organized, validly existing and in good
standing under the law of the State of Delaware.
(b) Dermion has full corporate power and authority to enter into this
Agreement and the License Agreement, and to carry out the transactions
contemplated hereby and thereby. The Board of Directors of Dermion has taken all
action required to authorize the execution, delivery and performance of this
Agreement and the License Agreement and the consummation of the transactions
contemplated hereby and thereby. This Agreement and the License Agreement each
has been duly and validly authorized, executed and delivered by Dermion, and
each constitutes a valid and binding obligation of Dermion enforceable against
it in accordance with its terms.
(c) The execution, delivery and performance by Dermion of this Agreement
and the License Agreement do not and will not (i) violate or breach the
certificate of incorporation or bylaws of Dermion, (ii) violate or conflict with
any applicable law, (iii) violate, breach, cause a default under or otherwise
give rise to a right of termination, cancellation or acceleration with respect
to (presently, with the giving of notice or the passage of time) any material
agreement, contract or instrument to which Dermion is a party or by which any of
its assets is bound, or (iv) result in the creation or imposition of any lien,
pledge, mortgage, claim, charge or encumbrance upon any assets of Dermion.
(d) No consent, authorization, license, permit, registration or approval of, or
exemption or other action by, any governmental authority or other person is
required in connection with Dermion's execution and delivery of this Agreement
or the License Agreement or with the performance by Dermion of its obligations
hereunder of thereunder, except in each case for any consent, authorization,
license, permit, registration or approval as have been obtained and remain in
full force and effect.
2
<PAGE> 3
(e) The authorized capital stock of Dermion consists of Four Million
(4,000,000) shares of Common Stock, $.001 par value per share, none of which are
issued and outstanding, and One Million (1,000,000) shares of Preferred Stock,
$.001 par value per share, none of which are issued and outstanding. The Shares
will, upon issuance pursuant to the terms of this Agreement, be duly and validly
authorized and issued, fully paid and nonassessable. Except as set forth in that
certain Stockholders' Agreement, dated of even date herewith, by and between
Dermion, IOMED, and Ciba-Geigy Corporation, a New York corporation acting
through its Pharmaceuticals Division, Dermion does not have outstanding any
rights (preemptive or other) or options to subscribe for or purchase, or any
warrants or other agreements providing for or requiring the issuance by Dermion
of, any of its capital stock or securities convertible into or exchangeable for
its capital stock.
5. Representations and Warranties of IOMED:
(a) IOMED is a corporation duly organized, validly existing and in good
standing under the law of the State of Utah.
(b) IOMED has full corporate power and authority to enter into this
Agreement, the License Agreement and the Bill of Sale, and to carry out the
transactions contemplated hereby and thereby. The Board of Directors of IOMED
has taken all action required to authorize the execution, delivery and
performance of this Agreement, the License Agreement and the Bill of Sale, and
the consummation of the transactions contemplated hereby and thereby. This
Agreement, the License Agreement and the Bill of Sale each has been duly and
validly authorized, executed and delivered by IOMED, and constitutes a valid and
binding obligation of IOMED enforceable against it in accordance with its terms.
(c) The execution, delivery and performance by IOMED of this Agreement and
the License Agreement do not and will not (i) violate or breach the articles of
incorporation or bylaws of IOMED, (ii) violate or conflict with any applicable
law, (iii) violate, breach, cause a default under or otherwise give rise to a
right of termination, cancellation or acceleration with respect to (presently,
with the giving of notice or the passage of time) any material agreement,
contract or instrument to which IOMED is a party or by which any of its assets
is bound, or (iv) result in the creation or imposition of any lien, pledge,
mortgage, claim, charge or encumbrance upon any assets of IOMED.
(d) No consent, authorization, license, permit, registration or approval
of, or exemption or other action by, any governmental authority or other person
is required in connection with IOMED's execution and delivery of this Agreement
or the License Agreement or with the performance by IOMED of its obligations
hereunder or thereunder, except in each case for any consent, authorization,
license, permit, registration or approval as have been obtained and remain in
full force and effect.
(e) IOMED is acquiring the Shares for investment for its own account and
not with a view to, or for resale in connection with, any public distribution,
and understands that such stock has not been registered under the Securities Act
of 1933, as amended (the "Securities
3
<PAGE> 4
Act"), by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent as expressed herein.
6. Employees. Promptly following the execution hereof, Dermion agrees to
employ each of the IOMED employees named on Exhibit D attached hereto, at which
time such employees will cease being employees of IOMED. Such employment shall
be on such terms and conditions, and for such duration, as Dermion shall
determine in its absolute discretion.
7. Legends. Each certificate representing the Shares shall bear a legend
in substantially the following form:
THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THE CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER THE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION.
THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR TRANSFERRED ONLY PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
Dermion shall reissue promptly certificates without such legend upon being
provided with an opinion of counsel or other evidence reasonably satisfactory to
Dermion to the effect that the securities proposed to be disposed of may
lawfully be so disposed without registration, qualification or legend.
8. Amendment. This Agreement may only be amended or supplemented by
written agreement of each party hereto.
9. Governing Law. The validity, interpretation, enforceability, and
performance of this Agreement shall be governed by and construed in accordance
with the law of the State of Delaware.
4
<PAGE> 5
10. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
The parties have caused this Agreement to be duly executed as of the
date first above written.
IOMED, INC., a Utah corporation
By: /s/ Robert J. Lollini
------------------------------
Name: Robert J. Lollini
----------------------------
Title: Secretary
---------------------------
DERMION, INC., a Delaware corporation
By: /s/ Ned M. Weinshenker
------------------------------
Name: Ned M. Weinshenker, Ph.D.
----------------------------
Title: President and CEO
---------------------------
5
<PAGE> 6
EXHIBIT A
R&D EQUIPMENT
FIXED ASSET INVENTORY
RECORD SHEET
<TABLE>
<CAPTION>
Qty Location Item Description
<S> <C> <C>
OWNED EQUIPMENT PRIOR TO AGREEMENT
1 B. Hause office HP Laser Jet 4M printer, s/n JPBH027487
1 B. Leaf office Cal Comp drawing board
1 B. Leaf office Cal Comp plotter
1 B. Leaf office portable tape backup system
1 B. Leaf office PWC pc, Arche monitor, keyboard
1 Electronics Lab 15 drawer Lista storage unit, gray
2 Electronics Lab 386 PC Systems
1 Electronics Lab 486 Computer system 18082
2 Electronics Lab 486 Computer system 18961
1 Electronics Lab 486 Computer system 19064
1 Electronics Lab 486 Computer system 19270
1 Electronics Lab 486 Computer system 19503
1 Electronics Lab 5 drawer Lista storage unit & bench with top & light
1 Electronics Lab 6 drawer Kennedy mechanics tool chest
3 Electronics Lab Blue stools
1 Electronics Lab brown folding table
1 Electronics Lab ClearView Stereo Microscope
1 Electronics Lab Conductive element test fixture
1 Electronics Lab Current Density meter
1 Electronics Lab Fluke 45 Digital Multimeter s/n 5535049
1 Electronics Lab Fluke 45 Digital Multimeter s/n 5650100
1 Electronics Lab gray stack chair
1 Electronics Lab gray storage cabinet
1 Electronics Lab IOMEGA Tape 250 tape backup
1 Electronics Lab lt. gray metal bookcase
1 Electronics Lab Metcal Soldering system s/n 6E 10610
1 Electronics Lab Mod Tap SLT3 Continuity Checker
1 Electronics Lab National Instruments GPIB 1284CT s/n 05404
1 Electronics Lab Oscilloscope Tektronix 2246 s/n B044878
1 Electronics Lab wood bench
1 extra office Mac IIsi, Radius 0277 monitor, keyboard
1 Lab Blue M OV-610A-3 oven
1 Lab Brookfield digital viscometer DV-I
1 Lab Brookfield EX-100 constant temp. water bath
1 Lab Callahan RF welder
1 Lab Electrode welder/assembler
1 Lab Film wet casting doctor blade
1 Lab Lab Scale drying machine
5 Lab Misc welding fixtures, dies
asst Lab Misc. pneumatic nozzles, chucks, hoses
1 Lab Parastaltic pump & disp. processor
1 Lab Simco static APMB eliminator
2 Lab storage racks, 4' x 2' x 12'
40 Lab Ubbelohde viscometers
1 Large office Mac II computer, MO400 monitor, keyboard
1 Large office Mac IIcx, M0400 monitor, keyboard
1 Large office Max IIcx, Radius monitor, keyboard
1 Large office Mac IIsi, Radius monitor, keyboard
1 Lunch room Magic Chef refrigerator
1 Lunch room Sharp Carousel II microwave oven
1 Lunch room water dispenser
1 L. Lloyd office Mac IIci, RGB monitor, keyboard
1 L. Lloyd office Samsung refrigerator
1 Machine shop 12" TEW impulse welder #TIFS-300
1 Machine shop 16" paper cutter
1 Machine shop 2 door adjustible shelf storage cabinet
1 Machine shop 20" paper cutter
1 Machine shop 30" paper cutter
1 Machine shop 5 gallon pressure vessel
1 Machine shop 5 shelf storage rack
</TABLE>
<PAGE> 7
R&D EQUIPMENT
FIXED ASSET INVENTORY
RECORD SHEET
<TABLE>
<CAPTION>
Qty Location Item Description
OWNED EQUIPMENT PRIOR TO AGREEMENT
<S> <C> <C>
1 B. Hause office HP Laser Jet 4M printer, s/n JPBH027487
1 B. Leaf office Cal Comp drawing board
1 B. Leaf office Cal Comp plotter
1 B. Leaf office portable tape backup system
1 B. Leaf office PWC pc, Arche monitor, keyboard
1 Electronics Lab 15 drawer Lista storage unit, gray
2 Electronics Lab 386 PC Systems
1 Electronics Lab 486 Computer system 18082
2 Electronics Lab 486 Computer system 18961
1 Electronics Lab 486 Computer system 19064
1 Electronics Lab 486 Computer system 19270
1 Electronics Lab 486 Computer system 19503
1 Electronics Lab 5 drawer Lista storage unit & bench with top & light
1 Electronics Lab 6 drawer Kennedy mechanics tool chest
3 Electronics Lab Blue stools
1 Electronics Lab brown folding table
1 Electronics Lab ClearView Stereo Microscrope
1 Electronics Lab Conductive element test fixture
1 Electronics Lab Current Density meter
1 Electronics Lab Fluke 45 Digital Multimeter s/n 5535049
1 Electronics Lab Fluke 45 Digital Multimeter s/n 5650100
1 Electronics Lab gray stack chair
1 Electronics Lab gray storage cabinet
1 Electronics Lab IOMEGA Tape 250 tape backup
1 Electronics Lab lt. gray metal bookcase
1 Electronics Lab Metcal Soldering system s/n 6E 10610
1 Electronics Lab Mod Tap SLT3 Continuity Checker
1 Electronics Lab National Instruments GPIB 1284CT s/n 05404
1 Electronics Lab Oscilloscope Tektronix 2246 s/n BO44878
1 Electronics Lab wood bench
1 extra office Mac IIsi, Radius 0277 monitor, keyboard
1 Lab Blue M OV-610A-3 oven
1 Lab Brookfield digital viscometer DV-1
1 Lab Brookfield EX-100 constant temp. water bath
1 Lab Callahan RF welder
1 Lab Electrode welder/assembler
1 Lab Film wet casting doctor blade
1 Lab Lab Scale drying machine
5 Lab Misc welding fixtures, dies
asst Lab Misc. pneumatic nozzles, chucks, hoses
1 Lab Parastaltic pump & disp. processor
1 Lab Simco static APMB eliminator
2 Lab storage racks, 4' x 2' x 12'
40 Lab Ubbelohde viscometers
1 Large office Mac II computer, MO400 monitor, keyboard
1 Large office Mac IIcx, MO400 monitor, keyboard
1 Large office Mac IIcx, Radius monitor, keyboard
1 Large office Mac IIsi, Radius monitor, keyboard
1 Lunch room Magic Chef refrigerator
1 Lunch room Sharp Carousel II microwave oven
1 Lunch room water dispenser
1 L. Lloyd office Mac IIci, RGB monitor, keyboard
1 L. Lloyd office Samsung refrigerator
1 Machine shop 12" TEW impulse welder #TIFS-300
1 Machine shop 16" paper cutter
1 Machine shop 2 door adjustable shelf storage cabinet
1 Machine shop 20" paper cutter
1 Machine shop 30" paper cutter
1 Machine shop 5 gallon pressure vessel
1 Machine shop 5 shelf storage rack
</TABLE>
<PAGE> 8
R&D EQUIPMENT
FIXED ASSET INVENTORY
RECORD SHEET
<TABLE>
<CAPTION>
Qty Location Item Description
<S> <C> <C>
1 Machine shop Alltrade hot melt glue gun
1 Machine shop AND Compact printer #AD-8117
1 Machine shop Arbor press
1 Machine shop Baldor sieve shaker
1 Machine shop Branson 125 Ultrasonic cleaner, s/n B-125-R
1 Machine shop Brown & Sharpe micrometer #599-10-1
1 Machine shop Centurian overhead projector
1 Machine shop combination wrench set
1 Machine shop Craftsman 5 1/2" bench vise #51871
1 Machine shop Craftsman steel punch set
1 Machine shop crescent wrench set
1 Machine shop Cres-cor rolling storage rack #2001841
1 Machine shop Crown DC 300 Amp #DC300A
1 Machine shop CRP exhaust hood
1 Machine shop Delta belt/disc sander combo #31-340
1 Machine shop Delta Scroll saw #40-601
1 Machine shop Drill bit set, 1-60
1 Machine shop Drill bit set, 1/16" thru 1/2"
1 Machine shop Drill bit set, A-Z
1 Machine shop Emerson servo motor controller
49 Machine shop End mill cutters, various sizes
1 Machine shop Eureka 8 gallon wet/dry vacuum
1 Machine shop Filamatic vial filler #AB-8
1 Machine shop Filter Queen vacuum
1 Machine shop Foredom metal deburring bits
1 Machine shop Foredom metal grinding bits
1 Machine shop Foredom model #5B
1 Machine shop Holesaw set
1 Machine shop Hopkins screen printing station
1 Machine shop Jet bench top drill press #JDP-11HS
1 Machine shop Kennedy 16 drawer tool chest
2 Machine shop Kitchen-Aide mixers
2 Machine shop lab stools
16 Machine shop laser cut steel rule dies
1 Machine shop Makita cordless drill, #6070D
1 Machine shop Master heat gun #HG-501A
1 Machine shop Mead pneumatic air press
1 Machine shop Merlin express label maker
1 Machine shop Micro bench top lathe
2 Machine shop Milling machine drill chucks
1 Machine shop Milling machine parallel set 1/2" thru 1 5/8"
1 Machine shop Milling machine table clamp set
1 Machine shop Milling machine collet set RS 1/8" thru 7/8"
1 Machine shop Milwaukee 5650 router
1 Machine shop Mitutoyo calipers
1 Machine shop Mitutoyo dial test indicator #513-242
1 Machine shop Mitutoyo Digital micrometer #293-761
1 Machine shop Mitutoyo Digital spindle axis read-out
1 Machine shop Morgan press injection molder
1 Machine shop Okidata 9 pin printer
3 Machine shop Omega microprocessor temperature controller #CN9121A
1 Machine shop Omega microprocessor thermometer switchbox #HH-20-SW
1 Machine shop Omega Microprocessor thermometer #HH21
1 Machine shop Orbit bench top vacuum former
1 Machine shop Precision square
1 Machine shop Rockwell 28-20C 14" band saw
1 Machine shop SA 2 pen strip chart recorder
1 Machine shop Scherr-Tumico dial test indicator
1 Machine shop screwdriver set
1 Machine shop Sears 6 gallon wet/dry vacuum
1 Machine shop Shimpo digital rpm meter #DT-107
</TABLE>
<PAGE> 9
R&D EQUIPMENT
FIXED ASSET INVENTORY
RECORD SHEET
<TABLE>
<CAPTION>
Qty Location Item Description
<S> <C> <C>
4 Machine shop Shop benches
3 Machine shop shop benches with risers
1 Machine shop Skil
1 Machine shop Skil 763 3/8" variable speed drill
7 Machine shop Small parts storage cabinets
1 Machine shop socket set
1 Machine shop Speedaire reserve storage tank
2 Machine shop Staco energy products variable auto transformer
40 Machine shop Steel punch set, 1/16" to 2 1/2"
68 Machine shop steel rule cutting dies
1 Machine shop Stimpson #479 manual rivet machine
1 Machine shop Sunex bench grinder #9605
1 Machine shop swing arm shop light
1 Machine shop TEW 18" impulse welder #TISF-450
10 Machine shop TEW 8" impulse sealers
24 Machine shop Thread taps, various thread sizes
1 Machine shop Toshia SR Teach Pendant
1 Machine shop Toshiba robot system, #VSB001005YSA
1 Machine shop Toshiba SR controller
1 Machine shop Toshiba TSR program loader
1 Machine shop Trivac vacuum pump
1 Machine shop Vaco nut driver set
1 Machine shop Vacuum oven
19 Machine shop Various hand tools
1 Machine shop vise grip set
1 Machine shop Wood boring bit set #920864
1 Machine shop Yellow Jack #512 12 ton shop press
2 Machine shop "T" handle allen wrench sets
1 Main lab 2001 Keyboard, Iomed 00350
1 Main lab Accumet 950, PH/ion meter, s/n 2819
3 Main lab Acid & solvent storage cabinets
1 Main lab All American 25X Electric pressure steam sterilizer
2 Main lab Animal cage racks
asst Main lab animal cages (shoeboxes)
1 Main lab Animal room humidifier
1 Main lab Balance table (granite)
8 Main lab Blue lab stools
1 Main lab Buchler mini Rotovaporizer
1 Main lab Cafranco stirring motor
20 sets Main lab Calibrating weights
1 Main lab CM-10 flourescence analysis cabinet, s/n 262937
1 Main lab Cole Parmer hygrothermograph
1 Main lab Cryotome
7 Main lab Eppendorf pipetters
1 Main lab Epson equity II+, pc computer
6 Main lab faucet sets
1 Main lab fiberglass sink
1 Main lab Fisher Scientific acid trap
2 Main lab Fisher Scientific XF-300 balances
2 Main lab flammable storage cabinets
4 Main lab Fluke 73 multimeters
6 Main lab gas regulators
asst Main lab glassware
25 Main lab Hamilton syringes
asst Main lab Hardware clamps in ring stands
1 Main lab IEC Centra - 4B centrifuge, s/n 23731318
1 Main lab Kitchen aid food mixer
1 Main lab Konica 35mm camera
3 Main lab Lab carts
3 Main lab Lab Glassware drying racks
1 Main lab Labconco 4' fume hood
</TABLE>
<PAGE> 10
R&D EQUIPMENT
FIXED ASSET INVENTORY
RECORD SHEET
Qty Location Item Description
2 Main lab Labconco 4' fume hoods
2 Main lab Labconco 6' fume hood
1 Main lab LanGarde 400, UPS
1 Main lab LanGarde 900
1 Main lab Loop monitor & keyboard
1 Main lab Melting point apparatus
3 Main lab Metal storage cabinets, 4 shelves
1 Main lab Mettler AE 240 analytical balance, s/n
609/448-3000
2 Main lab Microwave ovens
1 Main lab Nikon N6006 camera
1 Main lab PH Meter
1 Main lab Phoresor Scope w/bartly 286 computer
1 Main lab Pipette washer/soaking bath
1 Main lab Precision penetrometer
1 Main lab Remington Rand locking file safe
1 Main lab Safety shower
1 Main lab Samsung refrigerator, small
1 Main lab Shaker bath
1 Main lab Solvent recycler
1 Main lab SSI Monitor
4 Main lab stainless steel sinks
1 set Main lab standard testing sieves
4 Main lab stirrer/heating plate
asst Main lab surgical instruments
1 Main lab Thermodyne Maxi Mix III
1 Main lab Trash compactor
1 Main lab Unison 1500, 1200
1 Main lab Unison DP 1000 unipower
1 Main lab vacuum pump assembly
2 Main lab Vortex mixers, Cat. S8225-1
1 Main lab YSI conductance meter, model 35
1 Network stuff Black Box Cable Scanner s/n 910611875
1 Network stuff Cayman Gator box CS s/n 105090
1 Network stuff Cayman Gator box CS s/n 105099
1 Network stuff Macintosh II Iomed # 00081
1 Network stuff Network server 486-50
4 Network stuff NetWorth Micro Hub
2 Network stuff Star Controller Phone Net Series 300
1 Shipping area Pelouze 70 lb. scale
1 Shipping area shipping table
1 Shipping area shipping tape dispenser
1 spare stuff extension ladder, orange
1 spare stuff green refrigerator
1 spare stuff ladder, wooden
1 spare stuff set heavy duty metal shelving
1 spare stuff Sharp carousel microwave
1 spare stuff shipping table (6 ft x 3 ft)
1 spare stuff storage cabinet, dk. gray
1 T. Parkinson office Practical Peripherals PM04385 hard drive
1 B. Hause office 486 DCPX-66 Clone CPU, Sony CPD-1430 monitor,
Alps keyboard
1 B. Hause office circuit analysis software
1 B. Leaf office Mac Quadra 605 computer, Radius 0361 monitor,
keyboard
1 B. Leaf office NEC portable CD-rom reader
1 Electronics Lab American Reliance Programmable Power Supply s/n
23220025
1 Electronics Lab American Reliance Programmable Power Supply s/n
23220097
1 Electronics Lab Keithley 2001/2001 Scan Digital Multimeter s/n
0584779
1 Electronics Lab Oscilloscope Fluke Pm 3394 s/n DM 554033
1 Electronics Lab QMS Laser Printer Iomed #00088
1 Electronics Lab Wavetek 395 Arbitrary Waveform Generator s/n
F94073939
1 J. Beck office Mac Quadra 650, Radius monitor, keyboard
1 Machine shop Air dimensions vacuum pump
<PAGE> 11
R&D EQUIPMENT
FIXED ASSET INVENTORY
RECORD SHEET
<TABLE>
<CAPTION>
Qty Location Item Description
<S> <C> <C>
1 Machine shop American ultraviolet UV curing system
1 Machine shop Boulden laminating machine
1 Machine shop Bridgeport Mill
1 Machine shop Dennison PSTT stapler
1 Machine shop Mitutoyo digital read out #ALC-3705W
1 Machine shop Omega digital force meter, #DFG51-50
6 Machine shop Screen printing screens
1 Machine shop Servo x-axis power feed #140
1 Main lab Admiral frost free refrigerator, Iomed #00073
1 Main lab Alltech 345 solvent recycler for HPLC
1 Main lab A.C. Power Backup system (UPS)
1 Main lab Beckman High Performance Liquid Chromatograph system
1 Main lab Cole Parmer hygrothermograph
1 Main lab Cole Parmer hygrothermograph
Main lab Cornometer
1 Main lab Denver Inst. FX-3100 Balance
1 Main lab dishwasher
1 Main lab Distilled water system
3 Main lab Extended quenched standards
1 Main lab Fisher BioTech FB 1001 electrophoresis system
1 Main lab Fisher Scientific 2008 multi-electronic stirrer
1 Main lab Fisher Scientific Q005 cooling/heating bath s/n 313584
1 Main lab Forma Scientific 3028 C02 incubator
1 Main lab Foxy 200 Fraction Collector s/n 62213002-793319
1 Main lab Hanson autosampling system
1 Main lab High performance liquid chromatograph - Hot lab
1 Main lab Hitachi U-2000 Spectrophotometer, s/n 9005-030
1 Main lab HP 1200 c/pc Color Printer
1 Main lab HP 5890 Gas Chromatograph
1 Main lab Lipshaw electric model 1500, cryotome, s/n L-038
1 Main lab MIIII Q water system
1 Main lab Olympus stereo microscrope
1 Main lab Packard Instruments Tri-Carb 1500 LCS, includes dot-matrix printer
1 Main lab Premier Innovations lap-top PC, 6000
1 Reception area HP LaserJet 4Plus printer
1 Reception area Mac IIsi, 12" Monochrome monitor, keyboard
1 T. Parkinson office Mac Performa 575 w/keyboard, s/n L04228H925Y
<CAPTION>
EQUIPMENT PURCHASED AFTER 6/30/95
<S> <C> <C>
1 back dock Adix phone system & VSR voice mail
1 Main lab Swipe card access system
1 Reception area Murata Muratec F-73 fax
1 Electronics Lab Keithley 2000/2000 Scan Digital Multimeter s/n 0595951
1 Morgan press & stand
1 High density switch system
1 507 Auto sampler
1 Ultralow temp freezer
</TABLE>
<PAGE> 12
R&D EQUIPMENT
FIXED ASSET INVENTORY
RECORD SHEET
Qty Location
Item Description
FURNITURE & FIXTURES
1 B. Felman office 29" round table, oak veneer
1 B. Felman office 3 ft x 2 ft bulletin board
1 B. Felman office 4 ft x 3 ft white board
1 B. Felman office 5 ft bookcase, oak veneer, 5 shelf
1 B. Felman office 6 ft bookcase, oak veneer, 5 shelf
1 B. Felman office executive chair, rolling, gray
1 B. Felman office Filex filing cabinet, 4 drawer
1 B. Felman office secretarial chair, rolling, dk. blue
2 B. Felman office secretarial desk, 5 drawer
1 B. Hause office Anderson Hickey lateral file cabinet, 2 drawer
1 B. Hause office Anderson Hickey metal bookcase, 5 shelf
2 B. Hause office chairs, stationary, blue
1 B. Hause office Cole lateral file cabinet, 4 drawer
1 B. Hause office credenza, oak
1 B. House office executive chair, rolling, blue
1 B. Hause office executive desk, oak
1 B. Hause office oak veneer printer stand, 2 shelves
2 B. Hause office wood bookcase, 6 shelf
1 B. Leaf office Anderson Hickey file cabinet, 4 drawer
1 B. Leaf office bookcase, 3 shelf
1 B. Leaf office bookcase, 5 shelf
1 B. Leaf office computer table
1 B. Leaf office executive desk, rolling, dk. blue
1 B. Leaf office secretarial chair, gray
1 B. Leaf office secretarial chair, gray & black
2 B. Leaf office secretarial desk
9 Cubicles - R&D 18" dk. blue multi panel
2 Cubicles - R&D 18" gray panel
2 Cubicles - R&D 24" gray panel
2 Cubicles - R&D 30" dk. blue multi panel
8 Cubicles - R&D 30" light gray panel
4 Cubicles - R&D 35" x 23 1/2" x 26 1/2" gray desk tables
4 Cubicles - R&D 35" x 23 1/2" x 30" gray desk tables
4 Cubicles - R&D 50" x 23 1/2" x 30" gray corner desk tables
2 Cubicles - R&D brown covered book shelves
8 Cubicles - R&D gray book shelves with lights
4 Cubicles - R&D gray covered book shelves
4 Cubicles - R&D rolling two drawer file cabinets
1 Electronics Lab 4 drawer Anderson Hickey file cabinet
1 extra office 4 ft cubicle worktop
1 extra office 4 ft uncovered bookshelf
1 extra office 5 ft covered bookshelf, med. gray
1 extra office 5 ft cubicle worktop
2 extra office 5 ft x 2 ft cubicle panels
2 extra office 5 ft x 5 ft cubicle panels
1 extra office Anderson Hickey file cabinet, 4 drawer
1 extra office Anderson Hickey metal bookcase, 6 shelf
1 extra office bulletin board
1 extra office drawing cabinet
1 extra office Hon file cabinet, 4 drawer
1 extra office secretarial chair, gray
1 J. Beck office 44" x 34" white board
1 J. Beck office computer table, oak veneer
2 J. Beck office secretarial chair, blue
1 J. Beck office secretarial desk
1 J. Beck office wooden bookcase, 6 shelf
2 Large office Anderson Hickey filing cabinet, 4 drawer
1 Large office Anderson Hickey storage cabinet
1 Large office APS external hard drive
2 Large office catalog shelving units
<PAGE> 13
R&D EQUIPMENT
FIXED ASSET INVENTORY
RECORD SHEET
Qty Location Item Description
- ----------------- ---------------------------------------------------
1 Large office end table
3 Large office executive chair, rolling, blue
1 Large office Hon filing cabinet, 4 drawer
1 Large office rolling 2 drawer cubicle type filing cabinet
1 Large office secretarial chair
1 Large office secretarial desk
1 Large office secretarial desk
1 Large office secretarial desk
1 Large office stationary chair
2 Large office white boards
1 Large office Wooden bookcase, oak veneer, 4 shelf
1 Large office Wooden storage unit, 2 doors, 3 shelf
1 Library 3M overhead projector
1 Library Audio visual equipment cart
1 Library Audio visual screen
1 Library conference table
6 Library executive chair, blue
1 Library Kodak slide projector
2 Library secretarial chair, blue
2 Library stationary chair, blue
1 Library white board
4 Library wooden bookcase, 6 shelf
2 Library wooden bookcase, 7 shelf
2 Lunch room round lunch tables
5 Lunch room stationary chairs, blue
2 L. Lloyd office Anderson Hickey filing cabinet, 4 drawer
1 L. Lloyd office bulletin board
1 L. Lloyd office computer desk
1 L. Lloyd office executive chair, rolling, blue
1 L. Lloyd office executive desk
1 L. Lloyd office Hon filing cabinet, 2 drawer
2 L. Lloyd office stationary chair, blue
2 L. Lloyd office white board
1 L. Lloyd office wooden bookcase, 3 shelf
1 L. Lloyd office wooden bookcase, 5 shelf
1 Reception area brown storage cabinet, 2 drawers, 2 shelves
2 Reception area Cole lateral file, 4 drawer
1 Reception area Cubicle sections, 2 short pieces
1 Reception area file cabinet, 2 drawer
1 Reception area folding table, brown
1 Reception area Mita DC 4086 copier
1 Reception area reception desk w/right hand return
1 Reception area recycle bin
1 Reception area Ricoh 4000FL paper shredder
1 Reception area Secretarial chair
1 Reception area Secretarial desk, right hand return
1 Reception area Sharp Compet CS-2164F calculator
1 Reception area short supply cabinet
1 Reception area Smith Corona XD4700 typewriter
1 Reception area tall supply cabinet
8 Shipping area chair, blue plastic, stacking
1 Shipping area Wesco filing cabinet, 4 drawer
1 spare stuff 10 ft x 4 ft wood table
1 spare stuff 3 ft x 2 ft bulletin board
1 spare stuff 30" round plastic table
3 spare stuff 4 ft x 3 ft white board, metal trim
1 spare stuff 5 ft x 4 ft white board, oak trim
1 spare stuff 6 drawer brown locker
1 spare stuff 6 ft x 4 ft white board, oak trim
1 spare stuff arm chair, gray
1 spare stuff black executive chair, rolling
<PAGE> 14
R&D EQUIPMENT
FIXED ASSET INVENTORY
RECORD SHEET
Qty Location
Item Description
1 spare stuff blue love seat
1 spare stuff blue stool
1 spare stuff Canon A-1 board copier
3 spare stuff gray storage cabinets
1 spare stuff Hon file cabinet, 4 drawer
1 spare stuff Hon lateral file, 2 drawer
1 spare stuff lateral file cabinet, 4 drawer
1 spare stuff plastic gray stack chair
1 spare stuff secretarial chair, brown
1 spare stuff secretarial chair, brown
1 spare stuff secretarial desk, 5 drawer, oak veneer
1 T. Parkinson office Bookcase, 4 shelf, oak veneer
2 T. Parkinson office chairs, stationary, blue
1 T. Parkinson office Computer stand, oak veneer
1 T. Parkinson office Executive desk, oak veneer
1 T. Parkinson office Hon lateral file, 2 drawer
LEASEHOLD IMPROVEMENTS
1 Main lab Cabinets & countertops, 176' floor, 75' overhead
1 Electronics Lab wall mounted storage cabinets & countertops
<PAGE> 15
EXHIBIT D
CONTRIBUTION AGREEMENT
BETWEEN IOMED, INC. AND DERMION, INC.
IOMED EMPLOYEES TO BE TRANSFERRED TO DERMION
*
<PAGE> 1
EXHIBIT 10.16
RESEARCH AND DEVELOPMENT AGREEMENT
among
IOMED, INC.,
DERMION, INC.
and
CIBA-GEIGY CORPORATION
Dated as of March 29, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 DEFINITIONS................................................................................. 1
1.1 Definitions........................................................................ 1
1.2 General Definition Provisions...................................................... 9
ARTICLE 2 THE PROGRAM................................................................................. 9
2.1 Basic Provisions of the Program.................................................... 9
2.2 Staffing and Resources............................................................. 10
2.3 Annual Plans....................................................................... 11
2.4 The Committee...................................................................... 11
2.5 Research Records; Reports.......................................................... 14
2.6 Access to Facilities............................................................... 15
2.7 Clinical Trials.................................................................... 15
2.8 Clinical Manufacturing of Products................................................. 15
2.9 Liability Insurance................................................................ 15
ARTICLE 3 EXCLUSIVITY................................................................................. 16
3.1 Ciba Fields; Ciba Proprietary Drugs............................................. 16
3.2 Dermion Exclusivity................................................................ 17
3.3 Development of Systems for or by Dermion Outside the Program....................... 17
3.4 Development by Dermion of Abandoned Products....................................... 19
3.5 Development of Systems for or by Ciba.............................................. 19
ARTICLE 4 OWNERSHIP OF TECHNOLOGY; PATENTS............................................................ 21
4.1 Licensed Technology; No Other Rights............................................... 21
4.2 Improvements....................................................................... 22
4.3 Ownership and Use of Jointly Developed Technology.................................. 22
4.4 Transfer of Jointly Developed Technology........................................... 23
4.5 Patents and Patent Applications.................................................... 24
4.6 Infringement of Patent Rights...................................................... 26
4.7 Infringement of Third Party Rights................................................. 27
ARTICLE 5 LICENSES 28
5.1 Licenses to Ciba................................................................... 28
5.2 License from Ciba.................................................................. 29
5.3 Sublicensing....................................................................... 29
5.4 Transfers of Second Generation Technology by Dermion............................... 30
5.5 Future IOMED Licenses.............................................................. 30
ARTICLE 6 EQUITY AND FUNDING.......................................................................... 31
6.1 Related Transactions; License Fee.................................................. 31
6.2 Program Funding.................................................................... 31
6.3 Milestone Payments................................................................. 32
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
6.4 Royalties Payable by Ciba.......................................................... 34
6.5 General Provisions Regarding Royalties............................................. 35
6.6 Incorporation of Technology........................................................ 37
ARTICLE 7 REPRESENTATIONS AND WARRANTIES.............................................................. 37
7.1 Representations and Warranties of IOMED and Dermion......................................... 37
7.2 Representations and Warranties of Ciba............................................. 39
7.3 DISCLAIMERS........................................................................ 40
7.4 LIMITED LIABILITY.................................................................. 40
ARTICLE 8 OTHER COVENANTS AND AGREEMENTS.............................................................. 41
8.1 Confidentiality.................................................................... 41
8.2 IOMED Covenant Not to Compete...................................................... 42
8.3 Change of Control of Dermion....................................................... 43
8.4 Right of First Offer............................................................... 44
ARTICLE 9 TERM AND TERMINATION........................................................................ 45
9.1 Term............................................................................... 45
9.2 Termination........................................................................ 45
9.3 Survival Upon Termination Continuing Liability..................................... 46
9.5 Partial Termination................................................................ 47
9.6 Rejection in Bankruptcy............................................................ 47
9.7 Program Records.................................................................... 47
9.8 Certain Actions Following Termination.............................................. 48
ARTICLE 10 INDEMNIFICATION............................................................................. 48
10.1 Indemnification by Dermion and IOMED............................................... 48
10.2 Indemnification by Ciba............................................................ 48
ARTICLE 11 MISCELLANEOUS............................................................................... 48
11.1 Arbitration........................................................................ 48
11.2 Publicity.......................................................................... 49
11.3 Assignment......................................................................... 49
11.4 Amendment.......................................................................... 50
11.5 Waiver............................................................................. 50
11.6 Notices............................................................................ 50
11.7 Force Majeure...................................................................... 51
11.8 Disclaimer of Agency............................................................... 51
11.9 Further Assurances................................................................. 51
11.10 Expenses........................................................................... 52
11.11 Governing Law...................................................................... 52
11.12 Entire Agreement................................................................... 52
11.13 Severability....................................................................... 52
11.14 Broker's Fees...................................................................... 52
11.15 Article and Section Headings....................................................... 52
11.16 Counterparts....................................................................... 53
</TABLE>
ii
<PAGE> 4
Schedules
<TABLE>
<CAPTION>
Schedule Description
-------- -----------
<S> <C>
Schedule 1.1(a) Ciba Technology
Schedule 1.1(b) Dermion Technology
Schedule 3.1 Ciba Fields
</TABLE>
iii
<PAGE> 5
RESEARCH AND DEVELOPMENT AGREEMENT
RESEARCH AND DEVELOPMENT AGREEMENT (this "Agreement"), dated
as of March 29, 1996, among CIBA-GEIGY CORPORATION, a New York corporation
("Ciba"), acting through its Pharmaceuticals Division, IOMED, INC., a Utah
corporation ("IOMED"), and Dermion, Inc., a Delaware corporation ("Dermion").
WITNESSETH:
WHEREAS, as part of its business, IOMED has been engaged in
the business of conducting research with respect to and developing Systems on
its own behalf and/or on behalf of third parties (the "Business");
WHEREAS, prior to entering into this Agreement, IOMED formed
Dermion, a wholly-owned subsidiary of IOMED, contributed certain assets and
assigned certain rights to Dermion (including the right to receive any royalties
payable by any Person with respect to the IOMED Technology to the extent such
royalties are payable in connection with the conduct of the Business by Dermion)
and entered into certain agreements with Dermion, such that Dermion has all
assets, rights and properties necessary to conduct the Business as previously
conducted by IOMED other than the IOMED Technology;
WHEREAS, each of Dermion and Ciba have certain expertise in
the development of Systems, and Ciba owns or is licensed under Patent Rights and
Know-How with respect to and manufactures certain drugs;
WHEREAS, the parties desire to collaborate in the research and
development of Systems for the delivery of drugs owned by, licensed to, or
manufactured by Ciba, all on the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and of the
covenants and obligations set forth herein, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
<PAGE> 6
"1984 Act" shall mean the United States Drug Price Competition
and Patent Term Restoration Act of 1984 (as amended), including 21 USC 355, 35
USC 155-156, 35 USC 271 and applicable regulations promulgated thereunder.
"Abandoned Product" shall mean any Product with respect to
which Program activities have been terminated by the Committee.
"Affiliate" shall mean, with respect to any Person, any Person
which, directly or indirectly, controls, is controlled by or is under common
control with such Person. For the purposes of this definition, "control"
(including, with correlative meaning, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
**********************************************************
*********
"ANDA" shall mean an Abbreviated New Drug Application, as
defined in the FDA Act.
"Annual Plan" shall mean the written plan describing the
activities to be conducted by the parties during each year of the Program, as
prepared and approved, and as may be amended from time to time, by the Committee
in accordance with Section 2.3.
"Applicable Law" shall mean, with respect to a Person, any
domestic or foreign, federal, state or local statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree or other requirement of any Governmental Authority applicable
to such Person or its properties, business or assets.
"Background Technology" shall mean the Patent-Rights and
Know-How of Ciba or Dermion, or their respective Affiliates, as the case may be,
existing as of the date hereof. Patent Rights shall be deemed to exist as of the
date hereof if such Patent Rights are based on a patent application first filed
in the country of issuance or elsewhere prior to the date hereof, or if such
Patent Rights cover an invention first reduced to practice prior to the date
hereof as evidenced by documents prepared by, on behalf of or in cooperation
with, or in the possession of Ciba or Dermion, or their respective Affiliates,
as the case may be. Know-How shall be deemed to exist as of the date hereof to
the extent described in documents prepared by, on
2
<PAGE> 7
behalf of or in cooperation with, or in the possession of Ciba or Dermion, or
their respective Affiliates, as the case may be, prior to the date hereof.
"Bankruptcy Event" with respect to any Person shall mean any
of the following events: such Person makes an assignment for the benefit of its
creditors, files a voluntary petition under federal or state bankruptcy or
insolvency laws, a receiver or custodian is appointed for such Person's
business, proceedings are instituted against such Person under federal or state
bankruptcy or insolvency laws that have not been stayed within 30 days, all or
substantially all of such Person's business or assets become subject to
attachment, garnishment or other process, or a court or other Governmental
Authority of competent jurisdiction determines that such Person is insolvent.
"Business" shall have the meaning set forth in the recitals to
this Agreement.
"Business Day" shall mean any day which is not a Saturday,
Sunday or other day on which banks in the State of New York are legally required
or permitted to be closed.
"Change of Control" with respect to any Person shall mean (i)
any transaction or series of related transactions, other than a registered
public offering, as a result of which Persons owning the outstanding Voting
Securities (as defined below) of such Person immediately prior to such
transaction or series of related transactions cease to own a majority of the
outstanding Voting Securities of such Person thereafter, (ii) the consolidation
or merger of such Person with or into another Person, whether or not such Person
is the surviving entity of such transaction, unless immediately after such
consolidation or merger Persons owning the outstanding Voting Securities of such
Person prior to the transaction own a majority of the outstanding Voting
Securities of such new or surviving entity, or (iii) the sale, assignment or
other transfer of all or substantially all of the business or assets of such
Person to a third party in a single transaction or series of related
transactions. As used herein, the term "Voting Securities" of any Person shall
mean shares of capital stock, partnership interests or other equity interests of
such Person entitling the holder thereof to vote in the election of directors or
other applicable governing body of such Person.
"Ciba Fields" shall have the meaning set forth in Section 3.1.
"Ciba Technology" shall mean (i) the Patent Rights and
Know-How set forth on Schedule 1.1(a) , as such schedule may be
3
<PAGE> 8
updated by Ciba from time to time, (ii) all intellectual property rights
(including all Patent Rights and Know-How) of Ciba with respect to drugs to be
evaluated or tested under the Program or for which Systems will be developed
pursuant to the Program, and (iii) all Improvements thereto.
"Committee" shall have the meaning set forth in Section
2.4(a).
"Contribution Agreement" shall have the meaning set forth in
Section 6.1.
"Dermion Technology" shall mean the Patent Rights set forth on
Schedule 1.1(b)(i), as such schedule may be updated by Dermion from time to
time, and shall include all Improvements thereto.
"Drug" shall mean any drug or medicament possessing physical
and chemical properties that render it potentially deliverable by iontophoresis
in therapeutic quantities.
"Exclusivity Period" shall mean the term of this Agreement,
provided, that in the event that this Agreement is terminated by Dermion other
than pursuant to Section 9.2(iii), the Exclusivity Period shall mean the term of
this Agreement plus a period of two (2) years from the effective date of such
termination.
"FDA" shall mean the United States Food and Drug
Administration.
"FDA Act" shall mean the United States Food, Drug and Cosmetic
Act and applicable regulations promulgated thereunder.
"Final Marketing Image" shall mean, with respect to any
System, the physical and chemical form in which such System (including all
components thereof) shall ultimately be manufactured and marketed commercially.
"First Commercial Sale" shall mean, with respect to any
System, the date of the first sale of such System in the ordinary course of
business in any country. Neither transfer of a System for use in a clinical
trial nor a transfer to any Affiliate, licensee or sublicensee of Ciba for
resale will be deemed a "First Commercial Sale" whether or not the transferor
thereof is paid for such System.
"Fiscal Year" shall mean Ciba's fiscal year, which is a
fifty-two to fifty-three (52-53) week year based on 4-4-5 week quarters, ending
on the last Friday of the calendar year.
4
<PAGE> 9
"full-time equivalent employee" shall mean an individual or
individuals assigned to work on the Program with time and effort equivalent to
that which would be expended by one individual working on the Program on a
full-time basis consistent with normal business and scientific practice.
"Governmental Authority" shall mean any foreign, domestic,
federal, territorial, state or local governmental authority, court, government
or self-regulatory organization, commission, tribunal, organization or any
regulatory, administrative or other agency, or any political or other
subdivision, department, instrumentality, or branch of any of the foregoing.
"IDE" shall mean an Investigational Drug Exemption as defined
in the FDA Act.
"Improvements" shall mean all improvements, extensions,
enhancements, and modifications of or to Ciba Technology, Dermion Technology or
IOMED Technology, as the case may be.
"IND" shall mean an Investigational New Drug Application, as
defined in the FDA Act.
"Infringement Action" shall mean any action or suit, or threat
of action or suit, by a third party alleging that the manufacture, use or sale
of any Product or other System incorporating (or developed or manufactured
through processes incorporating) Dermion Technology, IOMED Technology or Jointly
Developed Technology, as the case may be, infringes a patent or violates any
other proprietary rights of any third party (which infringement or violation is
alleged to result from the incorporation of, or development or manufacture
through processes incorporating, such Dermion Technology, IOMED Technology or
Jointly Developed Technology in such Product or other System).
"Intercompany Patent License" shall have the meaning set forth
in Section 6.1.
"Interim Agreement" shall mean the Research Agreement, dated
as of July 17, 1995, between IOMED and Ciba, as extended prior to the date
hereof.
"IOMED Technology" shall mean the Patent Rights set forth on
Schedule 1.1(b)(ii), as such schedule may be updated by IOMED from time to time,
and shall include all Improvements thereto.
"Jointly Developed Technology" shall mean any and all
technology (including Patent Rights and Know-How) developed
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pursuant to the Program relating to Systems, provided, that in no event shall
Jointly Developed Technology include Ciba Technology, Dermion Technology or
IOMED Technology.
"Key Employees" shall mean those individuals identified as
such in a letter dated February 27, 1996 from Ciba to IOMED.
"Know-How" shall mean technology, formulae, trade secrets,
technical data, preclinical and clinical data, and any other information or
experience other than Patent Rights.
"Licensed Technology" shall mean Ciba Technology, Dermion
Technology and IOMED Technology.
"Lien" shall have the meaning set forth in Section 7.1(c).
"NDA" shall mean a New Drug Application, as defined in the FDA
Act.
"Net Sales" shall mean the amount billed by a party, its
Affiliates, licensees and sublicensees to third parties for the sale of Products
or other Systems, as the case may be, less allowances for all discounts and/or
rebates, reimbursements or other similar payments which reduce the revenue
actually received by Ciba for Products or Systems sold, as the case may be,
****************************************************************************
****************************************************************************
*************************************************************************
***********************************************************************; all
as determined in accordance with Ciba's standard accounting practices.
"parties" shall mean IOMED, Dermion and Ciba.
"Patent Rights" shall mean the rights and interests in and to
issued patents and pending patent applications, whether domestic or foreign,
claiming patentable inventions, including all substitutions, continuations,
continuations-in-part, divisions, and renewals, all letters patent granted
thereon, and all reissues, reexaminations and extensions thereof, whether owned
or licensed in by a party with the right to sublicense.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or Governmental Authority.
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"Product" shall mean a System developed by Dermion and Ciba
pursuant to this Agreement for delivery of any Drug specified by the parties.
"Program" shall mean those activities conducted pursuant to
this Agreement to research, develop, manufacture and commercialize Products.
"Program Costs" shall mean (i) all costs and expenses directly
related to Program activities incurred by Dermion in accordance with the Annual
Plans and Quarterly Budgets, plus (ii) a general and administrative overhead
*****************************************************************************
****************************************************************************
***************************************************************************
**********************************************************.
"Program Employee" shall have the meaning set forth in Section
2.2.
"Program Records" shall have the meaning set forth in Section
2.5.
"Prohibited Transfer" shall mean any Transfer other than (i)
to the partners, shareholders or other holders of any equity interest in the
transferor, or (ii) pursuant to an effective registration statement under the
Securities Act of 1933, as amended.
"Prohibited Transferee" shall mean **********************
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***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
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************************************************************************
"Prosecution Costs" shall mean all direct and indirect fully
absorbed costs, fees and expenses, including reasonable attorneys' fees incurred
in connection with the filing, maintenance and prosecution of patent
applications and patents with respect to Jointly Developed Technology,
including, without limitation, costs and charges reasonably incurred in
defending any interferences and oppositions with respect thereto.
"Quarterly Reports" shall have the meaning set forth in
Section 6.2(a).
"Research Funding Payments" shall have the meaning set forth
in Section 6.2(a).
"Royalty Period" shall mean that period beginning on the First
Commercial Sale of a System ******************************************
***************************************************************************
***************************************************************************
***************************************************************************
"Settlement Costs" shall mean, with respect to any
Infringement Action, all damages paid or payable to a third party in connection
with such Infringement Action, all costs and expenses (including reasonable
attorneys' fees) incurred in connection with such Infringement Action, and all
fees, royalties or other amounts paid or payable to a third party pursuant to
any Third Party License obtained in connection with such Infringement Action.
"Specified Indication" shall have the meaning set forth in
Section 3.1(b).
"System" shall mean an iontophoretic transdermal drug delivery
system, incorporating a current source, current controller, drug containment
device/electrode, dispersive electrode and method for attachment.
"Technology Transfer Restriction Period" shall have the
meaning set forth in Section 4.4.
"term of this Agreement" shall mean the initial term of this
Agreement and any extensions thereof in accordance with Section 9.1.
"Territory" shall mean **************************.
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"Third Party License" shall mean, with respect to any
Infringement Action, any license which either Dermion or Ciba, as the case may
be, is required to obtain from a third party under the terms of any settlement
or any judgment, decree or decision of a court, tribunal or other authority of
competent jurisdiction in order to make, have made, use or sell Products or
other Systems incorporating (or developed or manufactured through processes
incorporating) Dermion Technology, IOMED Technology or Jointly Developed
Technology, as the case may be.
"Transfer" shall mean (i) the making of any sale, exchange,
assignment, conveyance, gift or other disposition (whether voluntary or
involuntary) , (ii) the granting of any lien, security interest, pledge or other
encumbrance, or (iii) the entering into any agreement to do any of the
foregoing.
1.2 General Definition Provisions. For purposes of this
Agreement, except as otherwise expressly provided herein,
(a) the terms defined in Section 1.1 include the plural as
well as the singular;
(b) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms;
(c) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Section, Paragraph or other subdivision; and
(d) the words "include", "including" and other words of
similar import mean "include, without limitation" or "including, without
limitation," regardless of whether any reference to "without limitation" or
words of similar import is made.
ARTICLE 2
THE PROGRAM
2.1 Basic Provisions of the Program. The Program shall be
conducted by Dermion, subject to oversight by the Committee. Under the Program,
Dermion will use commercially reasonable efforts to conduct research with
respect to and develop Products in accordance with this Agreement. In
furtherance thereof, Dermion shall use commercially reasonable efforts to
perform such tasks and to comply with the time schedules therefor as are set by
the Committee in the Annual Plans or otherwise; provided, that Dermion shall
have no
9
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obligation to incur costs or expenses to purchase assets or obtain services for
use exclusively in connection with the Program which are materially in excess of
the aggregate amount of Research Funding Payments paid by Ciba. Program
activities shall be conducted at facilities provided by Dermion and/or Ciba and
shall use such personnel, methods and resources as shall be determined by
Dermion, subject to the approval of the Committee; provided, however, that any
such facilities provided by Ciba shall be provided at no charge to Dermion. Such
personnel, methods and resources shall be sufficient to fulfill the objectives
of the Program. Dermion covenants to Ciba that all Program activities conducted
by Dermion or its Affiliates shall be conducted in a professional and competent
manner, in compliance with all Applicable Laws and in accordance with this
Agreement.
2.2 Staffing and Resources.
(a) Dermion. Dermion shall make available for use exclusively
in the Program ****************************** equivalent employees ("Program
Employees") at all times during the term of this Agreement, unless at any time
the Committee determines that the objectives of the Program can be fulfilled
with fewer Program Employees. Each Program Employee shall have such technical
credentials, education and experience as is appropriate for such Program
Employee's position in the Program. It is understood and agreed that the Program
Employees may be consultants or independent contractors of, and need not be
employees of, Dermion. All compensation (including salary, bonus and other
benefits), and all travel, lodging and other business expenses of Program
Employees shall be paid by Dermion. In the event of a Program Employee vacancy
for any reason, prompt notice thereof shall be given to the Committee. Unless
otherwise determined by the Committee, any such vacancy shall be filled by
Dermion with an individual or individuals with comparable qualifications as the
departed Program Employee and acceptable to Ciba, in its reasonable discretion.
Subject to Section 2.2(c) below, Dermion shall provide such other scientific
resources (consultants, facilities, equipment and materials) as are reasonably
necessary to conduct the Program.
(b) Ciba. Ciba shall have the right to designate from time to
time Ciba personnel to participate in the Program ("Ciba Personnel"). Ciba
Personnel shall remain employed or otherwise engaged by Ciba during their
participation in the Program. Ciba shall remain responsible for all compensation
(including salary, bonus and other benefits) payable to, and all travel, lodging
and other business expenses of such Ciba Personnel.
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<PAGE> 15
(c) Equipment. Except as set forth in the next sentence, all
equipment necessary for conducting the Program shall be provided by Dermion at
its cost (which cost, if incurred in compliance with this Agreement, shall be
depreciated in accordance with generally accepted accounting principles as a
Program Cost) and, to the extent purchased by Dermion, title thereto shall be
retained by Dermion. To the extent any item of equipment is required to be
purchased in connection with conducting the Program for a purchase price in
excess of *******, Dermion shall notify the Committee. Subject to Section
2.4(a)(viii), Ciba shall purchase such equipment and make it available for use
in the Program. Ciba shall retain title to any such equipment and such equipment
shall be returned to Ciba upon termination of this Agreement.
2.3 Annual Plans. For each calendar year of the Program, an
Annual Plan shall be approved by the Committee no later than ninety (90) days
before the end of the prior calendar year. The Annual Plan for 1996 shall be
prepared and approved by the Committee no later than thirty (30)days after the
date hereof. Each Annual Plan shall be in writing and shall set forth with
reasonable specificity research objectives, milestones, budgets and personnel
requirements for Program activities to be conducted during the year covered by
such Annual Plan. The Committee may make amendments to the Annual Plan as it may
determine are necessary or desirable from time to time.
2.4 The Committee.
(a) Establishment and Functions. Dermion and Ciba shall
establish a research and development steering Committee (the "Committee"), which
shall be responsible for overseeing all aspects of the Program. The Committee
shall plan, administer, and monitor the Program and shall keep the parties
reasonably informed as to the status of all Program activities. Without limiting
the foregoing, the approval of the Committee shall be required for the following
actions with respect to the Program:
(i) The adoption, amendment or repeal of any material plan or
policy, including Annual Plans, with respect to the Program;
(ii) The determination as to whether to pursue research concerning
or the development of any particular Product;
(iii) The determination as to whether to make any material changes
or material adjustments with respect to the research
concerning or development of any particular Product or the
Program generally;
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<PAGE> 16
(iv) The termination of Program activities with respect to any
Product;
(v) The organization of, or the acquisition or disposition of any
interest in, any other Person by Dermion in connection with
the Program;
(vi) The execution, material amendment or termination by Dermion of
any agreement for the acquisition from a third Person of
Patent Rights or Know-How (or a license thereof) in connection
with Program activities;
(vii) Subject to the provisions of Section 4.5, the filing of any
patent application with respect to any Jointly Developed
Technology;
(viii) Except as contemplated in the then-current Annual Plan, any
capital expenditure or series of related capital expenditures
in connection with the Program aggregating in excess of Five
Thousand Dollars ($5,000);
(ix) Except as contemplated in the then-current Annual Plan, any
agreement for the performance of any Program activities by a
third party subcontractor involving payments in excess of Five
Thousand Dollars ($5,000);
(x) The determination as to whether to pursue an IND, IDE or NDA
with respect to any Product;
(xi) The determination as to whether any technology developed
pursuant to the Program constitutes Improvements to Ciba
Technology, Improvements to Dermion Technology, Improvements
to IOMED Technology or Jointly Developed Technology;
(xii) The establishment and approval of the Final Marketing Image of
any System; and
(xiii) The amendment or appeal of any prior resolutions of the
Committee.
(b) Size and Membership. The Committee shall consist of six
(6) members. Each Committee member shall have appropriate technical credentials,
knowledge and on-going familiarity with this Agreement, and the Committee
members of each party shall have authority to bind such party. Dermion and Ciba
each shall appoint, in its sole discretion, three members to the Committee.
Substitutes may be appointed at any time by notice in writing to the other
party. Vacancies 0 shall be filled by the party who appointed the departing
member.
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The initial members of the Committee shall be as set forth
below:
Dermion Appointees:
Ned Weinshenker
Tom Parkinson
Lindsay Lloyd
Ciba Appointees:
Harald Rettig
Glen Van Buskirk
Robert Andriola
(c) Meetings. The Committee shall meet at least semiannually,
with such semi-annual meeting to be held, alternatively, in Salt Lake City, Utah
and Summit, New Jersey, unless the parties agree otherwise. Any additional
meetings shall be held at such places and on such dates selected by the parties.
Employees of each party or its Affiliates, in addition to the members of the
Committee, may attend such meetings at the invitation of either party.
(d) Minutes. The Committee shall keep accurate minutes of its
deliberations which record all proposed decisions and all actions recommended or
taken. Drafts of the minutes shall be delivered to all Committee members within
fifteen (15) days after each meeting. The party hosting the meeting shall be
responsible for the preparation and circulation of the draft minutes. Draft
minutes shall be edited by the parties and shall be issued in final form only
with their approval and agreement as evidenced by their signatures on the
minutes.
(e) Quorum; Voting, Decisions. At each Committee meeting, the
presence of at least two representatives of each party shall constitute a
quorum. Each party's Committee representatives shall have in the aggregate one
vote on-all matters before the Committee, regardless of the number of
representatives present. All decisions of the Committee shall be made by
unanimous vote. In the event that the Committee is unable to resolve any matter
before it after substantial good faith negotiation (a "Disputed Matter"), and if
such Disputed Matter is a Ciba Matter (as defined below), Ciba shall cast the
deciding vote on the matter. Any Disputed Matter that is not a Ciba Matter shall
be referred at the request of either party to the Chairman of Dermion and the
Senior Vice President, Research, of the Pharmaceuticals Division of Ciba (or
such other individuals) not on the Committee designated from time to time in
writing by one party to the other) for resolution. Such
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<PAGE> 18
officers shall endeavor in good faith to resolve the matter in dispute. If the
matter has not been resolved within forty-five (45) days of such referral, it
shall be resolved in accordance with Section 11.1. As used in this Agreement,
"Ciba Matter" shall mean any matter described in clauses (i), (ii), (iii), (iv),
(viii), (ix), (x) or (xiii) of Section 2.4(a) (in the case of (xiii), only to
the extent that the resolution being amended or repealed constitutes a Ciba
Matter), and any other matter expressly designated as such in this Agreement.
(f) Expenses. Dermion and Ciba shall each bear all expenses of
their respective Committee members related to their participation on the
Committee and attendance at Committee meetings.
2.5 Research Records; Reports.
(a) Research Records. Dermion shall maintain complete and
accurate records, in good scientific manner and in appropriate detail for patent
purposes, fully and properly reflecting all Program activities performed by it,
costs and expenses incurred in connection therewith and the results thereof,
including, without limitation, such data and materials as are required to be
maintained pursuant to Applicable Laws ("Program Records"). Program Records
shall be maintained on a Product-by-Product basis.
(b) Reports. Within fifteen (15) days after the end of each
calendar quarter (and otherwise at the written request of the Committee),
Dermion shall prepare and provide to the Committee a written summary describing,
in reasonable detail, the status of the Program, including all discoveries and
technical developments, and the status of compliance with research objectives
and milestones as set forth in the Annual Plan. In addition, Dermion shall
provide Quarterly Reports to the Committee pursuant to and in accordance with
Section 6.2. Dermion shall provide such other research, financial or other
reports to the Committee as the Committee may from time to time reasonably
request.
(c) Interim Agreement Report. IOMED has prepared and provided
to Ciba a written report setting forth an accounting of all funds paid by Ciba
to IOMED pursuant to the Interim Agreement.
(d) Review. Subject to Section 8.1, Ciba shall have the right,
during normal business hours and upon reasonable notice, to inspect and copy the
records of Dermion relating to the Program.
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(e) Hazards. Each of Dermion and Ciba shall report to the
other as soon as practicable, and no later than five (5) days following such
party's own notification thereof, any findings associated with the use of any
System that may suggest significant hazards, significant contraindications,
significant side effects or significant precautions pertinent to the safety of
such System, in each case (i) at any time, insofar as it relates to Dermion
Technology, IOMED Technology or Jointly Developed Technology, or (ii) during the
term of this Agreement, insofar as it relates to Ciba Technology.
2.6 Access to Facilities. Subject to Section 8.1,
representatives of Ciba may, upon reasonable notice during normal business
hours, (a) visit any facilities where Program activities are being conducted,
and (b) consult informally, during such visits and by telephone, with
representatives of Dermion concerning the Program. On such visits, a
representative of Dermion may accompany the representatives of Ciba.
2.7 Clinical Trials. Unless otherwise determined by the
Committee with respect to any Product (which determination shall not be a Ciba
Matter), all clinical trials of Products shall be conducted by or under the
supervision of, and at the sole cost and expense of, Ciba, utilizing such
facilities, personnel, methods and other resources as shall be determined by
Ciba, subject to the review and approval of the Committee (which approval shall
be a Ciba Matter), provided, that Ciba shall not be required to pay any
additional compensation to Dermion in the event that any such facilities,
personnel, methods or other resources are provided by Dermion pursuant to this
Agreement. Dermion shall be given the opportunity to assist in the preparation
of any protocol proposed by Ciba for clinical trials of a Product.
2.8 Clinical Manufacturing of Products. Unless otherwise
determined by the Committee with respect to any Product, Dermion shall supply
Products for purposes of conducting clinical trials thereof. Dermion shall use
such facilities, personnel, methods and other resources as shall be determined
by Dermion, subject to the review and approval of the Committee. Ciba shall
reimburse Dermion for all direct out-of-pocket costs and expenses incurred by
Dermion in supplying Products pursuant to this Section 2.8. To the extent that
Dermion obtains products from IOMED, IOMED covenants and agrees to charge
Dermion only IOMED's direct fully absorbed costs and expenses incurred in
supplying such Products to Dermion.
2.9 Liability Insurance. During the term of this Agreement,
each party shall maintain comprehensive general liability insurance with respect
to claims for damages arising
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from bodily injury (including death) caused by, or arising out of, the
development, manufacture and sale of its products in such amounts, with such
deductibles and covering such risks as are customary for comparable companies in
its industry. Prior to the commencement of clinical trials with respect to any
Product, the Committee shall meet to discuss whether the parties should obtain
additional liability insurance with respect to claims caused by, or arising out
of, the development of the Products, including any clinical trials associated
therewith, and the amounts and deductibles of any such insurance.
ARTICLE 3
EXCLUSIVITY
3.1 Ciba Fields; Ciba Proprietary Drugs.
(a) Ciba Fields. Schedule 3.1(a) attached hereto sets forth as
of the date hereof those therapeutic fields in which Ciba or any of its
Affiliates ****************************************************************
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***************************************************************************
Ciba may update Schedule 3.1(a) from time to time in its discretion during the
Exclusivity Period, subject to Section 3.1(c). The therapeutic fields set forth
on Schedule 3.1(a), as so updated from time to time, shall be referred to herein
as the "Ciba Fields."
(b) Ciba Proprietary Drugs. Schedule 3.1(b) attached hereto
sets forth as of the date hereof certain Drugs with respect ********************
*****************************************, and which Ciba believes are
potentially therapeutic if delivered pursuant to a System in the treatment of
the indication (the "Specified Indication") set forth in Schedule 3.1(b) with
respect to such Drug. Ciba may update Schedule 3.1(b) from time to time during
the term of this Agreement, subject to Section 3.1(c), ***********************
***************************************************************************
**********************************. The Drugs set forth on Schedule 3.1(b), as
so updated from time to time, shall be referred to herein as the "Ciba
Proprietary Drugs."
(c) Updates. If Ciba desires at any time during the
Exclusivity Period to update Schedule 3.1(a) in order to include a new
therapeutic field (the "Proposed Ciba Field"), or at any time during the term of
this Agreement to update Schedule 3.1(b) to include a new Ciba Proprietary Drug
(such Drug, together with the associated Specified Indication, the "Proposed
Ciba
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Proprietary Drug"), it shall notify Dermion in writing, which notice shall
contain (i) in the case of a Proposed Ciba Field, a certification that such
Proposed Ciba Field satisfies the condition set forth in either clause (i) or
clause (ii) of Section 3.1(a) hereof, or (ii) in the case of a Proposed Ciba
Proprietary Drug, a certification that such Proposed Ciba Proprietary Drug
satisfies the condition set forth in Section 3.1(b) hereof. Such Proposed Ciba
Field or Proposed Ciba Proprietary Drug shall automatically and without further
action by any party hereto become a Ciba Field or a Ciba Proprietary Drug, as
the case may be, and be treated as such for all purposes of this Agreement
immediately upon receipt by Dermion of such written notice; provided, however,
that if Dermion has, prior to its receipt of such notice and in compliance with
the terms of this Agreement (including without limitation Section 3.3 hereof)
entered into an agreement with any other Person (a "Third Party Agreement") with
respect to the research, development, manufacture, distribution or sale of any
System to deliver a Drug in the Proposed Ciba Field or the Proposed Ciba
Proprietary Drug for treatment of the Specified Indication, such Third Party
Agreement shall not be subject to this Article 3.
(d) Removal of Ciba Field or Ciba Proprietary Drug. If, at any
time during the Exclusivity Period, any Ciba Field or, during the term of this
Agreement, any Ciba Proprietary Drug ceases to qualify as such, Ciba shall
within ninety (90) days notify Dermion in writing of such fact. Such Ciba Field
or Ciba Proprietary Drug, as the case may be, shall thereafter automatically and
without further action of the parties cease to be a Ciba Field or a Ciba
Proprietary Drug, as the case may be, for purposes of this Agreement.
3.2 Dermion Exclusivity. Dermion shall not conduct, have
conducted or fund any research or development activity with respect to, or
manufacture, distribute or sell (whether independently or on behalf of a third
party) any System for delivery of any Drug in a Ciba Field during the
Exclusivity Period or any Ciba Proprietary Drug for treatment of the Specified
Indication during the term of this Agreement, except (i) pursuant to the Program
in accordance with this Agreement, or (ii) outside the scope of the Program,
subject to compliance with Section 3.3.
3.3 Development of Systems for or by Dermion Outside the
Program.
(a) Notice of Dermion Proposed Systems. In the event that
during the Exclusivity Period Dermion determines to develop a System (including
any Abandoned Product) outside the scope of the Program, either pursuant to a
third party offer (a "Third
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Party Offer") to develop a System, or otherwise (a "Dermion Proposed System"),
Dermion shall give notice of the Dermion Proposed System to the Committee (the
"Notice"). The Notice shall include at least the therapeutic field of the drug
to be delivered pursuant to the Dermion Proposed System (the "Proposed Field"),
as well as such other information as is relevant to the Dermion Proposed System,
provided, that if the Dermion Proposed System is to be developed pursuant to a
Third Party Offer, Dermion shall not be required to disclose to the Committee
the name of such third party, the specific drug for which the System is to be
developed (unless such drug is a Ciba Proprietary Drug, in which case such drug,
as well as whether the indication proposed to be treated thereby is the
Specified Indication with respect to such drug, shall be disclosed) or any other
information that Dermion determines, in its good faith judgment, should not be
disclosed to Ciba because of confidentiality or competitive concerns (other than
the therapeutic field, which must in any event be disclosed).
(b) Dermion Proposed Systems in a Ciba Field. If the Proposed
Field is in whole or in part a Ciba Field, Dermion shall be prohibited from
pursuing the development of the Dermion Proposed System during the Exclusivity
Period without the prior written consent of Ciba, which may be given or withheld
in Ciba's sole discretion.
(c) Dermion Proposed Systems for Ciba Proprietary Drugs. If
the Dermion Proposed System relates to the delivery of a Ciba Proprietary Drug
for treatment of the Specified Indication, Ciba shall have the right during the
term of this Agreement to elect to have Dermion develop a Product for such Ciba
Proprietary Drug for treatment of the Specified Indication for it pursuant to
the Program instead of the Proposed Dermion System. If Ciba so elects, it shall
give notice thereof to the Committee within fifteen (15) Business Days of
receipt by the Committee of the Notice, in which case Dermion shall be
prohibited during the term of this Agreement from developing the Dermion
Proposed System for treatment of the Specified Indication, subject to the last
sentence of this Section 3.3 (c) The development of any such Product for a Ciba
Proprietary Drug for treatment of the Specified Indication pursuant to the
Program shall be pursuant to this Agreement or an amendment to this Agreement
(provided, that, other than providing for incremental costs to be paid by Ciba
and incremental personnel, facilities and resources to be provided by Dermion,
such amendment shall be on the same terms and conditions as this Agreement). If
Ciba fails to give such notice within such fifteen (15) Business Day period, or
if activities with respect to developing a Product for the Ciba Proprietary Drug
for treatment of the Specified Indication pursuant to the Program have not
commenced within
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ninety (90) days of receipt by the Committee of the Notice (other than as a
result of any acts or omissions of Dermion), Dermion shall be free to pursue the
development of the Dermion Proposed System for treatment of the Specified
Indication outside the scope of the Program, provided, that if activities with
respect to developing such Dermion Proposed System for treatment of the
Specified Indication outside the scope of the Program have not commenced within
ninety (90) days after expiration of such fifteen (15) Business Day period or
such ninety (90) day period, as the case may be, any activities by Dermion with
respect to such Dermion Proposed System shall thereafter be subject to
compliance with this Section 3.3.
(d) Other Dermion Proposed Systems. If the Proposed Field is
not a Ciba Field and if the Drug proposed to be delivered pursuant to the
Dermion Proposed System is not a Ciba Proprietary Drug for treatment of the
Specified Indication, Dermion may freely develop the Dermion Proposed System for
a third party (which development may be pursuant to an agreement under which
Dermion grants exclusive licenses to such third party).
3.4 Development by Dermion of Abandoned Products. Dermion
shall be entitled to pursue research concerning and development of Abandoned
Products outside the scope of the Program, provided, that (i) any such activity
shall be subject to compliance with Section 3.3, (ii) Patent Rights covering the
Drug for which such Abandoned Product was being developed or such drug's
manufacture or use shall have expired, and (iii) Dermion shall reimburse Ciba in
accordance with the next sentence for all costs and expenses previously incurred
in conducting Program activities with respect to such Abandoned Product. ***
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3.5 Development of Systems for or by Ciba.
(a) Systems for the Delivery of Ciba Proprietary Drugs. In the
event that during the term of this Agreement Ciba determines to develop a System
for a Ciba Proprietary Drug for treatment of the Specified Indication, it shall
give notice
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thereof to the Committee (a "Ciba Proposed Proprietary System"). Dermion shall
have the right to elect to develop such Ciba Proposed Proprietary System for
treatment of the Specified Indication as a Product pursuant to the Program. If
Dermion so elects, it shall give notice thereof to the Committee within fifteen
(15) Business Days of receipt by the Committee of such notice, in which case
Ciba shall be prohibited during the term of this Agreement from developing the
Ciba Proposed Proprietary System for treatment of the Specified Indication
outside the scope of the Program, subject to the last sentence of this Section
3.5(a). The development of a Ciba Proposed Proprietary System for treatment of
the Specified Indication as a Product pursuant to the Program shall be pursuant
to this Agreement or an amendment to this Agreement (provided, that, other than
providing for incremental costs to be paid by Ciba and incremental personnel,
facilities and resources to be provided by Dermion, such amendment shall be on
the same terms and conditions as this Agreement). If Dermion fails to give such
notice within such fifteen (15) Business Day period, or if activities with
respect to developing a Product for the Ciba Proprietary Drug for treatment of
the Specified Indication have not commenced within ninety (90) days of receipt
by the Committee of such notice (other than as a result of any acts or omissions
of Ciba), Ciba shall be free to pursue the development of the Ciba Proposed
Proprietary System for treatment of the Specified Indication outside the scope
of the Program, provided, that if activities with respect to developing such
Ciba Proposed Proprietary System for treatment of the Specified Indication
outside the scope of the Program have not commenced within ninety (90) days
after the expiration of such fifteen (15) Business Day period or such ninety
(90) day period, as the case may be, any activities by Ciba with respect to such
Ciba Proposed Proprietary System shall thereafter be subject to compliance with
this Section 3.5(a).
(b) Other Systems. If during the term of this Agreement Ciba
makes the determination to engage a third party (other than Dermion) to develop
a System for a Drug owned, licensed or manufactured by Ciba (other than a Ciba
Proprietary Drug for treatment of the Specified Indication, which shall be
covered by Section 3.5(a) above) (a "Ciba Proposed System"), prior to initiating
discussions with such third party, Ciba shall notify Dermion in writing. Ciba
agrees for a period of thirty (30) days from such notice (the "Ciba Standstill
Period"), (i) to negotiate in good faith with Dermion to reach an agreement
under which Dermion would develop the Ciba Proposed System for Ciba either
pursuant to this Agreement or an amendment to this Agreement (provided, that,
other than providing for incremental costs to be paid by Ciba and incremental
personnel, facilities and resources to be provided by Dermion, such amendment
shall be on the same terms and conditions as this Agreement), and
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(ii) Ciba shall not negotiate with or enter into a binding agreement with any
third party for the development of such Ciba Proposed System. If, upon
expiration of the Ciba Standstill Period, Ciba and Dermion have not reached an
agreement with regard to the development of the Ciba Proposed System, Ciba shall
be free to negotiate with and to enter into an agreement with a third party to
develop the Ciba Proposed System. Notwithstanding the foregoing, this Section
3.5(b) shall not apply to any Ciba Proposed System to the extent that
discussions regarding the development of such Ciba Proposed System are initiated
by a third party.
(c) No Other Restrictions. Notwithstanding any other provision
of this Agreement, Ciba shall be free to pursue the development of any System
(including any Ciba Proposed System) independently without the assistance of a
third party at any time without complying with Section 3.5(b) or any other
provision of this Agreement (other than Section 3.5(a) which shall apply only in
the case of a Ciba Proposed Proprietary System), and without any other
restriction or limitation of any kind.
ARTICLE 4
OWNERSHIP OF TECHNOLOGY; PATENTS
4.1 Licensed Technology; No Other Rights. It is understood and
agreed that Dermion owns the Dermion Technology, that IOMED owns the IOMED
Technology and that Ciba owns the Ciba Technology. It is further understood and
agreed that Dermion or its Affiliates owns Dermion Background Technology and
Ciba or its Affiliates owns Ciba Background Technology. Except as expressly set
forth in Section 5.2, neither IOMED nor Dermion shall, by virtue of entering
into this Agreement or the conduct of the Program, acquire any right, title or
interest in or to any technology (including Patent Rights and Know-How) or
products of Ciba, including the Ciba Technology and Ciba Background Technology.
Except as expressly set forth in Section 5.1, Ciba shall not, by virtue of
entering into this Agreement or the conduct of the Program, acquire any right,
title or interest in or to any technology (including Patent Rights and Know-How)
or products of IOMED or Dermion, including the Dermion Technology, the IOMED
Technology and Dermion Background Technology. Except as expressly provided
herein, nothing in this Agreement shall be deemed to grant (directly, by
implication or estoppel, or otherwise) any license under any such technology. It
is understood and agreed by the parties that this Agreement does not grant to
any party any license or other right to use in advertising, publicity or
otherwise, any trademark, service mark,
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trade name or their equivalent, or any contraction, abbreviation or simulation
thereof, of any other party.
4.2 Improvements. Without limiting the generality of the
foregoing, any Improvements of or to Dermion Technology, IOMED Technology or
Ciba Technology made in the course of conducting the Program shall remain the
sole and exclusive property of Dermion, IOMED or Ciba, as the case may be. In
furtherance thereof, as between Dermion and IOMED and Persons claiming through
either of them, on the one hand, and Ciba and Persons claiming through Ciba, on
the other hand, (i) any Improvements made in the course of conducting the
Program, or any results of the Program, in each case that are specific to the
Dermion Technology or the IOMED Technology shall be the sole and exclusive
property of Dermion or IOMED, as the case may be, and all records and data
relating thereto shall be retained by Dermion or IOMED, as the case may be, and
(ii) any Improvements made in the course of conducting the Program, or any
results of the Program, in each case that are specific to the Ciba Technology
shall be the sole and exclusive property of Ciba, and all records and data
relating thereto shall be delivered to Ciba. Each of IOMED and Dermion hereby
assigns to Ciba all intellectual property rights that it may now have or
hereafter acquire in any Improvements that are made in the course of conducting
the Program, or any results of the Program, in each case that are specific to
the Ciba Technology. Ciba hereby assigns to Dermion all intellectual property
rights that it may now have or hereafter acquire in any Improvements that are
made in the course of conducting the Program, or any results of the Program, in
each case that are specific to the Dermion Technology. Ciba hereby assigns to
IOMED all intellectual property rights that it may now have or hereafter acquire
in any Improvements that are made in the course of conducting the Program, or
any results of the Program, in each case that are specific to the IOMED
Technology.
4.3 Ownership and Use of Jointly Developed Technology.
(a) Ownership of Jointly Developed Technology. Subject to
Section 4.3(b) , Dermion and Ciba shall jointly hold all right, title and
interest in and to all Jointly Developed Technology. Except as otherwise
provided in this Agreement, both Ciba and Dermion may freely practice and
otherwise exploit any and all Jointly Developed Technology without the consent
of, and without any obligation (including without limitation any obligation to
pay royalties or other amounts, or to render an accounting) to, the other party.
Each of Dermion and Ciba shall cause its employees and others performing Program
activities on its behalf (including, in the case of Dermion, Program Employees,
and in the case of Ciba, Ciba Personnel) (its "Scientists") to execute
agreements (i) assigning world-wide rights to all Jointly
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Developed Technology made or developed by such Scientists to Dermion and Ciba,
jointly, and (ii) agreeing to cooperate with Dermion and Ciba in obtaining
patent protection with respect thereto (including by executing such documents as
may be required by any patent office in connection with a related patent
application or patent). Each of Dermion and Ciba shall cause its Scientists
promptly to disclose to such party, and shall thereafter promptly disclose to
the other party and the Committee, the conception or reduction to practice of
any Jointly Developed Technology that it believes has a reasonable likelihood of
receiving patent protection.
(b) Limitations on Use of Jointly Developed Technology by
Dermion. Notwithstanding the rights of Dermion and Ciba as joint owners of
Jointly Developed Technology pursuant to Section 4.3(a), any use of Jointly
Developed Technology by Dermion and Ciba shall be subject to Article 3 hereof.
4.4 Transfer of Jointly Developed Technology. During the term
of this Agreement, and for a period of three (3) years after the effective date
of termination thereof (such term and period, the "Technology Transfer
Restriction Period"), neither Dermion nor Ciba shall sell, assign, transfer or
convey (for purposes of this Section 4.4, "Assign") all right, title and
interest in or to any item of Jointly Developed Technology without the prior
written consent of the other party, except (i) to a successor to substantially
all of the business of Dermion or the Pharmaceuticals Division of Ciba, as the
case may be, whether by merger, consolidation, stock sale, asset sale or
otherwise, (ii) in the case of Ciba, to any Person other than a Prohibited
Transferee, or (iii) in the case of Dermion, to any Person other than for use in
connection with the research, development, manufacture, distribution or sale of
Systems for delivery of drugs in any of the Ciba Fields (as defined from time to
time in accordance with Section 3.1(a)), it being a condition precedent to any
Assignment of Jointly Developed Technology pursuant to this clause (iii) that
Dermion obtain the agreement of such Person not to so use during the Technology
Transfer Restriction Period the Jointly Developed Technology to be Assigned;
provided, however, that notwithstanding any other provision of this Section 4.4,
in the event that Dermion Assigns any Jointly Developed Technology to a
Prohibited Transferee (which Assignment by its terms shall require the Assignee
to give notice to Dermion of subsequent Assignments by such Prohibited
Transferee), and such Prohibited Transferee subsequently Assigns such Jointly
Developed Technology to another Prohibited Transferee, Dermion shall promptly
give Ciba notice of such subsequent Assignment, in which case the restriction
set forth in clause (ii) above shall, as of the date of such subsequent
Assignment, terminate and thereafter be of no further force or effect.
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4.5 Patents and Patent Applications.
(a) Initial Filings. Each party shall promptly disclose to the
Committee the conception or reduction to practice of any Jointly Developed
Technology that the disclosing party believes has a reasonable likelihood of
receiving patent protection. Promptly after such disclosure, the Committee shall
meet (in person or by teleconference) to discuss such Jointly Developed
Technology, including (i) whether to proceed with a patent application with
respect thereto and (ii) the jurisdictions in which such patent application
should be filed. In the event that the Committee elects to file a patent
application with respect to any Jointly Developed Technology, Ciba shall be
responsible therefor (unless the Committee determines that Dermion should file
such patent application (which determination shall not be a Ciba Matter)) (the
party filing such patent application being referred to in this Section 4.5 as
the "Responsible Party"). The Responsible Party shall (i) give the other party
an opportunity to review the text of any such application promptly (with
consideration of all applicable filing deadlines) before filing and (ii)
promptly supply the other party with a copy of the application as filed,
together with notice of its filing date and serial number. Unless otherwise
agreed by the parties, the Responsible Party shall be responsible for the
initial filing of any such patent application and the subsequent prosecution and
maintenance of the application and any resulting patents.
(b) Foreign Filings. Within a reasonable period of time (which
the parties shall use reasonable efforts to ensure is no more than nine (9)
months) following the filing date of a patent application pursuant to Section
4.4(a), the Committee shall determine whether to abandon such application
without replacement, abandon and refile such application, proceed with such
application only in the country of filing, or use such application (e.g. as the
basis for a claim of priority under the Paris Convention) for corresponding
applications in other countries. Dermion and Ciba shall consult together to
ensure that, so far as practicable, the texts of applications filed in different
jurisdictions contain the same information and claim the same scope of
protection.
(c) Patent Prosecution and Maintenance. The Responsible Party
shall diligently prosecute and maintain, using commercially reasonable
practices, patent applications and patents with respect to Jointly Developed
Technology for which it is responsible, and promptly provide the other party
with copies of all relevant documentation with respect thereto. The Responsible
Party shall use patent counsel and other professional
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advisors of its own selection, reasonably acceptable to the other party. The
Committee shall periodically review the status of patents and patent
applications constituting Jointly Developed Technology, including whether the
prosecution and/or maintenance of each such patent or patent application should
be continued.
(d) Authority. The Responsible Party shall have the sole and
exclusive authority to prosecute and maintain the patent application and patent
for which it is responsible, including the right to amend and cancel claimed
subject matter, as may be reasonably appropriate or desirable in the view of the
Responsible Party, but shall consult in good faith with the other party
regarding such prosecution and maintenance with respect to Jointly Developed
Technology for which it is responsible, and will promptly provide the other
party with a copy of all relevant documentation with respect thereto. The other
party shall cooperate with the Responsible Party, including providing the
Responsible Party with access to such information as may be reasonably necessary
to permit such prosecution and maintenance, and signing, or causing to have
signed, such documents as may be necessary or appropriate in connection
therewith. Prior to abandoning any such patent application or patent, the
Responsible Party shall offer the same to the other party for prosecution or
maintenance, as the case may be. The costs, if any, of such cooperation shall be
Prosecution Costs subject to Section 4.4(e).
(e) Prosecution Costs. *******************************
***************************************************************************
***************************************************************************
***************************************************************************
(f) Independent Filing. In the event that after consideration
thereof the Committee elects not to file a patent application in any
Jurisdiction with respect to any Jointly Developed Technology, either Dermion or
Ciba shall be entitled to file a patent application in such jurisdiction with
respect to such Jointly Developed Technology (an "Independent Filing"). In such
event, the party making the Independent Filing shall bear all Prosecution Costs
with respect to such patent application and shall own all right, title and
interest in and to any Patent Rights arising or resulting from such Independent
Filing. Notwithstanding the foregoing, the other party may within one (1) year
of the filing date elect to join the filing party in such Independent Filing, in
which case (i) such other party shall pay to the filing party such other party's
share of Prosecution Costs incurred by the filing party to date in connection
with such Independent Filing plus an amount equal to ******************** (a
"Premium") of all such Prosecution Costs, (ii) all Patent Rights arising or
resulting from such filing shall be deemed
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Jointly Developed Technology for all purposes under this Agreement, and (iii)
thereafter all of the other provisions of this Section 4.5 shall apply to such
patent application (with the filing party serving as the Responsible Party).
4.6 Infringement of Patent Rights.
(a) Notice. If any party shall become aware of any
infringement or threatened infringement of any Patent Rights constituting
Jointly Developed Technology or Licensed Technology, including that contained in
a notice provided under the 1984 Act by a party filing an ANDA or an NDA for a
System, or an equivalent action in any other country of the world (an
"Infringement"), then the party having such knowledge shall give notice
"Infringement Notice") to the other parties promptly upon becoming aware of such
Infringement.
(b) Jointly Developed Technology. Promptly upon receipt of any
Infringement Notice relating to Infringement of Jointly Developed Technology,
the Committee shall meet to determine appropriate action to take with respect to
such Infringement (the "Committee's Determination"), including (i) whether the
parties should prosecute such Infringement jointly, whether either party should
prosecute such Infringement independently, or whether no action should be taken
by the parties with respect to such Infringement, (ii) in the event that the
Committee determines to prosecute such Infringement jointly, the party or
parties to have primary responsibility therefor (the "Responsible Party(ies)"),
(iii) allocation between the parties of expenses to be incurred with respect to
the prosecution of such Infringement, (iv) allocation between the parties of any
damages recovered in respect of such Infringement, and (v) any other matter
deemed relevant by the Committee in respect of such Infringement. With respect
to any joint prosecution, the Responsible Party(ies) shall take such action, as
deemed appropriate, whether by action, suit, proceeding or otherwise, in
accordance with the Committee's Determination to prevent or eliminate the
Infringement and to collect damages with respect thereto. Except as set forth
below, all costs and expenses incurred by any party in connection with the
Infringement shall be borne by the parties in accordance with the Committee's
Determination. Except as set forth below, damages recovered by any party in such
action, suit or proceeding in connection with such Infringement shall be
apportioned between the parties in accordance with the Committee's
Determination. In the event that the Committee is unable to make a determination
mutually acceptable to the parties as to how to proceed with respect to such
Infringement, either party shall be entitled to prosecute such Infringement in
its own name and on its own behalf, in which case such party shall bear all
costs and expenses incurred by it
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in connection with prosecuting such Infringement and shall retain all damages
recovered in respect thereof.
(c) Licensed Technology. Each party shall be responsible to
take such action as it deems appropriate, whether by action, suit, proceeding or
otherwise, at its own expense to prevent or eliminate an Infringement of such
party's Licensed Technology and to collect damages, provided, that, with respect
to Patent Rights constituting Dermion Technology or IOMED Technology
incorporated in any Product (or in any process used in developing or
manufacturing any Product), Ciba shall have the right to prosecute such
infringement in the same manner and under the same terms and conditions as set
forth in Section 4.6(b).
4.7 Infringement of Third Party Rights.
(a) Notice. If either Dermion or Ciba shall become aware of
any Infringement Action with regard to the manufacture, use or sale of any
System incorporating (or developed or manufactured through processes
incorporating) Jointly Developed Technology, the party aware shall promptly
notify the other party of the same and fully disclose, to its knowledge, the
basis therefor.
(b) Infringement Actions with respect to Products. if the
Infringement Action relates to a Product incorporating (or developed or
manufactured through processes incorporating) Jointly Developed Technology, the
parties shall jointly compromise or defend the Infringement Action on such basis
and on such terms as the parties shall mutually agree. In such event the parties
shall cooperate fully with respect to the compromise or defense of such
Infringement Action, and each party shall keep the other fully informed as to
the status of such Infringement Action. If, in connection with such Infringement
Action, either Dermion or Ciba is required to obtain a Third Party License in
order to make, have made, use or sell Products incorporating (or developed or
manufactured through processes incorporating) Jointly Developed Technology, such
Third Party License shall be obtained for the benefit of both Dermion and Ciba,
and all rights under such Third Party License shall be held jointly by the
parties. *****************************************************************
**************************************************************************
************************.
(c) Infringement Actions with respect to Other Systems. If the
Infringement Action relates to a System incorporating (or developed or
manufactured through processes incorporating) Jointly Developed Technology,
which System is not a Product developed pursuant to the Program, the Committee
shall meet to determine appropriate action to take with respect to such
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Infringement Action, including (i) whether the parties should compromise or
defend such Infringement jointly or whether either party should compromise or
defend such Infringement independently, (ii) in the event that the Committee
determines to compromise or defend such Infringement Action jointly, the party
or parties to have primary responsibility therefor, (iii) allocation between the
parties of expenses to be incurred with respect to the compromise or defense of
such prosecution, (iv) allocation between the parties of rights under any Third
Party License obtained in connection with such Infringement Action, and (v) any
other matter deemed relevant by the Committee in respect of such Infringement
Action. In the event that the Committee is unable to make a determination
mutually acceptable to the parties as to how to proceed with respect to such
Infringement Action, either party shall be entitled to compromise or defend such
Infringement Action in its own name and on its own behalf, in which case such
party shall bear all Settlement Costs incurred by it in connection with
compromising or defending such Infringement Action and shall retain sole
ownership of all rights under any Third Party License obtained by it in
connection with such Infringement Action.
ARTICLE 5
LICENSES
5.1 Licenses to Ciba. (a) Dermion hereby grants to Ciba during
the term of this Agreement a non-exclusive license under the Dermion Technology,
with the right to sublicense (subject to Section 5.3), to make, have made, use
and sell Systems in the Territory. At the end of the term of this Agreement,
Ciba shall have a perpetual, worldwide, paid-up, royalty-free (subject to
Section 6.4), non-exclusive license under the Dermion Technology, with the right
to sublicense (subject to Section 5.3), to further make, have made, use and sell
Systems. All rights granted under this Section 5.1(a) are subject to Section
5.1(c) below.
(b) IOMED hereby grants to Ciba during the term of this
Agreement a non-exclusive license under the IOMED Technology, with the right to
sublicense (subject to Section 5.3), to make, have made, use and sell Systems in
the Territory. At the end of the term of this Agreement, Ciba shall have a
perpetual, worldwide, paid-up, royalty-free (subject to Section 6.4),
non-exclusive license under the IOMED Technology, with the right to sublicense
(subject to Section 5.3), to further make, have made, use and sell Systems. All
rights granted under this Section 5.1(b) are subject to Section 5.1(c) below.
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(c) ******************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
(d) IOMED and Dermion agree to abide by and not breach the
***********************************************, and shall not terminate, agree
to any amendment or modification of or waive any rights under such licenses
without the prior written consent of Ciba (not to be unreasonably withheld).
(e) Notwithstanding the foregoing, with respect to
Improvements to Dermion Technology and IOMED Technology, respectively, the
licenses granted under this Section 5.1 shall only include such Improvements
made during the term of this Agreement.
5.2 License from Ciba. Ciba hereby grants to Dermion during
the term of this Agreement a non-exclusive, royalty-free, license under the
Patent Rights included in the Ciba Technology to make, have made, use and sell
Products in the Territory pursuant to the Program. In addition to the foregoing,
Ciba hereby grants to Dermion during the term of this Agreement a nonexclusive
license to practice the Know-How included in the Ciba Technology in the
Territory pursuant to the Program. All rights to Ciba Technology (including
Patent Rights and Know-How) granted to Dermion pursuant to this Agreement shall
terminate upon the effective date of termination of this Agreement, and Dermion
shall have no right, title or interest in such Ciba Technology thereafter.
5.3 Sublicensing.
(a) Dermion. Notwithstanding any other provision of this
Agreement, Dermion shall not sublicense the rights granted to it under Section
5.2 without the prior written consent of Ciba, which Ciba may give or withhold
in its sole discretion.
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(b) Ciba. Subject to Section 5.1(c), Ciba shall be permitted
to sublicense the rights granted to it under Sections 5.1(a) and 5.1(b) to any
Person in connection with the research concerning, development, manufacture,
distribution or sale by such Person of Systems for drugs owned, licensed or
manufactured by Ciba; provided, however, that such license may not permit such
Person to grant lower level licenses. Any other sublicense by Ciba of its rights
under Sections 5.1(a) and 5.1(b) may be made only with the prior written consent
of Dermion, which Dermion may give or withhold in its sole discretion.
5.4 Transfers of Second Generation Technology by Dermion. If
at any time during the term of this Agreement and for a period of five (5) years
after the effective date of termination thereof, Dermion obtains any Patent
Rights covering Second Generation Technology (as defined below), Dermion shall
notify Ciba in writing of such event. Dermion agrees that for a period of thirty
(30) days from such notice (the "Dermion Standstill Period"), (i) it will
negotiate in good faith with Ciba to reach an agreement to license the Second
Generation Technology to Ciba on terms and conditions acceptable to the parties,
and (ii) Dermion shall not negotiate or enter into a binding agreement with any
third party to Transfer the Second Generation Technology, provided, that clause
(ii) of this sentence shall only apply during the term of this Agreement. If,
upon expiration of the Dermion Standstill Period, Ciba and Dermion have not
reached an agreement for the license of such Second Generation Technology to
Ciba, Dermion shall be free to Transfer such Second Generation Technology to any
third party. In addition, if Ciba and Dermion have reached an agreement for a
license, Dermion shall also be free to Transfer such Second Generation
Technology to any third party to the extent permitted under the terms of the
license from Dermion to Ciba. Notwithstanding the foregoing, Dermion shall not
be required to enter into a license with Ciba if and to the extent that the
terms of such license would, in the good faith judgment of Dermion on advice of
counsel, violate the terms of any agreement between Dermion and any third party
then in effect. As used in this Section 5.4, "Second Generation Technology"
shall mean any technology (including Patent Rights and Know-How), other than
Improvements to Dermion Technology or IOMED Technology, developed by Dermion
that is applicable or potentially applicable to the development of Systems. If
any transaction is covered by both this Section 5.4 and Section 8.4 below, the
terms of Section 8.4 shall exclusively govern such transaction.
5.5 Future IOMED Licenses. Subject to Section 5.1(c), upon the
request of Dermion, IOMED shall grant a non-exclusive license of the IOMED
Technology to such licensee and on such terms and conditions as may be requested
by Dermion in connection
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with the conduct of the Business by Dermion. IOMED acknowledges that all rights
to royalties payable in connection with any such license have been assigned to
Dermion pursuant to the Contribution Agreement.
ARTICLE 6
EQUITY AND FUNDING
6.1 Related Transactions; License Fee. (a) Simultaneously with
the execution and delivery of this Agreement (i) Ciba and Dermion shall enter
into a Stock Purchase Agreement pursuant to which Ciba shall purchase shares of
Dermion's Common Stock for a purchase price of One Million Dollars ($l,000,000)
(the "Stock Purchase Agreement"); (ii) IOMED and Dermion shall enter into a
Contribution Agreement (the "Contribution Agreement") in the form attached as
Exhibit F to the Stock Purchase Agreement; (iii) Ciba, Dermion and IOMED shall
enter into a Stockholders' Agreement in the form attached as Exhibit E to the
Stock Purchase Agreement; (iv) IOMED and Dermion shall enter into a Patent
License Agreement in the form attached as Exhibit B to the Stock Purchase
Agreement (the "Intercompany Patent License"); (v) IOMED and Dermion shall enter
into an Agreement of Sublease in the form attached as Exhibit D to the Stock
Purchase Agreement (the "Sublease"); and (vi) IOMED and Dermion shall enter into
a Support Services Agreement in the form attached as Exhibit C to the Stock
Purchase Agreement (the "Support Services Agreement").
(b) In consideration of the rights granted to Ciba in Section
5.1, Ciba shall pay IOMED the sum of One Million Dollars ($1,000,000) upon
execution of this Agreement.
6.2 Program Funding
(a) Research Funding Payments. In order to fund activities to
be conducted under the Program, Ciba shall reimburse Dermion for all Program
Costs up to a maximum aggregate amount per annum equal to *****************
*************************************. Such amounts are referred to in this
Agreement as "Research Funding Payments." Research Funding Payments shall be
payable quarterly as follows:
(i) Within thirty (30) days after the end of each calendar
quarter, Dermion shall prepare and provide to the Committee a
financial report with respect to the Program (the "Quarterly
Report"), which shall include (x) a statement setting forth in
comparative form Program Costs actually paid or
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incurred by Dermion during the previous calendar quarter
("Actual Costs") and Program Costs previously budgeted with
respect to such calendar quarter ("Budgeted Costs"), together
with the amount by which Actual Costs exceeded or were less
than Budgeted Costs, and (y) a budget (the "Quarterly Budget")
of Program Costs for the current calendar quarter. ********
*********************************************************
********.
(ii) Subject to subparagraph (iii) below, within fifteen (15) days
after receipt by the Committee of the Quarterly Report, Ciba
shall pay Dermion the amount of Program Costs for the current
quarter as set forth in the Quarterly Budget plus or minus the
amount by which Actual Costs exceeded or were less than
Budgeted Costs for the previous quarter.
(iii) To the extent that Ciba disagrees with any item or amount set
forth in the Quarterly Report, including any Actual or
Budgeted Cost for the previous quarter or the budgeted Program
Costs for the current quarter set forth in the Quarterly
Budget, any such disagreement shall be submitted to the
Committee for resolution in accordance with Section 2.4(e) and
Ciba shall be entitled to withhold from any amounts to be paid
under subparagraph (ii) above the amount in dispute until such
disagreement shall be resolved.
(iv) Upon execution of this Agreement, Ciba shall pay Dermion
******** representing the remaining Research Funding Payment
for the calendar quarter ended March 31, 1996.
(b) Use of Proceeds. All Research Funding Payments shall be
used by Dermion solely to pay for Program Costs. All Program activities, as
described in the Annual Plans, shall be paid for by Dermion out of Research
Funding Payments or otherwise, subject to Section 2.1.
6.3 Milestone Payments.
(a) Payments. For each Product, Ciba shall make the following
payments (each, a "Milestone Payment") to Dermion upon achievement of the
milestone events set forth below with respect to such Product:
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(i) ***********************************************************
*********************************************************
*********************************************************
*********************************************************
*********************************************************
*********************************************************
(ii) ********************************************************
**********************************************
(iii) *********************************************************
*********************************************************
For purposes of this Section 6.3(a), (i) to the extent that multiple Systems are
developed pursuant to the Program in order to deliver multiple dosage regimens
of the same Drug for treatment of the same indication, or (ii) to the extent
that any System developed pursuant to the Program can be used, without material
modification, in order to deliver any Drug for treatment of multiple
indications, then, in either case, such Systems or System shall be considered
one Product. Upon termination of the development of any Product (whether
pursuant to a termination of this Agreement or otherwise), Dermion shall
thereafter be entitled to any Milestone Payment with respect to such Product
only if the Milestone Trigger for such Milestone Payment is achieved within ***
********** after the effective date of termination of such Product. For purposes
of this Section 6.3, "Milestone Trigger" with respect to a Milestone Payment
shall mean (x) in the case of a Milestone Payment referred to in Section
6.3(a)(i), ****************************************, as the case may be, with
respect to such Product and (y) in the case of a Milestone Payment referred to
in Section 6.3(a)(ii) or (iii), the establishment and approval by the Committee
of ************************* with respect to such Product, provided, that the
effectiveness of such establishment and approval of ************************* as
a Milestone Trigger shall be conditioned upon Dermion's continued cooperation
and provision of assistance to Ciba (to the extent reasonably requested by Ciba)
in connection with the ********************************************* with
respect to such Product.
(b) Milestone Credits. ******************* of Milestone
Payments paid with respect to a Product pursuant to Sections 6.3(a)(ii) and
(iii) above ("Milestone Credits") shall be credited against royalties on Net
Sales of such Product pursuant to Section 6.4(a), or, pursuant to Section
6.4(e), against other amounts payable under this Article 6. In payment of
Milestone Credits, Dermion shall receive no royalties with respect to a Product
pursuant to Section 6.4(a) until aggregate royalties payable with respect to
such Product are in excess of the amount of such credit.
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6.4 Royalties Payable by Ciba.
(a) Royalties on Net Sales of Products. With respect to each
Product incorporating, or developed or manufactured through processes
incorporating, patents constituting Dermion Technology or IOMED Technology
licensed to Ciba hereunder or Jointly Developed Technology, Ciba shall pay to
Dermion for each Fiscal Year during the Royalty Period, royalties equal to ****
*************************************************.
(b) Royalties on Net Sales of Other Systems. With respect to
each System incorporating, or developed or manufactured through processes
incorporating, patents constituting Dermion Technology or IOMED Technology
licensed to Ciba hereunder but which System is not a Product developed pursuant
to the Program, Ciba shall pay to Dermion for each Fiscal Year during the
Royalty Period royalties equal to **********************************************
*******.
(c) Termination. Upon termination of this Agreement, a System
being developed pursuant to the Program and incorporating or developed or
manufactured through processes incorporating Jointly Developed Technology (and
not Dermion Technology or IOMED Technology) shall be deemed to be a Product
giving rise to royalties payable pursuant to Section 6.4 (a) only if the Final
Marketing Image of such System shall have been established and approved by the
Committee within six (6) months after the effective date of termination of such
Product. In the event that this Agreement is terminated by Ciba pursuant to
Section 9.2(iii), Ciba shall be entitled to set off against any royalties
payable under this Section 6.4 any liability, damage, loss or expense (including
reasonable attorney's fees and expenses) arising from or in connection with the
breach by Dermion giving rise to the right of termination by Ciba.
(d) Invalidity of Dermion Technology or IOMED Technology. In
the event that one or more claims of patents constituting Dermion Technology or
IOMED Technology are declared invalid or unenforceable by a judgement, decree or
decision of a court, tribunal or other authority of competent jurisdiction
("Invalid Claims") , Ciba shall be relieved of its obligations to pay royalties
to Dermion pursuant to this Section 6.4 on any Products or Systems incorporating
(or developed or manufactured through processes incorporating) such Dermion
Technology or IOMED Technology, but only to the extent that any such Products or
Systems do not incorporate, and were not developed or manufactured through
processes incorporating either (i) any Dermion Technology or IOMED Technology
other than Invalid Claims, or (ii) in the case of Products only, any Jointly
Developed Technology, provided, however, that such royalty obligation shall
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revive effective immediately as of the date, if ever, that any such judgment,
decree or decision is overturned or otherwise modified such that any claim at
issue therein once again becomes valid and enforceable.
(e) Infringement of Third Party Rights. If, in connection with
any Infringement Action with regard to the manufacture, use or sale (either in
the United States (a "US Infringement Action") or outside the United States (a
"Non-US Infringement Action")) of any System incorporating (or developed or
manufactured through processes incorporating) Dermion Technology or IOMED
Technology, Ciba is required to obtain a Third Party License in order to make,
have made, use or sell any System, and/or to pay Settlement Costs in connection
with such Infringement Action, then, if and to the extent that that any such
consequence results from the incorporation of Dermion Technology or IOMED
Technology in such System, or from the development or manufacture of such System
through processes incorporating Dermion Technology or IOMED Technology, in
either case in compliance with the terms of this Agreement, any royalties
payable under this Section 6.4 with respect to such System shall be reduced by
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
*******************. In such event, to the extent that Ciba is unable to recoup
Milestone Credits as a result of such reduction in royalties, Ciba shall be
entitled to reduce any amount payable under this Article 6 by the amount of such
unpaid Milestone Credits.
(f) No Waiver. Nothing in Section 6.4(d) or (e) shall be
construed as a waiver or cure of any breach of any warranties set forth in
Section 7, or any release of any claim by Ciba as may be appropriate relating
thereto.
6.5 General Provisions Regarding Royalties.
(a) Payments. For purposes of determining the applicable
royalty amounts to be paid pursuant to Section 6.4, Net Sales shall be converted
from the currency used in each country of sale to Swiss Francs and then to
United States Dollars, all in accordance with Ciba's standard method of currency
conversion. All royalty payments shall be made in United States Dollars.
(b) Intra-Company Sales. Sales of any System between or among
Ciba and its Affiliates, licensees and sublicensees shall not be subject to any
royalty hereunder, and in such cases
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<PAGE> 40
royalties shall be calculated in accordance with this Agreement upon Net Sales
to an independent third party by Ciba or its Affiliates, licensees and
sublicensees. Ciba shall be responsible for payment of any royalty accrued on
Net Sales of such System to such independent third party through its Affiliates,
licensees or sublicensees. Royalties shall accrue hereunder only once in respect
of the same unit of System.
(c) Timing of Royalty Payments; Records.
(i) within ninety (90) days after the end of each half-year of the
Fiscal Year, Ciba shall pay to Dermion the royalty payment due
for that half year, provided, that royalties with respect to
the first half-year in which any Product or other System is
sold shall not be payable with respect to such Product or
System until the royalty payment date for the next succeeding
half-year.
(ii) Together with each royalty payment, Ciba shall submit to the
Dermion a written accounting showing its computation of
royalties due under this Agreement for such half-year of the
Fiscal Year. Said accounting shall (A) set forth gross sales,
Net Sales, the specific deductions used in arriving at Net
Sales, and the total royalties due for the half-year in
question and (B) be in accordance with Ciba's standard
accounting practices.
(iii) Ciba shall keep full and accurate books and records setting
forth gross sales, Net Sales, the specific deductions used in
arriving at Net Sales and the amount of royalties payable to
Dermion hereunder for no less than two (2) years after the end
of each half-year of the Fiscal Year. Ciba shall permit
Dermion, at Dermion's expense, to have such books and records
examined by independent certified public accountants retained
by Dermion and reasonably acceptable to Ciba, during regular
business hours upon reasonable advance notice, but not later
than two (2) years following the rendering of any such
reports, accounting and payments, and no more often than one
(1) time per year. Such independent accountants shall keep
confidential any information obtained during such examination
and shall report to Dermion only the amounts of royalties
which the independent accountant believes to be due and
payable hereunder.
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6.6 Incorporation of Technology. For purposes of this
Agreement, a System shall be deemed to incorporate, or to be developed or
manufactured through processes incorporating Dermion Technology, IOMED
Technology, or Jointly Developed Technology to the extent that the manufacture,
use or sale of such System would, if not for the rights granted herein,
constitute an act of infringement of such Dermion Technology, IOMED Technology
or Jointly Developed Technology.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties of IOMED and Dermion. IOMED
and Dermion hereby jointly and severally represent and warrant to Ciba that, as
of the date of this Agreement, the following statements are true and correct in
all material respects:
(a) Organization and Good Standing. Such party is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the corporate power and
authority to engage in the business such party is presently engaged in and to
enter into this Agreement and to perform its obligations hereunder.
(b) Authorization; Binding Effect. All corporate action on the
part of such party and such party's officers and directors necessary for the
authorization, execution and delivery of this Agreement and for the performance
of all of such party's obligations hereunder has been taken and this Agreement,
when executed and delivered, shall constitute a valid, legally binding
obligation of such party, enforceable against it in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency and other
similar laws affecting creditors' rights generally or general equitable
principles.
(c) Noncontravention. The execution, delivery and performance
by such party of this Agreement do not and will not (i) violate or breach the
certificate of incorporation or bylaws of such party, (ii) violate or conflict
with any Applicable Law, (iii) violate, breach, cause a default under or
otherwise give rise to a right of termination, cancellation or acceleration with
respect to (presently, with the giving of notice or the passage of time) any
material agreement, contract or instrument to which it is a party or by which
any of its assets is bound, or (iv) result in the creation or imposition of any
lien, pledge, mortgage, claim, charge, or encumbrance ("Lien") upon any assets
of such party.
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(d) Government and Other Consents. No consent, authorization,
license, permit, registration or approval of, or exemption or other action by,
any Governmental Authority or other Person is required in connection with such
party's execution and delivery of this Agreement or with the performance by it
of its obligations hereunder; provided, however, that no representation is made
with respect to any consent, authorization, license, permit, registration or
approval that may be required from Governmental Authorities as a pre-condition
to the First Commercial Sale of any Product in any jurisdiction.
(e) Dermion Technology. Dermion is the owner or licensee of
the Dermion Technology and has the right to license said Dermion Technology free
of any Lien **************************************************************
*************************** in the manner set forth in this Agreement. IOMED is
the licensee of the IOMED Technology and has the right to license said IOMED
Technology free of any Lien **********************************************
**************************** (in the manner set forth in this Agreement. There
are no existing defaults under the ******************************************
(or events which, with notice or lapse of time or both, would constitute a
default) either by IOMED or, to the best of IOMED's knowledge, by any other
party thereto, and true and correct copies of such licenses have been delivered
to Ciba. Neither IOMED nor Dermion has assigned or conveyed any interest in the
Dermion Technology or the IOMED Technology which conflicts with the rights
granted hereunder; to the best of its knowledge, the practice of the Dermion
Technology and the IOMED Technology by IOMED or Dermion in connection with its
business activities does not infringe any rights of third parties; such party is
not aware that any third party is infringing any Dermion Technology or any IOMED
Technology; with respect to all Patent Rights constituting Dermion Technology or
IOMED Technology which were prosecuted by IOMED, such Patent Rights have been
prosecuted in good faith; and neither IOMED nor Dermion has reason to believe
that any patent included within the Dermion Technology or the IOMED Technology
would be invalid or would be held to be unenforceable by a court of competent
jurisdiction. To the best of such party's knowledge, after reasonable inquiry,
Schedules 1.1(b)(i) and 1.1(b)(ii) set forth all Patent Rights and identifiable
Know-How owned or licensed by IOMED or Dermion or their respective Affiliates
applicable to the development of Systems.
(f) The Business. IOMED has contributed to Dermion assets,
properties and rights that are sufficient, when taken together with the
facilities to be made available to Dermion pursuant to the Sublease and the
services to be made available to Dermion pursuant to the Support Services
Agreement, for the conduct of the Business as previously conducted by IOMED,
other
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than the IOMED Technology. Dermion currently owns or has full right to use
all assets, rights and properties (including all authorizations, approvals and
consents of Governmental Authorities) necessary (i) to conduct the Business as
previously conducted by IOMED and (ii) to perform the transactions contemplated
by this Agreement except, in each case, for the IOMED Technology.
(g) Interim Agreement. All amounts paid by Ciba to IOMED prior
to the date hereof pursuant to the Interim Agreement and not previously spent in
accordance therewith have been contributed to Dermion by IOMED pursuant to the
Contribution Agreement.
7.2 Representations and Warranties of Ciba. Ciba hereby
represents and warrants to IOMED and Dermion that, as of the date of this
Agreement, the following statements are true and correct in all material
respects:
(a) Organization and Good Standing. Ciba is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has the corporate power and authority to engage in the business
Ciba is presently engaged in and to enter into this Agreement and to perform its
obligations hereunder.
(b) Authorization; Binding Effect. All corporate action on the
party of Ciba and Ciba's officers and directors necessary for the authorization,
execution and delivery of this Agreement and for the performance of all of
Ciba's obligations hereunder has been taken and this Agreement, when executed
and delivered, will constitute a valid, legally binding obligation of Ciba
enforceable against Ciba in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency and other similar laws affecting
creditors' rights generally or by general equitable principles.
(c) Noncontravention. The execution, delivery and performance
by Ciba of this Agreement do not and will not (i) violate or breach the
certificate of incorporation or bylaws of Ciba, (ii) violate or conflict with
any Applicable Law, (iii) violate, breach, cause a default under or otherwise
give rise to a right of termination, cancellation or acceleration with respect
to (presently, with the giving of notice or the passage of time) any material
agreement, contract or instrument to which Ciba is a party or by which any of
its assets is bound, or (iv) result in the creation or imposition of any Lien
upon any assets of Ciba.
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(d) Government and Other Consents. No consent, authorization,
license, permit, registration or approval of, or exemption or other action by,
any Governmental Authority or other Person is required in connection with Ciba's
execution and delivery of this Agreement or with the performance by Ciba of its
obligations hereunder; provided, however, that no representation is made with
respect to any consent, authorization, license, permit, registration or approval
that may be required from Governmental Authorities as a precondition to the
First Commercial Sale of any Product in any jurisdiction.
(e) Ciba Technology. Ciba is the owner of the Ciba Technology
and has the right to license said Ciba Technology free of any Lien in the manner
set forth in this Agreement; it has not assigned or conveyed any interest in the
Ciba Technology which may be inconsistent with the rights granted hereunder; to
the best of its knowledge, the practice of the Ciba Technology by Ciba in
connection with its business activities does not infringe any rights of third
parties; Ciba is not aware that any third party is infringing the Ciba
Technology; and Ciba has prosecuted all patent applications within the Ciba
Technology in good faith and has no reason to believe that any patent included
within the Ciba Technology would be invalid or would be held to be unenforceable
by a court of competent jurisdiction. To the best of Ciba's knowledge, after
reasonable inquiry, Schedule 1.1(a) sets forth all Patent Rights and
identifiable Know-How owned or licensed by Ciba or its Affiliates applicable to
the development of Systems.
7.3 DISCLAIMERS. EXCEPT TO THE EXTENT EXPRESSLY PROVIDED IN
THIS AGREEMENT, THE PARTIES HEREBY EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING (A) ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, AND (2) THAT ANY PATENT WILL ISSUE BASED UPON ANY PENDING
PATENT APPLICATION INCLUDED WITHIN LICENSED TECHNOLOGY.
7.4 LIMITED LIABILITY. NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT OR OTHERWISE, NO PARTY TO THIS AGREEMENT SHALL BE LIABLE WITH
RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE,
STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR (A) ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR LOST PROFITS OR (B) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, TECHNOLOGY OR SERVICES.
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ARTICLE 8
OTHER COVENANTS AND AGREEMENTS
8.1 Confidentiality.
(a) Confidential Information. "Confidential Information" of
Dermion, IOMED or Ciba shall mean (1) all written information disclosed by such
party hereunder (i) bearing a legend indicating that such information is
confidential and (ii) that does not constitute Confidential Information of any
non-disclosing party pursuant to clause (2), (3) or (4) below, (2) all
intellectual property of such party that is disclosed or furnished by such party
hereunder (including, without limitation, in the case of Ciba, all Ciba
Technology, in the case of Dermion, all Dermion Technology, and, in the case of
IOMED, all IOMED Technology), (3) Improvements specific to the Licensed
Technology of such party made in the course of the Program and (4) any results
of the Program that are specific to the Licensed Technology of such party.
(b) Nondisclosure. During the term of this Agreement and for a
period of ten (10) years thereafter, except as expressly authorized by the other
party in writing, each of Dermion, IOMED and Ciba agrees to use diligent
efforts, and at least the same degree of care that it uses to protect its own
confidential information of like importance, to prevent unauthorized use,
dissemination and disclosure of any other party's Confidential Information. In
furtherance, and not in limitation of the foregoing, each of Dermion, IOMED and
Ciba agrees that, except as otherwise permitted hereunder, it shall (1) use such
confidential Information exclusively for the purpose of exercising its rights
and fulfilling its obligations under this Agreement, (2) restrict disclosure of
such Confidential Information to those of its employees, agents, collaborative
partners and Affiliates who have a "need to know" such information, and refrain
from disclosing such Confidential Information to anyone other than such
employees, agents, collaborative partners and Affiliates, and (3) cause each of
its Scientists to agree in writing to, and instruct all other such employees,
agents, collaborative partners and Affiliates, to maintain the confidentiality
of such information and not to use such Confidential Information except as
expressly permitted herein.
(c) Exceptions. The provisions contained in Section 8 (b)
above shall not apply to any portion of the Confidential Information of any
party which: (1) becomes a matter of public knowledge through no fault of the
party receiving the Confidential Information, (2) is rightfully
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received by the receiving party from a third party, (3) was known to the
receiving party before its first receipt from the disclosing party, as shown by
files existing at the time of initial disclosure, or (4) is independently
developed by the receiving party without use of another party's Confidential
Information.
(d) Return of Information. After any termination of this
Agreement, upon written request, each party shall promptly discontinue the use
of, and return all originals and copies of, any requested Confidential
Information that has been fixed in any tangible means of expression within
thirty (30) days of such request; provided, however, that if a party's license
rights pursuant to Article 5 shall remain in effect notwithstanding such
termination, such party shall be permitted to retain such information concerning
Licensed Technology as is necessary, in its reasonable judgment, in connection
with the continued exercise of its license rights hereunder. In the event that
information concerning Licensed Technology is retained after termination
pursuant to the preceding sentence, the retaining party shall, upon the request
of the party to which such information relates or belongs (as used in this
paragraph (d), the "other party"), within ninety (90) days after termination,
provide the other party with a written description, in reasonable detail, of the
information concerning the other party's Licensed Technology that has been
retained.
(e) Court or Administrative Order. In the event that Dermion,
IOMED or Ciba is requested or required pursuant to Applicable Law by any
Governmental Authority to disclose any Confidential Information, such party
shall provide the party whose Confidential Information is the subject of the
request or requirement (as used in this paragraph (e), the "other party") with
prompt written notice of such request or requirement so that the other party may
seek a protective order or other appropriate remedy or waive compliance with the
provisions of this Agreement. If, in the absence of a protective order or other
remedy or the receipt of a waiver by the other party, the party being requested
or required to disclose any Confidential Information is nonetheless legally
compelled to disclose such Confidential Information, it may, without liability
hereunder, disclose only that portion of the Confidential Information which it
is legally compelled to disclose.
8.2 IOMED Covenant Not to Compete.
(a) Covenant. IOMED agrees that during the term of this
Agreement neither it nor any of its subsidiaries, other than Dermion, shall
engage, directly or indirectly, in the Restricted Business. For purposes of this
Section 8.2 the term "Restricted
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Business" shall mean the business of conducting research with respect to or
developing Systems on its own behalf and/or on behalf of third parties (other
than such research or development by IOMED on its own behalf and not for a third
party with respect to Systems for Drugs used in the treatment of acute
inflammation or for inducement of local anesthesia).
(b) Blue Penciling. The parties agree and acknowledge that the
duration, scope and geographic area of the covenant not to compete described in
this Agreement are fair, reasonable and necessary in order to protect the
legitimate interests of Ciba, and that adequate consideration has been received
by IOMED for such obligations. If, however, for any reason any court determines
that the restrictions in this Agreement are not reasonable or that such
consideration is inadequate, such restrictions shall be interpreted, modified or
rewritten to include as much of the duration, scope and geographic area
identified in this Agreement as will render such restrictions valid and
enforceable.
(c) Injunctive Relief. The parties acknowledge that any breach
of the provisions contained in this Section 8.2 will result in serious and
irreparable injury to Ciba. Therefore, IOMED acknowledges and agrees that in the
event of a breach of such provisions, Ciba shall be entitled, in addition to any
other remedy at law or in equity to which Ciba may be entitled, to equitable
relief against IOMED, including, without limitation, an injunction to restrain
IOMED from such breach and to compel compliance with this Section 8.2 in
protecting or enforcing the rights and remedies of Ciba hereunder.
(d) No Other Limitation. Except only as provided in Section
8.2(a) above, nothing contained in this Agreement or any other document executed
in connection herewith shall be construed as limiting in any manner the free and
unrestricted ability of IOMED to carry on its business activities in any manner
that it chooses in its sole and absolute discretion.
8.3 Change of Control of Dermion.
(a) Covenant Against a Change of Control of Dermion. For a
period of two (2) years from the date of this Agreement, Dermion covenants and
agrees that, without the prior written consent of Ciba, it shall not cause or
approve a Change of Control of Dermion.
(b) Injunctive Relief. The parties acknowledge that any breach
of the provisions contained in this Section 8.3 will result in serious and
irreparable injury to Ciba. Therefore, Dermion acknowledges and agrees that in
the event of a breach of
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this Agreement, Ciba shall be entitled, in addition to any other remedy at law
or in equity to which Ciba may be entitled, to equitable relief against Dermion,
including, without limitation, an injunction to restrain Dermion from such
breach and to compel compliance with this Agreement in protecting or enforcing
the rights and remedies of Ciba hereunder.
8.4 Right of First Offer.
(a) Offer. If at any time the Board of Directors of Dermion
proposes to enter into or approve a transaction or series of related
transactions which, if consummated, would result in a Change of Control of
Dermion (a "Transaction"), then it shall promptly forward to Ciba a written
notice (an "Offer Notice") offering to enter into a Transaction with Ciba and
specifying the purchase price (the "Proposed Purchase Price") and other terms
and conditions under which it would enter into such Transaction with Ciba (the
offer made in any such Offer Notice, the "Offer"). Ciba shall have sixty (60)
days after its receipt of an Offer Notice (the "Acceptance Period") to provide
written notice to Dermion of its acceptance of the offer.
(b) Response to Offer. If Ciba accepts the offer, it shall be
obligated to consummate such Transaction at the price and other terms specified
in the Offer Notice within one hundred twenty (120) days after the acceptance of
the Offer, subject to negotiation of a definitive acquisition agreement
containing representations and warranties, covenants, conditions to closing and
such other terms and conditions customary for agreements of its type. If Ciba
rejects the Offer (or otherwise fails to forward an acceptance of the offer
prior to the expiration of the Acceptance Period), Dermion shall, for a period
of two hundred seventy (270) days after expiration of the Acceptance Period,
have the right to consummate a Transaction of the type described in the Offer
Notice only at a price greater than ninety percent (90%) of the Proposed
Purchase Price and on such other terms and conditions more favorable to it than
those offered to Ciba (unless Ciba consents to such lower price or other terms
and conditions, which consent shall not be unreasonably withheld, it being
understood that Ciba's withholding of consent based on its desire to consummate
a Transaction at such lower price or other terms and conditions shall be deemed
reasonable); provided, however, that in the event that a Transaction has not
been consummated within such two hundred seventy (270) day period, then any
proposed future Transaction shall continue to be subject to this Section 8.4.
(c) Survival. The offer rights of Ciba described in this
Section 8.4 shall survive any termination of this Agreement
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for a period of twelve (12) months from the effective date of such termination.
ARTICLE 9
TERM AND TERMINATION
9.1 Term. Unless terminated sooner pursuant to Section 9.2,
this Agreement shall continue in full force and effect from the date hereof
through and including December 31, 1997, and shall automatically be renewed for
subsequent one (1) year periods indefinitely.
9.2 Termination. This Agreement may be terminated by the
parties as follows:
(i) by either Dermion or Ciba, effective as of the
expiration of the initial term or any extension
thereof, for any reason or no reason by written
notice to the other given at least six (6) months
prior to the expiration of the initial term or any
extension thereof;
(ii) by mutual agreement in writing signed by Dermion and
Ciba, effective at the time specified in such
writing;
(iii) by Dermion upon thirty (30) days, prior written
notice to Ciba in the event of a material breach of
this Agreement by Ciba which remains unremedied at
the end of such thirty (30) day period, or by Ciba
upon thirty (30) days, prior written notice to
Dermion in the event of a material breach of this
Agreement by Dermion or IOMED which remains
unremedied at the end of such thirty (30) day period,
effective, in either case, at the end of such thirty
(30) day period;
(iv) by Dermion in the event of a Bankruptcy Event of
Ciba, or by Ciba in the event of a Bankruptcy Event
of Dermion, in either case, effective immediately;
(v) subject to Section 8.3, by Ciba in the event of a
Change of Control of Dermion (other than a Change of
Control resulting from a Transfer that is not a
Prohibited Transfer) upon
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thirty (30) days' prior written notice to Dermion,
effective at the end of such thirty (30) day period,
provided, that Ciba must exercise such right not
later than ninety (90) days after receiving written
notice from Dermion of such transaction; and
(vi) by Ciba, effective immediately, in the event that for
any reason any Key Employee is terminated or resigns
as a Program Employee (or is otherwise unable for a
period of three (3) months to perform his obligations
as a Program Employee in substantially the same
manner as previously performed (a "Disability")) and
such Key Employee is not replaced with an individual
with comparable qualifications and acceptable to Ciba
in its reasonable discretion within three (3) months
of such termination, resignation or Disability.
Any termination of this Agreement effected pursuant to this Section 9.2 shall be
effective with respect to and binding on all parties to this Agreement.
9.3 Survival Upon Termination. The parties agree that their
respective rights and obligations pursuant to Sections 2.4(f), 2.5(e), 3.1-3.3
(to the extent of the Exclusivity Period), 4.1-4.4, 4.6, 4.7, 5.1, 5.3(b), 5.4,
5.5, 6.3-6.6, 7.4, 8.1, 8.3, 8.4, 9.3-9.5, 9.6, 9.7, 9.8, 10.1, 10.2, 11.1 and
11.10 shall survive termination of this Agreement for any reason, and a
non-breaching party shall have the right to seek monetary or injunctive relief
upon any material breach by the other party of such provisions, provided that
such rights and obligations shall in any event terminate on the tenth (l0th)
anniversary of the effective date of termination of this Agreement.
9.4 Continuing Liability. Termination of this Agreement for
any reason shall not release any party from any liability, obligation or
agreement which has already accrued nor affect the survival of any provision
hereof which is expressly stated to survive such termination. Termination of
this Agreement for any reason shall not constitute a waiver or release of, or
otherwise be deemed to prejudice or adversely affect, any rights, remedies or
claims, whether for damages or otherwise, which a party may have hereunder or
which may arise out of or in connection with such termination.
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9.5 Partial Termination. Ciba shall have the right to
terminate this Agreement in part and thereafter continue the Agreement based on
a reduced number of full-time equivalent employees serving as Program Employees
(a "Partial Termination") any such Partial Termination to be effective no
earlier than December 31, 1997 or, if this Agreement is extended in accordance
with Section 9.1, the last day of such extension. In order to exercise such
right, Ciba shall give Dermion notice of such Partial Termination at least three
(3) months prior to the expiration of the initial term or any extension thereof,
such notice to indicate the number and function of the full-time equivalent
employees with respect to which Ciba intends to continue the Agreement. In such
event, this Agreement shall continue in full force and effect in all respects,
with the only modifications as a result of such Partial Termination being the
reduction in full-time equivalent employees serving as Program Employees and
reductions in Research Funding Payments payable by Ciba, and facilities and
other resources to be provided by Dermion. A Partial Termination shall not
constitute a termination of this Agreement for any other purpose.
9.6 Rejection in Bankruptcy. In receipt of good and valuable
consideration, which is hereby acknowledged, Dermion hereby grants to Ciba a
security interest in and to the Dermion Technology to secure performance of any
and all obligations of Dermion set out in this Agreement and agrees to execute
and assist Ciba in filing such Form UCC-l's and other documents as may be needed
from time to time to perfect such security interest. A rejection of this
Agreement by a trustee in bankruptcy or debtor in possession shall be a default
under this Agreement, whereupon Ciba shall have all rights and remedies of a
secured party under the Uniform Commercial Code.
9.7 Program Records.
(a) Retention of Program Records. All Program Records shall be
retained by any party in possession thereof for a period of seven (7) years
following termination of this Agreement (the "Document Retention Period").
During the Document Retention Period, neither Dermion nor Ciba (or their
respective Affiliates) shall destroy or give up possession of any Program
Records without first offering to the other the opportunity to obtain the same.
In such event, such other party shall be responsible for costs of delivery, if
any. Thereafter, the party wishing to dispose of such Program Records shall be
free to do so as it deems fit.
(b) Access to Program Records. During the Document Retention
Period all Program Records that are retained by any party shall be open for
inspection by representatives of the
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other party at any time upon reasonable notice during regular business hours
until such time as such documents are disposed of in accordance with Section
9.7(a), and during such period a party may at its expense make such copies
thereof as it may reasonably request.
9.8 Certain Actions Following Termination. If, following the
effective date of any termination of this Agreement, any action or decision is
required to be taken or made by the Committee under the terms hereof, any such
action or decision shall be taken or made by mutual agreement of Ciba and
Dermion provided, that Ciba will continue to have a veto over Ciba Matters.
ARTICLE 10
INDEMNIFICATION
10.1 Indemnification by Dermion and IOMED. Dermion and IOMED
shall jointly and severally indemnify and hold harmless Ciba and its directors,
officers, employees and agents and their respective successors, heirs and
assigns, against any liability, damage, loss or expense (including reasonable
attorneys' fees and expenses) arising from or in connection with (i) any
inaccuracy in or breach of any of the representations and warranties of Dermion
or IOMED in this Agreement, (ii) any failure by Dermion or IOMED to perform or
comply with any covenant or agreement in this Agreement, and (iii) the acts or
omissions of Dermion or IOMED in performing its obligations under this
Agreement.
10.2 Indemnification by Ciba. Ciba shall indemnify and hold
harmless Dermion and IOMED and their respective directors, officers, employees
and agents and such Persons, respective successors, heirs and assigns, against
any liability, damage, loss or expense (including reasonable attorneys' fees and
expenses) arising from or in connection with (i) any inaccuracy in or breach of
any of the representations and warranties of Ciba in this Agreement, (ii) any
failure by Ciba to perform or comply with any covenant or agreement in this
Agreement, and (iii) the acts or omissions of Ciba in performing its obligations
under this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Arbitration. Any controversy, claim or dispute between
the parties, directly or indirectly, concerning this
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Agreement or the breach hereof or the subject matter hereof, including questions
concerning the scope and applicability of this arbitration clause, shall be
finally settled by three (3) arbitrators knowledgeable in the subject matter
involved in such controversy or claim appointed and acting in accordance with
the then-prevailing commercial arbitration rules of the American Arbitration
Association. One (1) arbitrator shall be selected by each of Ciba and Dermion,
and the third arbitrator shall be selected by mutual agreement of the first two.
The arbitration shall be conducted in New York, NY. The arbitrators shall be
informed that time is of the essence in deciding the matters subject to their
review. The decision in writing of any two of the arbitrators shall be final,
binding and conclusive on each party to this Agreement; judgment upon such
decision or award may be entered in any court of competent jurisdiction; and the
application may be made to such court for confirmation of such decision or
award, for an order of enforcement and for any other legal remedies that may be
necessary to effectuate such decision or award. The arbitrators shall have the
right and authority to assess the costs of the arbitration proceedings.
11.2 Publicity. Except after consultation with the other
parties, no party shall publicize, advertise, announce or publicly describe to
any Governmental Authority or other Person, the terms of this Agreement, the
parties hereto or the transactions contemplated hereby, except as required by
Applicable Law or as required pursuant to this Agreement. In the event that
Dermion or IOMED on the one hand or Ciba on the other is requested or required
pursuant to Applicable Law by any Governmental Authority to disclose to any
Governmental Authority or other Person any terms of this Agreement, the party
subject to such request or requirement shall provide the other with prompt
written notice of such request or requirement so that the other party may seek a
protective order or other appropriate remedy or waive compliance with the
provisions of this Agreement. If, in the absence of a protective order or other
remedy or the receipt of a waiver by the other party, the party being requested
or required to disclose such terms of this Agreement is nonetheless legally
compelled to disclose such terms, it may, without liability hereunder, disclose
only that portion of this Agreement which it is legally compelled to disclose.
11.3 Assignment. This Agreement shall inure to the benefit of,
and shall be binding upon, the parties and their respective successors and
permitted assigns. No party may assign or delegate this Agreement or any of its
rights or duties under this Agreement without the prior written consent of the
other parties except (i) to an Affiliate of such party who expressly assumes the
obligations of the assigning party hereunder (including, without limitation, by
operation of law), (ii) in the
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case of Ciba, to a successor to Ciba's Pharmaceuticals Division, whether by
merger, consolidation, stock sale, asset sale or otherwise, or (iii) as
expressly permitted herein.
11.4 Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument specifically referring to this
Agreement that is signed and delivered by duly authorized officers of each
party.
11.5 Waiver. The failure of any party to enforce at any time
any provision of this Agreement shall not be construed to be a waiver of any
such provision and will not affect the validity of this Agreement or any part
hereof or the right of such party to enforce any such provision. No waiver of
any breach hereof will be construed to be a waiver of any other breach.
11.6 Notices. All notices and communications required or
authorized to be given hereunder shall be in writing and shall be deemed to have
been duly given (a) when delivered by messenger, (b) upon actual receipt if sent
by telecopy (with receipt confirmed), provided that a copy is mailed by
registered or certified mail, postage prepaid, return receipt requested, or (c)
when received by the addressee, if sent by overnight courier, in each case to
the appropriate address or telecopier number set forth below:
If to IOMED or Dermion:
IOMED, INC.
3385 West 1820 South
Salt Lake City, Utah 84104
Attn: Chief Executive Officer
Tel: 801-975-1191
Fax: 801-972-9072
With a copy to:
Morrison & Foerster LLP
345 California Street
San Francisco, California
Attn: C. Patrick Machado, Esq.
Tel: 415-677-7589
Fax: 415-677-7522
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If to Ciba:
Ciba-Geigy Corporation
Pharmaceuticals Division
556 Morris Avenue
Summit, New Jersey 07901
Attn: President
Tel: 908-277-5200
Fax: 908-277-7627
With a copy to:
Ciba-Geigy Corporation
Pharmaceuticals Division
556 Morris Avenue
Summit, New Jersey 07901
Attn: Division Counsel
Tel: 908-277-5616
Fax: 908-277-5753
or to such other person or address as any party may designate in writing from
time to time.
11.7 Force Majeure. If the performance of this Agreement or
any obligations hereunder is prevented, restricted or interfered with by reason
of fire or other casualty or due to strikes, riot, storms, explosions, acts of
God, war, or a similar occurrence or condition beyond the reasonable control of
the parties, the party so affected shall, upon giving prompt notice to the other
parties, be excused from such performance during such prevention, restriction or
interference, and any failure or delay resulting therefrom shall not be
considered a breach of this Agreement.
11.8 Disclaimer of Agency. This Agreement shall not be
construed to constitute the parties as partners, joint venturers, agents or
otherwise as participants in a joint or common undertaking. No party (or its
agents and employees) is the representative of the other party for any purpose
and no party has power or authority as agent, legal representative, employee or
in any other capacity to represent, act for, bind, or otherwise create or assume
any obligation on behalf of, any other party for any purpose whatsoever.
11.9 Further Assurances. The parties shall each perform such
acts, execute and deliver such instruments and documents, and do all such other
things as may be reasonably necessary to accomplish the transactions
contemplated in this Agreement.
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11.10 Expenses. The parties shall each bear their own costs
and expenses (including attorneys' fees) incurred in connection with the
negotiation and preparation of this Agreement and, except as otherwise provided
herein, consummation of the transactions contemplated hereby, provided, however,
that all such costs and expenses incurred by IOMED and Dermion shall be borne by
Dermion.
11.11 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of New York, without giving effect to the
conflicts of laws provisions thereof.
11.12 Entire Agreement. This Agreement, including the exhibits
and schedules hereto, each of which is incorporated herein by this reference,
contains the entire agreement and understanding of the parties, and supersedes
any prior understandings and agreements, with respect to its subject matter,
including the Interim Agreement.
11.13 Severability. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth herein. In such event, the
parties shall negotiate, in good faith, a substitute, valid and enforceable
provision or agreement which most nearly effects the parties' intent in entering
into this Agreement.
11.14 Broker's Fees. Each of the parties represents and
warrants that it has not dealt with any broker or finder in connection with any
of the transactions contemplated by this Agreement, and, to its knowledge, no
broker or other Person is entitled to any commission or finder's fee in
connection with any of these transactions. Each of the parties shall be
responsible for, and shall indemnify and hold the other parties harmless
against, the fees of its investment bankers and other advisors, if any.
11.15 Article and Section Headings. The article and Section
headings included in this Agreement are for convenience of the parties only and
shall not affect the construction or interpretation of this Agreement.
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11.16 Counterparts. This Agreement may be executed in any
number of counterparts each of which shall constitute an original instrument but
all of which, taken together, shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
IOMED, INC.
By:/s/ Ned M. Weinshenker
-----------------------------------
Name: Ned M. Weinshenker
--------------------------------
Title: President & CEO
--------------------------------
DERMIION, INC.
By:/s/ Robert J. Lollini
-----------------------------------
Name: Robert J. Lollini
--------------------------------
Title: Secretary
--------------------------------
CIBA-GEIGY CORPORATION
Pharmaceuticals Division
By: /s/ James M. Callahan
-----------------------------------
Name:
--------------------------------
Title:
--------------------------------
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Schedule 1.1(a)
---------------
(Ciba Technology)
****
<PAGE> 60
Schedule 1.1(b)
---------------
See Attached.
<PAGE> 61
Schedule 1.1(b)(i)
(Dermion Technology)
****
<PAGE> 62
Schedule 1.1(b)(ii)
(IOMED Technology)
****
<PAGE> 63
Schedule 3.1
------------
(a) Ciba Fields
****
(b) Ciba Proprietary Drugs
****
<PAGE> 1
EXHIBIT 10.17
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of March 29,
1996, is made by and among IOMED, Inc., a Utah corporation ("IOMED"), Ciba-Geigy
Corporation, a New York corporation ("Purchaser"), acting through its
Pharmaceuticals Division, and Dermion, Inc., a Delaware corporation (the
"Company").
RECITALS:
The Company desires to issue and sell to Purchaser, and Purchaser
desires to purchase from the Company, shares of the Company's Common Stock, par
value $.001 per share (the "Common Stock"), on the terms and subject to the
conditions set forth herein.
The Company and Purchaser are entering into this Agreement in
connection with their execution of the Research and Development Agreement, dated
of even date herewith, by and between the Company, Purchaser and IOMED (the "R&D
Agreement"). Capitalized terms not otherwise defined herein shall have the
meanings given to them in the R&D Agreement.
Now, therefore, in consideration of the mutual promises and covenants
hereinafter contained, and intending to be legally bound, the parties agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.01 Stock to Be Purchased. Subject to the terms and conditions
contained in this Agreement, the Company agrees to issue and sell to Purchaser
at the Closing (as defined in Section 1.03), and Purchaser agrees to purchase
from the Company, Two Hundred Thousand (200,000) newly issued shares of Common
Stock (the "Shares").
1.02 Purchase Price. The purchase price for the Shares (the "Purchase
Price") shall consist of cash in the amount of One Million Dollars ($1,000,000).
The Purchase Price shall be paid at the Closing, in the form of a check made
payable to the Company or in such other form agreed upon by the parties.
1.03 Closing. The closing of the purchase and sale of the Shares under
this Agreement (the "Closing") shall take place simultaneously with the
execution of this Agreement.
1.04 Delivery of Shares. At the Closing, the Company shall deliver to
Purchaser certificates representing the Shares, registered in the name of
Purchaser.
1.05 Legal Opinion. At the Closing, the Company will deliver to
Purchaser an opinion of Morrison & Foerster LLP, counsel to the Company, in the
form of Exhibit A attached hereto.
1.06 Further Assurances. In addition to the actions, documents and
instruments specifically required to be taken or delivered hereby, the Company
and Purchaser shall execute
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and deliver, or cause to be executed and delivered, such other instruments and
take such other actions as the other party may reasonably request in order to
complete and perfect the transactions contemplated by this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.01. Representations and Warranties of the Company and IOMED. The
Company and IOMED hereby jointly and severally represent and warrant to
Purchaser on the date hereof as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company is duly licensed or qualified to do business, and is in good standing
under the laws of, each state in which the Company is required to be so licensed
or qualified. The Company has the corporate power and authority to own or lease
its properties, rights and assets and to conduct its business as now conducted
or presently proposed to be conducted. Since its date of incorporation, the
Company has not engaged in any activities or operations of any nature, except as
contemplated by this Agreement and the Transaction Documents. IOMED is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Utah.
(b) The Company and IOMED have full corporate power and
authority to enter into this Agreement, the Patent License Agreement in the form
attached as Exhibit B hereto (the "License Agreement"), the Support Services
Agreement in the form attached as Exhibit C hereto (the "Services Agreement"),
the Agreement of Sublease (the "Sublease Agreement") in the form attached as
Exhibit D hereto, the Stockholders' Agreement in the form attached as Exhibit E
hereto (the "Stockholders' Agreement"), the, Contribution Agreement in the form
attached as Exhibit F hereto (the "Contribution Agreement") and the R&D
Agreement (collectively, the "Transaction Documents"), and to carry out the
transactions contemplated hereby and thereby. All corporate action on the part
of the Company and of IOMED required to authorize the execution, delivery and
performance by the Company and IOMED of this Agreement and each of the
Transaction Documents, and the consummation of the transactions contemplated
hereby and thereby, has been taken. This Agreement and each of the Transaction
Documents has been duly and validly authorized, executed and delivered by the
Company and IOMED, and each constitutes a valid and binding obligation of the
Company and IOMED, enforceable against each of them in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights and to
general equitable principles.
(c) The execution, delivery and performance by the Company and
IOMED of this Agreement and each of the Transaction Documents do not and will
not (i) violate or breach the certificate of incorporation or bylaws of the
Company or the articles of incorporation or bylaws of IOMED, (ii) violate or
conflict with any applicable law, (iii) violate, breach, cause a default under
or otherwise give rise to a right of termination, cancellation or acceleration
with respect to (presently, with the giving of notice or the passage of time)
any material agreement, contract or
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<PAGE> 3
instrument to which the Company or IOMED is a party or by which any of their
respective assets are bound, or (iv) result in the creation or imposition of any
lien, pledge, mortgage, claim, charge or encumbrance upon any assets of the
Company or IOMED.
(d) Assuming the accuracy of Purchaser's representations and
warranties in Section 2.02(e), no consent, authorization, license, permit,
registration or approval of, or exemption or other action by, any governmental
authority or other person is required in connection with the Company's or
IOMED's execution and delivery of this Agreement or any of the Transaction
Documents, or with the performance by the Company or IOMED of their respective
obligations hereunder or thereunder, except in each case for any consent,
authorization, license, permit, registration or approval as have been obtained
and remain in full force and effect.
(e) The authorized capital stock of the Company consists of
Four Million (4,000,000) shares, of Common Stock, of which Eight Hundred
Thousand (800,000) are issued and outstanding, all of which issued and
outstanding shares are owned beneficially and of record by IOMED, and One
Million (1,00.0,000) shares of Preferred Stock, $.001 par value per share, none
of which are issued and outstanding. Upon consummation of the transactions
contemplated by this Agreement and the Contribution Agreement, One Million
(1,000,000) shares of Common Stock will be issued and outstanding. The Shares
will, upon issuance pursuant to the terms of this Agreement, be duly and validly
authorized and issued, fully paid and nonassessable. Except as set forth in the
Stockholders' Agreement, the Company does not have outstanding any rights
(preemptive or other) or options to subscribe for or purchase, or any warrants
or other agreements providing for or requiring the issuance by the Company of,
any of its capital stock or securities convertible into or exchangeable for its
capital stock, nor is the Company under any obligation to repurchase or redeem
any shares of its capital stock or securities convertible into or exchangeable
for its capital stock.
(f) The Company has provided to Purchaser true and correct
copies of all agreements executed by the Company and IOMED pursuant to the
Contribution Agreement.
(g) The Company is the owner or licensee of the Dermion
Technology, and has the right to license said Dermion Technology free of any
Lien (other than the obligations to pay royalties as provided in the University
of Utah License) in the manner set forth in the R&D Agreement. IOMED is the
licensee of the IOMED Technology and has the right to license said IOMED
Technology free of any Lien (other than the obligation to pay royalties as
provided in the Alza License) in the manner set forth in the R&D Agreement.
There are no existing defaults under the Alza License or University of Utah
License (or events which, with notice or lapse of time or both, would constitute
a default) either by IOMED or, to the best of IOMED's knowledge, by any other
party thereto, and true and correct copies of such licenses have been delivered
to Purchaser. Except as set forth on Schedule 7.01(e) to the R&D Agreement,
neither IOMED nor the Company has assigned or conveyed any interest in the
Dermion Technology or the IOMED Technology which may be inconsistent with the
rights granted under the R&D Agreement; to the best knowledge of the Company and
IOMED, the practice of the Dermion Technology and the IOMED Technology by the
Company and IOMED in connection with their
3
<PAGE> 4
respective business activities does not infringe any rights of third parties;
neither IOMED nor the Company is aware that any third party is infringing any
Dermion Technology or any IOMED Technology; with respect to all Patent Rights
constituting Dermion Technology or IOMED Technology which were prosecuted by
IOMED, such Patent Rights have been prosecuted in good faith; and neither IOMED
nor the Company has reason to believe that any patent included within the
Dermion Technology or the IOMED Technology would be invalid or would be held to
be unenforceable by a court of competent jurisdiction. To the best of IOMED's
and the Company's knowledge, after reasonable inquiry, Schedules 1.1(b)(i) and
1.1(b)(ii) to the R&D Agreement set forth all Patent Rights and identifiable
Know-How owned or licensed by IOMED or the Company or their respective
Affiliates, applicable to the development of the Systems.
(h) IOMED has contributed to the Company assets, properties
and rights that are sufficient, when taken together with the facilities to be
made available to the Company pursuant to the Sublease Agreement and the
services to be made available to the Company pursuant to the Services Agreement,
for the conduct of the Business as previously conducted by IOMED, other than the
IOMED Technology. The Company currently owns or has full-right to use all
assets, rights and properties (including all authorizations, approvals and
consents of Governmental Authorities) necessary to (i) to conduct, the Business
as previously conducted by IOMED and (ii) to perform the transactions
contemplated by this Agreement and the R&D Agreement except, in each case, for
the IOMED Technology.
(i) Attached as Schedule 2.01(i) is the unaudited pro forma
balance sheet of the Company as of March 29, 1996, (the "Balance Sheet"). The
Balance Sheet fairly presents the assets, liabilities and financial position of
the Company (assuming consummation of the transactions contemplated by the
Contribution Agreement as of such date) and was prepared in accordance with
generally accepted accounting principles.
2.02 Representations and Warranties of Purchaser. Purchaser represents
and warrants to the Company and to IOMED as follows:
(a) Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York.
(b) Purchaser has full corporate power and authority to enter
into this Agreement and each of the Transaction Documents to which it is a party
and to carry out the transactions contemplated hereby and thereby. All corporate
action on the part of Purchaser required to authorize the execution, delivery
and performance of this Agreement and each of the Transaction Documents to which
it is a party and the consummation of the transactions contemplated hereby and
thereby, has been taken. This Agreement and each of the Transaction Documents to
which it is a party has been duly and validly authorized, executed and delivered
by Purchaser, and each constitutes a valid and binding obligation of Purchaser
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equitable principles.
4
<PAGE> 5
(c) The execution, delivery and performance by Purchaser of
this Agreement and each of the Transaction Documents to which it is a party do
not and will not (i) violate or breach the articles of incorporation or bylaws
of Purchaser, (ii) violate or conflict with any applicable law, (iii) violate,
breach, cause a default under or otherwise give rise to a right of termination,
cancellation or acceleration with respect to (presently, with the giving of
notice or the passage of time) any material agreement, contract or instrument to
which Purchaser is a party or by which any of its assets is bound, or (iv)
result in the creation or imposition of any lien, pledge, mortgage, claim,
charge or encumbrance upon any assets of Purchaser.
(d) No consent, authorization, license, permit, registration
or approval of, or exemption or other action by, any governmental authority or
other person is required in connection. with Purchaser's execution and delivery
of this Agreement. or any Transaction Document to which it is a party or with
the performance by Purchaser of its obligations hereunder or thereunder, except
in each case for any consent, authorization, license, permit, registration or
approval as have been obtained and remain in full force and effect.
(e) Purchaser is acquiring the Shares for investment for its
own account and not with a view to, or for resale in connection with, any public
distribution, and understands that neither the Shares nor the shares of Common
Stock issuable upon conversion thereof have been registered under the Securities
Act of 1933, as amended (the "Securities Act"), by reason of a specific
exemption from the registration provisions of the Securities Act which depends
upon, among other things, the bona fide nature of the investment intent as
expressed herein.
ARTICLE III
DISCLAIMER OF IMPLIED WARRANTIES, REPRESENTATIONS
AND COVENANTS: SURVIVAL
3.01 Disclaimer. In entering into this Agreement, Purchaser, the
Company and IOMED have relied solely upon the representations and warranties set
forth in this Agreement and the Schedules hereto and the information referred to
herein as having been supplied by one to the other, and there are no
representations, warranties, covenants or agreements, express or implied, made
by any party to any other party in connection with the transactions contemplated
hereby other than as set forth in this Agreement and/or such Schedules.
3.02 Survival. The representations and warranties of the Company and
IOMED set forth in Sections 2.01(g), (h) and (i) shall survive the consummation
of the transaction contemplated herein and any examination or investigation of
the parties for a period of two years after the Closing Date. All other
representations and warranties of the parties set forth in this Agreement shall
survive the consummation of the transactions contemplated herein, and any
examination or investigation of the parties, indefinitely, without limitation as
to the duration thereof.
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ARTICLE IV
INDEMNIFICATION
4.01 Indemnification by the Company and IOMED. Subject to the
provisions of this Article IV, the Company and IOMED shall jointly and severally
indemnify, defend and hold harmless Purchaser from and against any and all loss,
claim, liability, damage, cost and expense (including reasonable attorneys' fees
and expenses) (hereinafter referred to as a "Loss") asserted against, resulting
to, imposed upon or incurred or suffered by Purchaser or any assignee or
successor of Purchaser as a result of or arising out of any of the following:
(a) Any breach of any of the representations or warranties of
the Company or IOMED set forth in this Agreement or in any Schedule to this
Agreement; or
(b) Any breach or nonfulfillment by the Company or IOMED of
any of the covenants or agreements of the Company or IOMED contained in this
Agreement.
4.02 Indemnification by Purchaser. Subject to the provisions of this
Article IV, Purchaser shall indemnify, defend and hold harmless the Company and
IOMED from and against any and all Loss asserted against, resulting to, imposed
upon or incurred or suffered by the Company or any of its successors or assigns
as a result of or arising out of any of the following:
(a) Any breach of any of the representations or warranties of
Purchaser set forth in this Agreement or in any Schedule to this Agreement; or
(b) Any breach or nonfulfillment by Purchaser of any of the
covenants or agreements of Purchaser contained in this Agreement.
4.03 Procedure for Indemnification.
(a) Demands, Etc. Each indemnified party hereunder agrees that
upon its obtaining knowledge of facts indicating that there may be a basis for a
claim for indemnity under the provisions of this Agreement, including receipt by
it of notice of any demand, assertion, claim, action or proceeding, judicial or
otherwise, by any third party (such third party actions being collectively
referred to hereinafter as the "Claim"), with respect to any matter as to which
it may be entitled to indemnity under the provisions of this Agreement, it will
give notice thereof in writing to the indemnifying party within a reasonable
time after obtaining such knowledge, together with a statement of such
information respecting any of the foregoing as it shall then have. The
indemnifying party shall be obligated to indemnify the indemnified party
notwithstanding failure to give such notice in a timely manner, except if and to
the extent that the indemnifying party is materially prejudiced by any delay in
delivering, or non-delivery of, such notice.
(b) Right to Contest and Defend. The indemnifying party is
entitled at its cost and expense to contest and defend by all appropriate legal
proceedings any Claim with respect to
6
<PAGE> 7
which it is called upon to indemnify the indemnified party under the provisions
of this Agreement; provided, however, that notice of the intention so to contest
shall be delivered by the indemnifying party to the indemnified party within
thirty (30) days after the indemnifying party becomes aware of such Claim (or
within such shorter period of time as may be necessary to avoid prejudice to the
rights of the indemnified party hereunder). Any such contest may be conducted in
the name and on behalf of the indemnifying party or the indemnified party, as
may be appropriate. Such contest shall be conducted by attorneys employed by the
indemnifying party, but the indemnified party shall have the right to
participate in such proceedings and to be represented by attorneys of its own
choosing at its cost and expense. If the indemnified party joins in any such
contest, the indemnifying party shall have full authority to determine all
action to be taken with respect thereto. If after such opportunity, the
indemnifying party does not elect to contest any such Claim, the indemnifying
party shall be bound by the result obtained with respect thereto by the
indemnified party and the indemnified party shall be entitled to abandon the
contesting of the Claim or to settle or compromise the Claim, and the
indemnifying party shall be bound by all actions of the indemnified party with
respect to such Claim. At any time after the commencement of defense of any
Claim by the indemnifying party, the indemnifying party may notify the
indemnified party in writing of the abandonment of such contest or of the
payment or compromise by the indemnifying party of the asserted Claim, whereupon
such action shall be taken; provided, however, that the sole relief provided is
monetary damages that are paid in full by the indemnifying party; provided,
further, that the indemnified party may determine that the contest should be
continued, and shall so notify the indemnifying party in writing within 15 days
of such notice from the indemnifying party. In the event that the indemnified
party determines that the contest should be continued (and provided the timing
of notice condition has been met and the sole relief provided is monetary
damages that are paid in full by the indemnifying party), the indemnifying party
shall be liable hereunder only to the extent of the lesser of (i) the amount
which the other party to the contested Claim had agreed to accept in payment or
compromise as of the time the indemnifying party made its request therefor to
the indemnified party, or (ii) such amount for which the indemnifying party may
be liable with respect to such Claim by reason of the provisions hereof.
Notwithstanding the foregoing, if the indemnified party determines in, good
faith that there is a reasonable probability that an action regarding a Claim
either (i) may materially and adversely affect it or its Affiliates other than
as a result of monetary damages, or (ii) will substantially impair its ability
to continue to conduct its business or the business of the Company as previously
conducted, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise or settle such action, but the
indemnifying party shall not be bound by any determination of an action so
defended or any compromise or settlement thereof effected without its consent
(which shall not be unreasonably withheld or delayed). All of the foregoing is
subject to the rights of any indemnified party's insurance carrier which is
defending any such above proceedings.
(c) Cooperation. If requested by the indemnifying party, the
indemnified party agrees to cooperate with the indemnifying party and its
counsel in contesting any Claim which the indemnifying party elects to contest
or, if appropriate and not inconsistent with the reasonable commercial interests
of the indemnified party, in making any counterclaim against the person
asserting the Claim, or any cross-complaint against any person and further
agrees to take such other action as reasonably may be requested by an
indemnifying party to reduce or
7
<PAGE> 8
eliminate any loss or expense for which the indemnifying party would have
responsibility, but the indemnifying party will reimburse the indemnified party
for any expenses incurred by it in so cooperating or acting at the request of
the indemnifying party.
(d) Payment of Losses. The indemnifying party shall pay to the
indemnified party in cash the amount of any Losses to which the indemnified
party may become entitled by reason of the provisions of this Agreement, such
payment to be made within fifteen (15) days after any such amount of Losses is
finally determined either by mutual agreement of the parties hereto or pursuant
to the judgment of a court of competent jurisdiction. Any claim for which
indemnification occurs hereunder shall be, to the extent appropriate, assigned
to the indemnifying party.
ARTICLE V
MISCELLANEOUS
5.01 Publicity. Except after consultation with the other parties, no
party shall publicize, advertise, announce or describe to any
Governmental Authority or other Person, the terms of this Agreement,
the parties hereto or the transactions contemplated hereby, except as
required by Applicable Law or as required pursuant to this Agreement.
5.02 Assignment. This Agreement shall inure to the benefit of, and
shall be binding upon, the parties and their respective successors and
permitted assigns. No party may assign or delegate this Agreement or
any of its rights or duties under this Agreement (including, without
limitation, by operation of law) without the prior written consent of
the other parties, except (i) to an Affiliate of such party who
expressly assumes the obligations of the assigning party hereunder and
(ii) in the case of Ciba, to a successor to Ciba's Pharmaceuticals
Division, whether by merger, consolidation, stock sale, asset sale or
otherwise.
5.03 Amendment. This Agreement may be amended, modified or supplemented
only by a written instrument specifically referring to this Agreement
that is signed and delivered by duly authorized officers of each party.
5.04 Waiver. The failure of any party to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of
any such provision and will not effect the validity of this Agreement
or any part hereof or the right of such party to enforce any such
provision. No waiver of any breach hereof will be construed to be a
waiver of any other breach.
5.05 Notices. All notices and communications required or authorized to
be given hereunder shall be in writing and shall be deemed to have been
duly given (a) when delivered by messenger, (b) upon actual receipt if
sent by telecopy (with receipt confirmed), provided that a copy is
mailed by registered or certified mail, postage prepaid, return receipt
requested, or (c) when received by the addressee, if sent by overnight
courier, in each case to the appropriate address or telecopier:
If to IOMED or the Company:
IOMED, Inc.
3385 West 1820 South
8
<PAGE> 9
Salt Lake City, Utah 84104
Attn: Chief Executive Officer
Tel: (801) 975-1191
Fax: (801) 972-9072
with a copy to:
Morrison & Foerster LLP
345 California Street
San Francisco, California
Attn: C. Patrick Machado, Esq.
Tel: (415) 677-7589
Fax: (415) 677-7522
If to Purchaser:
Ciba-Geigy Corporation
Pharmaceuticals Division
556 Morris Avenue
Summit, New Jersey 07901
Attn: President
Tel: (908) 277-5200
Fax: (908) 277-7627
with a copy to:
Ciba-Geigy Corporation
Pharmaceuticals Division
556 Morris Avenue
Summit, New Jersey 07901
Attn: Division Counsel
Tel: (908) 277-5616
Fax: (908) 277-5753
or to such other person or address as any party may designate in writing from
time to time.
5.06 Disclaimer of Agency. This Agreement shall not be construed to
constitute the parties as partners, joint venturers, agents or otherwise as
participants in a joint or common undertaking. No party (or its agents and
employees) is the representative of the other party for any purpose and no party
has power or authority as agent, legal representative, employee or in any other
capacity to represent, act for, bind, or otherwise create or assume any
obligation on behalf of, any other party for any other purpose whatsoever.
5.07 Further Assurances. The parties shall each perform such acts,
execute and deliver such instruments and documents, and do all such other things
as may be reasonably necessary to accomplish the transaction's contemplated in
this Agreement.
5.08 Expenses. The parties shall each bear their own costs and expenses
(including attorneys' fees) incurred in connection with the negotiation and
preparation of this Agreement
9
<PAGE> 10
and, except as otherwise provided herein, consummation of the transactions
contemplated hereby.
5.09 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of New York, without giving effect to the conflicts
of laws provisions thereof.
5.10 Entire Agreement. This Agreement, including the exhibits and
schedules hereto, each of which is incorporated herein by this reference,
contains the entire agreement and understanding of the parties, and supersedes
any prior understandings and agreements, with respect to its subject matter,
including the Interim Agreement.
5.11 Severability. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth herein. In such event, the
parties shall negotiate, in good faith, a substitute, valid and enforceable
provision or agreement which most nearly effects the parties' intent in entering
into this Agreement.
5.12 Broker's Fees. Each of the parties represents and warrants that it
has not dealt with any broker or finder in connection with any of the
transactions contemplated by this Agreement, and, to its knowledge, no broker or
other Person is entitled to any commission or finder's fee in connection with
any of these transactions. Each of the parties shall be responsible for, and
shall indemnify and hold the other parties harmless against, the fees of its
investment bankers and other advisors, if any.
5.13 Article and Section Headings. The article and section headings
included in this Agreement are for convenience of the parties only and shall not
affect the construction or interpretation of this Agreement.
5.14 Counterparts. This Agreement may be executed in any number of
counterparts each of which shall contribute an original instrument but all of
which, taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
IOMED, INC., a Utah corporation
By:/s/Ned M. Weinsheaker
---------------------------------------------
Ned M. Weinsheaker
Its: President and Chief Executive Officer
---------------------------------------------
CIBA-GEIGY CORPORATION,
a New York corporation, acting through its
Pharmaceuticals Division
By:/s/ signature illegible
---------------------------------------------
Its:
---------------------------------------------
DERMION, INC., a Delaware corporation
By: /s/ Robert J. Lollini
---------------------------------------------
Its: Secretary
---------------------------------------------
<PAGE> 11
[MORRISON & FOERSTER LLP LETTERHEAD]
March 19, 1996
Ciba-Geigy Corporation
Pharmaceuticals Division
556 Morris Avenue
Summit, New Jersey 07901
Re: Dermion, Inc.
Ladies and Gentlemen:
We have acted as counsel for Dermion, Inc., a Delaware corporation (the
"Company"), in connection with the purchase by Ciba-Geigy Corporation, a New
York corporation ("Purchaser"), acting through its Pharmaceuticals Division, of
Two Hundred Thousand (200,000) shares (the "Shares") of the Common Stock, $.001
par value per share (the "Common Stock"), of the Company pursuant to a Stock
Purchase Agreement, dated of even date herewith (the "Agreement"), by and
between Purchaser, the Company and IOMED, Inc., a Utah corporation ("Iomed").
This opinion is furnished to you pursuant to Section 1.05 of the Agreement.
Capitalized terms not otherwise defined herein shall have the meanings given to
them in the Agreement.
We have examined originals or copies of the following documents (the
"Documents"):
(i) the "Agreement"; and
(ii) the Stockholders' Agreement, dated of even date herewith, by and
between Purchaser, the Company and Iomed (the "Stockholders'
Agreement").
In addition, we have examined such records, documents, certificates of
public officials and of the Company, made such inquiries of officials of the
Company, and considered such questions of law as we have deemed necessary for
the purpose of rendering the opinions set forth herein.
We have assumed the genuineness of all signatures and the authenticity of
all items submitted to us as originals and the conformity with originals of all
items submitted to us as copies. In making our examination of the Documents, we
have assumed that each party to one or more of the Documents other than the
Company has the power and authority to execute and
<PAGE> 12
Ciba-Geigy Corporation MORRISON & FOERSTER LLP
Pharmaceuticals Division
March 29, 1996
Page 2
deliver, and to perform and observe the provisions of the Documents, and has
duly authorized, executed and delivered such Documents, and that such Documents
constitute the legal, valid and binding obligations of such party.
Our opinion in paragraph (a) below as to the qualification and good
standing of the Company is based solely upon certificates of public officials in
the states named in that paragraph. In rendering our opinion in paragraph (d)
below, we have assumed the accuracy of the representations and warranties of
Purchaser set forth in Section 2.02(e) of the Agreement.
Whenever our opinion herein with respect to the existence or absence of
facts is indicated to be based on our knowledge, it is intended to signify that,
in the course of our representation of the Company in connection with the matter
described in the first paragraph hereof, we have not acquired actual knowledge
of the existence or absence of such facts. We have not undertaken any
independent investigation to determine the existence or absence of such facts,
and no inference as to our knowledge of the existence or absence of such facts
should be drawn from the fact of our representation of the Company.
The opinions hereinafter expressed are subject to the following further
qualifications and exceptions:
(1) the effect of bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws relating to or affecting the
rights of creditors generally, including, without limitation, laws relating to
fraudulent transfers or conveyances, preferences and equitable subordination;
(2) limitations imposed by general principles of equity upon the
availability of equitable remedies or the enforcement of provisions of the
Documents; and the effect of judicial decisions which have held that certain
provisions are unenforceable where their enforcement would violate the implied
covenant of good faith and fair dealing, or would be commercially unreasonable,
or where a default under the Documents is not material;
(3) the enforceability of provisions of the Documents providing for
indemnification or contribution to the extent such indemnification or
contribution is against public policy; and
(4) the enforceability of provisions of the Documents providing for
arbitration of disputes to the extent that arbitration of a particular dispute
would be against public policy.
Based upon and subject to the foregoing, we are of the opinion that:
<PAGE> 13
Ciba-Geigy Corporation MORRISON & FOERSTER LLP
Pharmaceuticals Division
March 29, 1996
Page 3
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and is duly qualified
and in good standing in the State of Utah.
(b) The Company has the corporate power and authority to execute and
deliver, and to perform and observe the provisions of, the Documents.
(c) The Documents have each been duly authorized, executed and
delivered by the Company. The Documents constitute valid and binding obligations
of the Company enforceable against the Company in accordance with their
respective terms.
(d) No registration with, consent or approval of, notice to, or other
action by, any governmental entity is required on the part of the Company for
the execution, delivery or performance by the Company of the Documents, or if
required, such registration has been made, such consent or approval has been
obtained, such notice has been given or such other appropriate action has been
taken.
(e) The execution, delivery and performance of the Documents by the
Company are not in violation of its Certificate of Incorporation or Bylaws.
(f) The authorized capital stock of the Company consists of Four
Million (4,000,000) shares of Common Stock, of which Eight Hundred Thousand
(800,000) are issued and outstanding, all of which issued and outstanding shares
are owned beneficially and of record by Iomed, and One Million (1,000,000)
shares of Preferred Stock, $.001 par value per share, none of which are issued
and outstanding. To our knowledge, except pursuant to the Stockholders'
Agreement, the Company does not have outstanding any rights (preemptive or
other) or options to subscribe for or purchase, or any warrants or other
agreements providing for or requiring the issuance by the Company of, any of its
capital stock or securities convertible into or exchangeable for its capital
stock, nor is the Company under any obligation to repurchase or redeem any
shares of its capital stock or securities convertible into or exchangeable for
its capital stock.
(g) The Shares, which are to be issued to you pursuant to the Agreement,
have been duly authorized for issuance, and, when issued and delivered against
payment therefor in accordance with the Agreement, will be validly issued, fully
paid and nonassessable.
We express no opinion as to matters governed by any laws other than the
substantive laws of the State of New York (without reference to its
choice-of-law rules), the Delaware General Corporation Law, and federal laws of
the United States, in each case as in effect on the date hereof.
<PAGE> 14
Ciba-Geigy Corporation MORRISON & FOERSTER LLP
Pharmaceuticals Division
March 29, 1996
Page 4
In addition, we call your attention to the arbitration provisions of the
Documents and to the existence of differences between the arbitral and judicial
processes. We have based our opinion upon an assessment of legal authorities
which would be applicable in judicial proceedings.
This opinion is solely for your benefit and may not be relied upon by, nor
may copies be delivered to, any other person without our prior written consent.
Very truly yours,
MORRISON & FOERSTER LLP
<PAGE> 15
SUPPORT SERVICES AGREEMENT
THIS SUPPORT SERVICES AGREEMENT (the "Agreement"), dated as of March 29,
1996, is made by and between IOMED, Inc., a Utah corporation ("IOMED") and
Dermion, Inc., a Delaware corporation (the "Company").
A. The Company has been formed to conduct the business (the "Business")
of conducting research with respect to or developing iontophoretic transdermal
drug delivery systems on its own behalf and/or on behalf of third parties, as
previously conducted by IOMED.
B. Pursuant to a Contribution Agreement, dated of even date herewith
(the "Contribution Agreement"), IOMED has contributed certain assets to the
capital of the Company in exchange for Eight Hundred Thousand (800,000) of the
issued and outstanding shares of Common Stock, $.001 par value per share
("Common Stock"), of the Company.
C. Pursuant to a Stock Purchase Agreement, dated of even date herewith
(the "Stock Purchase Agreement"), the Company has issued and sold to Ciba-Geigy
Corporation, a New York corporation ("Purchaser"), acting through its
Pharmaceuticals Division, Two Hundred Thousand (200,000) of the issued and
outstanding shares of Common Stock.
D. As a result of the transactions contemplated by the Contribution
Agreement and the Stock Purchase Agreement, IOMED and Purchaser have acquired
all of the issued and outstanding shares of capital stock of the Company.
E. Pursuant to a Research and Development Agreement, dated of even date
herewith (the "R&D Agreement"), Purchaser, IOMED and the Company have agreed to
conduct a research and development program on the terms and subject to the
conditions set forth therein.
F. As contemplated by the Stock Purchase Agreement and the R&D
Agreement, IOMED and the Company desire to enter into this Agreement in order
to provide for the provision by IOMED to the Company of certain support
services, all on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. Services Provided by IOMED. During the term of this Agreement, IOMED
agrees to provide the Company with the following support services
(collectively, the "Support Services"):
o EXECUTIVE MANAGEMENT SERVICES: strategic management and business
development services
o HUMAN RESOURCE SERVICES: including assistance with recruiting and
screening of applicants, preparation of position descriptions,
maintenance of employee records, maintenance of employee drug testing
program, assistance with regulatory
1
<PAGE> 16
compliance and mandatory reporting requirements, including EEOC and
OSHA, maintenance of employee policy manuals
o PAYROLL ADMINISTRATION: including semi-monthly payroll, annual
preparation of W-2s, quarterly payment of withholding taxes,
management of garnishments
o BENEFITS ADMINISTRATION: including medical and dental insurance
plans, 401(k) savings plan, life and disability plans
o INSURANCE ADMINISTRATION: negotiation of renewals and maintenance of
proper coverage of all insurance, including facilities, property and
casualty, general liability, products liability and worker's
compensation
o CONTRACT ADMINISTRATION: general contract administration, including
the negotiation, compliance with and maintenance of collaborative
development, service and licensing agreements
o CORPORATE SECRETARIAL SERVICES: maintenance of corporate records,
records retention and maintenance of required permits and licenses
o LEASE ADMINISTRATION
o FACILITIES MAINTENANCE: including general facilities maintenance and
contract administration for security, janitorial, waste management,
landscape and snow removal services
o CASH MANAGEMENT SERVICES: including investment and treasury services,
negotiation and administration of debt service and capital or
operating lease agreements, treasury account reconciliations
o PURCHASING SERVICES: including purchase order processing, shipping
and receiving services as necessary
o BOOKKEEPING SERVICES: general ledger account maintenance, including
accounts receivable, collections and accounts payable processing,
maintenance of fixed asset records, financial reporting (internal and
external, including audit if required), preparation of project
reporting and other special reports as required pursuant to
development agreements
o TAX SERVICES: payment of all property, sales and use taxes, including
maintenance of appropriate records, coordination and preparation of
state and federal income tax returns (independent or consolidated).
2. Standard of Care. IOMED shall provide all Support Services in
compliance with applicable law and sound business practices, and in a manner and
of a quality consistent with the analogous services provided by IOMED in
connection with its operation of the Business prior to the date hereof.
3. Compensation. In consideration for the Support Services, the Company
shall pay IOMED each month an amount equal to IOMED's direct out of pocket
costs (which shall not
2
<PAGE> 17
include any allocated overhead costs, including without limitation salary and
benefit costs) of providing the Support Services plus an overhead allocation
(including salary and benefit costs) in the amount of Twenty Thousand Dollars
($20,000) per month. In the event any such out of pocket costs benefit both the
Company and IOMED, IOMED shall invoice the Company for, and the Company shall
be required to pay, only the portion of such costs as are related solely to the
Company. The monthly overhead allocation shall be subject to review by the
parties at the end of each fiscal year of IOMED, and shall be adjusted at such
times to a level agreed to by the parties that reflects any changes in the cost
to IOMED of the overhead so allocated.
4. Invoices: Payment Terms. IOMED shall invoice the Company once each
month for Support Services rendered hereunder, and each such invoice shall be
payable in full by the Company within thirty (30) days of the invoice date.
Each invoice submitted by IOMED shall be accompanied by reasonably detailed
records, including, where applicable, original invoices or copies thereof,
supporting the out of pocket costs being submitted to the Company for payment.
5. Term. The term of this Agreement shall commence on the date hereof
and shall terminate upon the later to occur of (a) termination of the R&D
Agreement and (b) three (3) years after the date hereof; provided, however,
that the Company shall have the right, exercisable by it at any time upon
thirty (30) days written notice to IOMED, to terminate this Agreement in whole
or in part. As used in this Agreement, "Affiliate" means, with respect to any
person, a person controlling, controlled by or under common control with such
person, and "control" means ownership of a majority of the outstanding voting
securities of such person. Notwithstanding anything to the contrary contained
herein, the obligation of the Company to pay for Support Services rendered
under this Agreement prior to a termination shall survive any such termination.
6. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware, without reference
to its conflict of law rules.
7. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given when
delivered by hand, three (3) business days after mailing by certified or
registered mail, return receipt requested and postage prepaid, and one (1)
business day after transmittal by overnight courier.
8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
9. Waiver. No waiver of any provision of this Agreement or any right or
obligation of any party hereunder shall be effective unless set forth in a
writing, specifying such waiver, signed by the party against which such waiver
is being enforced. Any such waiver shall be effective only in the specific
instance and for the specific purpose stated in such writing.
3
<PAGE> 18
10. Entire Agreement: Amendments. This Agreement sets forth the entire
understanding between the parties with respect to the subject matter hereof and
supersedes any prior oral or written communications, representations,
understandings or agreements existing between the parties with respect to such
subject matter. This Agreement may not be amended, in whole or in part, except
by a writing, specifying such amendment, signed by both parties.
11. Assignment. Neither the rights nor obligations of any party under
this Agreement may be transferred or assigned, directly or indirectly, without
the prior written consent of the other party, which consent will not be
unreasonably withheld; provided, however, that each party may freely assign its
rights and obligations hereunder to any Affiliate.
12. Binding Agreement. The terms of this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first written above.
IOMED, INC., a Utah corporation
By: [SIG]
------------------------------
Its: Secretary
-----------------------------
DERMION, INC., a Delaware corporation
By: [SIG]
------------------------------
Its: President and CEO
-----------------------------
4
<PAGE> 19
AGREEMENT OF SUBLEASE
THIS AGREEMENT OF SUBLEASE (this "Sublease") is entered into as of this
29th day of March, 1996, between IOMED, Inc., a Utah corporation, (hereinafter
referred to as "Sublessor"), and Dermion, Inc., a Delaware corporation
(hereinafter referred to as "Sublessee").
W I T N E S S E T H:
1. Master Lease. Pursuant to the Lease Agreement by and between Textron
Collective Investment Trust, a Rhode Island trust and successor in interest to
Stangl Alliance (hereinafter referred to as "Lessor") and IOMED, Inc., a Utah
corporation and successor in interest to Motion Control, Inc. ("Sublessor"),
dated October 1, 1986, as amended by the First Amendment to Lease Agreement,
dated as of March 9, 1988, the Second Amendment to Lease Agreement, dated as of
May 5, 1989, the Third Amendment to Lease Agreement dated as of July 10, 1989,
the Fourth Amendment to Lease Agreement dated as of July 18, 1989, the Fifth
Amendment to Lease Agreement dated as of February 7, 1992, and the Sixth
Amendment to Lease Agreement dated as of July 20, 1994 (as amended, the "Master
Lease"), Sublessor has leased from Lessor certain premises located in the
office building situated at 1290 West 2320 South (the "Building") in West
Valley City, Salt Lake County, State of Utah. Attached as Exhibit A is a copy
of the Master Lease.
2. Sublease. Sublessor upon the following terms and conditions hereby
subleases to Sublessee, and Sublessee hereby subleases from Sublessor, a
portion of the premises subject to the Master Lease consisting of approximately
8,100 square feet of office, warehouse, research and development space,
situated in the building identified as "K", as shown on Exhibit B attached
hereto (hereinafter referred to as the "Subleased Premises"). Sublessee shall
also be entitled to the non-exclusive use for the term of this Sublease of the
parking stalls adjacent to the Subleased Premises as shown in Exhibit B.
3. Use of Subleased Premises. Sublessee shall use and occupy the
Subleased Premises in strict accordance with Article 5 and all other terms of
the Master Lease for the sole purpose of conducting its research, development
and manufacturing of iontophoretic transdermal drug delivery systems and other
medical devices.
4. Term of Sublease. The term of this Sublease shall commence on the
date hereof and shall terminate on the date on which the Master Lease
terminates, subject to early termination by mutual agreement of Sublessor and
Sublessee. As used herein, "affiliate" means, with respect to any person, a
person controlling, controlled by or under common control with such person, and
"control" shall mean ownership of a majority of the outstanding voting
securities of such person.
1
<PAGE> 20
5. Rent.
(a) Sublessee shall pay to Sublessor as rent for the Subleased Premises,
the sum of SEVENTY THOUSAND EIGHT HUNDRED DOLLARS ($70,800) per annum, payable
in equal monthly installments of FIVE THOUSAND NINE HUNDRED DOLLARS ($5,900).
(b) Sublessee shall pay to Sublessor, as additional rent, the
proportional share, adjusted on a pro rata basis to the number of square feet
comprising the Subleased Premises, of the utilities, Taxes, insurance premium
costs, Building Common Area expenses, and Development Common Area expenses as
required under (and as defined in) the Master Lease.
(c) In the event of any increase in base rent or other amount payable by
Sublessor to Lessor pursuant to the Master Lease, Sublessee shall pay Sublessor
its proportional share of any such increases, adjusted on a pro rata basis to
the number of square feet comprising the Subleased Premises divided by the
number of square feet subject to the Master Lease; provided, however, that
Sublessee shall have no liability for any such increase resulting from an
amendment to the Master Lease effected after the date hereof without Sublessee's
written consent.
(d) All payments of base rent, any additional rent and any other amount
required to be made by Sublessee shall be paid in advance on the first day of
each calendar month of the term of this Sublease (to the extent ascertainable
as of such date) and shall be payable without notice or demand, and without any
deduction, offset or abatement, in lawful money of the United States of America
to Sublessor at the address stated herein, or to such other persons or at such
other places as Sublessor may designate in writing. Any such payment not
ascertainable as of the first day of each calendar month of the term of this
Sublease shall be paid by Sublessee within ten (10) days after its receipt of a
written invoice from Sublessor, including reasonable supporting documentation,
for such amount. The rent for any partial month during which the term of this
Sublease commences or terminates shall be equitably prorated.
6. Condition of Premises. The Subleased Premises sublet hereunder shall
be taken and leased by Sublessee on an "as is" basis.
7. Waiver of Liability: Indemnification. Without limiting in any way the
effect or generality of all indemnification and waiver provisions contained as
part of the terms of the Master Lease, which are incorporated herein pursuant
to paragraph 10 below, the parties hereby agree that:
(a) Neither Sublessor nor Lessor shall be liable to Sublessee, and
Sublessee hereby waives all claims against Sublessor and Lessor, for any injury
or damage to any person or property in or about the Subleased Premises and/or
Building by or from any cause whatsoever other than by reason of the negligence
or willful act of Sublessor, its agents, servants, employees or invitees, or
Lessor.
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(b) Sublessee shall defend, indemnify and hold Sublessee and Lessor
harmless against any and all claims or liability for any injury or damage to any
person or property whatsoever if and to the extent that such injury or damage
shall be caused by the act, neglect, fault of, or omission of any duty with
respect to the same, by Sublessee, its agents, servants, employees, or invitees;
(i) occurring in, on, or about the Subleased Premises or any part thereof, and
(ii) occurring in, on, or about any facilities (including, without prejudice to
the generality of the term "facilities," elevators, stairways, passageways or
hallways) the use of which Sublessee may have in conjunction with other tenants
of the Building.
(c) Sublessee shall not be liable to Sublessor, and Sublessor hereby
waives all claims against Sublessee, for any injury or damage to any person or
property in or about the Subleased Premises and/or Building if and to the
extent caused by reason of the negligence or willful act of Sublessor, its
agents, servants, employees or invitees, or Lessor.
(d) Sublessor shall defend, indemnify and hold Sublessee harmless against
any and all claims or liability for any injury or damage to any person or
property whatsoever if and to the extent that such injury or damage shall be
caused by the act, neglect, fault of, or omission of any duty with respect to
the same, by Sublessor, its agents, servants, employees, or invitees; (i)
occurring in, on, or about the Subleased Premises or any part thereof, and (ii)
occurring in, on, or about any facilities (including, without prejudice to the
generality of the term "facilities," elevators, stairways, passageways or
hallways) the use of which Sublessee may have in conjunction with other tenants
of the Building.
(e) Any indemnification payments pursuant to Section 7(b) or 7(d) above
shall be net of any insurance recoveries by the indemnified party.
8. Notices. All notices and demands which may or are required to be
given by either party to the other hereunder shall be in writing. All notices
and demands shall be deemed to have been duly given (a) when delivered by
messenger, (b) upon actual receipt if sent by telecopy (with receipt confirmed),
provided that a copy is mailed by registered or certified mail, postage prepaid,
return receipt requested, or (c) when received by the addressee, if sent by
overnight courier, in each case to the appropriate address or telecopier:
If to the Sublessee:
Dermion, Inc.
1290 West 2320 South
Salt Lake City, Utah 84119
Attn: Chief Executive Officer
Tel: (801) 975-1191
Fax: (801) 972-9072
3
<PAGE> 22
If to the Sublessor:
IOMED, Inc.
3385 West 1820 South
Salt Lake City, Utah 84104
Attn: Chief Executive Officer
Tel: (801) 975-1191
Fax: (801) 972-9072
or to such other person or address as the parties may designate in writing
from time to time. All notices shall be deemed to have been received at the
time of delivery, if personally delivered, or forty-eight (48) hours after
deposit in the United States mail as specified above, if mailed.
9. Assignment and Subletting.
(a) Sublessee shall not sell, assign, encumber or otherwise transfer by
operation of law or otherwise this Sublease or any interest herein, sub-sublet
the Subleased Premises or any part thereof, or suffer any other person to
occupy or use the Subleased Premises or any portion thereof, without the prior
written consent of Sublessor, which consent may be granted or denied in
Sublessor's absolute and sole discretion, nor shall Sublessee permit any lien
to be placed on the Sublessee's interest by operation of law or otherwise.
(b) Any sub-subletting hereunder by Sublessee shall not result in
Sublessee being released or discharged from any liability under this Sublease.
Any consent by Sublessor to any sub-subletting of the Subleased Premises or any
part thereof by Sublessee shall not be deemed to be a consent to any other
sub-subletting of the Subleased Premises and shall not constitute a waiver of
the requirements of Sublessor's consent to any other sub-subletting of the
Subleased Premises as such requirement is stated herein. Any sale, assignment,
encumbrance, sub-subletting, occupation, lien or other transfer of this
Sublease which does not comply with the provisions of this paragraph 9 shall be
void.
10. Incorporation of Terms of Master Lease. It is expressly understood,
acknowledged and agreed by Sublessee that all of the other terms, conditions
and covenants of this Sublease shall be those stated in the Master Lease as
attached hereto, except for Articles 2, 10, 11 and 26, and, to the extent
discussed above, Articles 4, 7, 25 and 28. Sublessee shall and hereby agrees to
be subject to and bound by and to comply with all of said Paragraphs and
Subparagraphs of the Master Lease with respect to that certain space leased
therein encompassed by this Sublease and to satisfy all applicable terms and
conditions of the Master Lease for the benefit of both Sublessor and Lessor, it
being understood and agreed that wherever in the Master Lease the word "Tenant"
appears, for the purposes of this Sublease, the word "Sublessee" shall be
substituted, and, subject to Section 11 below, wherever in the Master Lease the
word "Landlord" appears, for the purposes of this Sublease, the word
"Sublessor" shall be substituted, and that upon the breach of any of said
terms, conditions or covenants of the Master Lease or upon the failure of the
Sublessee to pay rent or comply with any of the provisions of this Sublease,
Sublessor may exercise any and all rights and remedies granted to Lessor by the
4
<PAGE> 23
Master Lease. Sublessee hereby acknowledges that it has read and is familiar
with the terms of the Master Lease, and agrees that this Sublease is
subordinate and subject to the Master Lease and that any termination thereof
without the fault of the Sublessor shall likewise terminate this Sublease.
11. Limitation of Liability. Notwithstanding anything to the contrary
contained herein, it is understood and agreed that the Sublessor has no duty or
obligation to the Sublessee with respect to the Master Lease other than (a) to
maintain the Master Lease in full force and effect during the term of this
Sublease (provided, however, that Sublessor shall not be liable to Sublessee
for any earlier termination of the Master Lease which is not due to the fault
of Sublessor), (b) to refrain from taking any actions that would preclude
Lessor from performing its covenants under the Master Lease insofar as they
relate to the Subleased Premises, and (c) upon request of Sublessee, to use
commercially reasonable efforts to enforce against Lessor any provisions of the
Master Lease reasonably requested by Sublessee relating to Sublessee's use and
enjoyment of the Subleased Premises. Any costs and expenses incurred, and any
damages or other amounts recovered as a result of, any actions pursuant to
clause (c) above shall be shared by Sublessor and Sublessee in accordance with
the relative number of square feet occupied by each of them that is the subject
of any such matter.
IN WITNESS WHEREOF, the parties have executed this Sublease the date first
above written.
Sublessor: IOMED, Inc., A Utah corporation
By: [SIG]
-----------------------------
Its: Secretary
Sublessor: Dermion, Inc., a Delaware corporation
By: [SIG]
-----------------------------
Its: President and CEO
5
<PAGE> 24
EXHIBIT A
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made and entered into as of this 1st day
of October, 1986, by and between Stangl Alliance - a Joint Venture whose
managing partner is F.C. Stangl, III, hereinafter referred to as the
"Landlord," and Motion Control, Inc. - a Utah Corporation, hereinafter referred
to as the "Tenant":
W I T N E S S E T H :
ARTICLE 1. PREMISES AND TERM. Landlord hereby leases and by these presents
does lease and demise to the Tenant, and the Tenant does lease and take from
the Landlord, the premises described on Exhibit B attached hereto, consisting
of approximately 10,000 net usable square feet of office, warehouse, research
and development space, situated in the building identified as "K" on Exhibit
"A" attached hereto (the "Building") in the space indicated thereon (the
"Premises"), together with all the easements, rights, privileges and
appurtenances thereunto belonging or in any way appertaining thereto together
with access and ingress thereto and the right to enjoy the common areas.
TO HAVE AND TO HOLD the Premises, together with all and singular the
improvements, appurtenances, rights, privileges and easements thereunto
belonging to or in anywise appertaining, unto Tenant for a term commencing as
of the date set forth herein under Article 3 and continuing thereafter to and
including the date four (4) years from the first day of the first month
immediately following the Commencement Date, subject, however, to extension and
renewal as hereinafter provided.
ARTICLE 2. CONSTRUCTION OF IMPROVEMENTS. Landlord agrees, at Landlord's
sole cost and expense, to construct interior improvements within the premises,
in accordance with the plans and specifications prepared by F.C. Stangl
Construction Company, copies of which have been attached hereto and
incorporated herein as Exhibit "B", (Metro building "K" floor plan), and
Exhibit "B1", (specifications for interior
<PAGE> 25
improvements of the Premises) and initialed by the parties, which plans and
specifications the parties have reviewed and approved. All such improvements
shall be completed in a good workmanlike manner and in accordance with
applicable governmental codes and regulations including, but not limited to
"life and safety" requirements.
ARTICLE 3. TENANT'S POSSESSION. The preliminary term of this Lease shall
commence on the date hereof and continue until, and expire upon, the first day
of the original term. The original term ("Term") shall commence thirty (30) days
after the date Landlord delivers to Tenant possession of the Premises and upon
which date Tenant accepts and approves the Premises as having improvements to
the state of being ready for occupancy provided in no event will such date be
prior to November 15, 1986 ("Commencement Date"). The words "ready for
occupancy" shall mean the date upon which (i) the construction work referred to
in Article 2 is debris free and substantially completed in accordance with the
plans and specifications referred to therein (except for minor finishing details
of construction, minor omissions, decorations, and mechanical adjustments which
do not materially interfere with Tenants installation of its improvements and
trade fixtures and, (ii) a permanent "certificate of occupancy" has been issued
by the appropriate authorities. Tenant shall thereafter have five (5) days
within which to inspect the Premises before the Commencement Date at which time
Tenant shall confirm whether the same is ready for occupancy and provide
Landlord with a list of items (punch list) to be completed, or otherwise
corrected by Landlord. When the Commencement Date has been determined, Landlord
and Tenant shall enter into an agreement in recordable form setting forth such
date. Landlord shall notify Tenant when it deems the Premises are ready for
occupancy. By taking possession of the Premises, Tenant acknowledges having
inspected the same and accepts the Premises as in such condition and repair and
that the improvements have been completed in accordance with the
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<PAGE> 26
provisions of this Lease except (i) as to those items on the above referenced
punch list provided by Tenant to Landlord, which items shall be accepted when
completed by Landlord in accordance with the provisions of this Lease Agreement
and, (ii) to items or conditions not readily apparent from such inspection or
defects which are latent. Landlord shall complete the items on the punch list
within thirty (30) days after said punch list has been provided by Tenant.
Landlord agrees to have the Premises ready for occupancy no later than 60 days
after leases and floor plans have been finalized by both Landlord and Tenant.
ARTICLE 4. OBLIGATIONS OF TENANT AND LANDLORD.
Surrender of Premises -- Maintenance of Adjacent Areas. At the termination
or expiration of this Lease or any renewal thereof, Tenant agrees to deliver up
the Premises and improvements (other than improvements or personal property of
Tenant) to Landlord in as good order, condition and state of repair as when
received by Tenant, reasonable wear and tear thereof and damage by fire, acts
of God, or the elements excepted.
Property Taxes. Landlord shall pay before delinquency thereof all real
property taxes and assessments which are levied against or which apply with
respect to the Building and the real property underlying the same ("Taxes). In
addition to the rents outlined in Article 7. Rent. below, Tenant shall pay to
Landlord as additional rental for each calendar year of the Term or any Extended
Term of the Lease Tenant's proportional share of the Taxes, which amount shall
be determined by multiplying (1) the Taxes for each such calendar year by (2) a
fraction, the numerator of which is the total gross square footage of floor
area of the Premises and the denominator of which is the total gross square
footage of floor areas of the Building (such fraction is hereinafter referred
to as "Tenant's Proportionate Share").
Equitable adjustments shall be made so that only that prorata part of the
Taxes shall be paid by the Tenant for
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<PAGE> 27
fractions of the Term at the beginning or end of the Lease. Tenant shall
reimburse Landlord for its Proportionate Share of the Taxes computed hereunder
on or before the later of (i) fifteen (15) days before the date the Taxes must
be paid before becoming delinquent or (ii) fifteen (15) days from the date
Tenant receives from Landlord a statement setting forth the amount due Landlord
under this paragraph, together with the original tax bill or a true and correct
copy thereof and a computation of the amount to be paid by Tenant as provided in
this paragraph. If Landlord shall be required by its mortgagee to maintain a tax
impound account, Tenant shall, at Landlord's request, pay 1/12 of Tenant's
proportionate share of the estimated annual taxes in advance each month in
addition to the minimum rental payment.
The Tenant shall pay all taxes levied and assessed against its personal
property located within the Premises. Nothing in this lease contained shall
require or be construed to obligate the Tenant to pay any franchise, excise,
corporate, estate, inheritance, succession, capital levy or transfer tax of the
Landlord, or any income, profits or revenue tax upon the income of the Landlord.
Insurance. The Tenant shall, during the entire term of this Lease, at the
Tenant's sole cost and expense, but for the mutual benefit of the Landlord and
Tenant, maintain general public liability insurance against claims for personal
injury, death or property damage occurring upon, in or about the Premises
attached hereto, such insurance to afford protection to the limit of not less
than $500,000 in respect to injury or death to a single person, and to the limit
of not less than $1,000,000 in respect to any one accident, and to the limit of
not less than $100,000 in respect to property damage or a combined single limit
policy not less than $1,000,000 per occurrence. All policies shall name Landlord
and the mortgagee of the Building as an additional named insured, as their
interest may appear. The initial mortgagee shall be Travelers Insurance Company.
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<PAGE> 28
Tenant agrees to maintain or cause to be maintained liability insurance
against claims for bodily injury, loss of life or property damage occurring on
the Building Common Area (as that term is defined below) with bodily injury,
loss of life and property damage coverage in a combined single limit of not
less than One Million Dollars ($1,000,000.00) for a total claims for any one
occurrence. All policies shall name Tenant, Landlord and the mortgagee of the
Building as an additional named insured, as their interest may appear.
Tenant shall also provide hazard insurance coverage to the extent of the
full replacement value covering all of Tenant's property, fixture, equipment,
tools, improvements, stock, goods, wares or merchandise, that it may have in or
on or about the Premises.
To the extent that Tenant fails to provide the foregoing insurance, either
hazard or liability, Tenant shall be responsible to Landlord, as his interest
appears, for such damage that would have been insured by said policies but for
Tenant's failure to obtain such insurance.
Landlord agrees to keep the building insured against loss or damage by
fire and the perils (including loss of rents insurance) commonly covered under
the standard extended coverage endorsement to the extent of one hundred percent
(100%) of the replacement value thereof, including all improvements,
alterations, additions and completed changes made by Landlord, but excluding
fixtures and equipment owned by Tenant. All such insurance shall be carried for
the protection of both Landlord and Tenant. Landlord shall provide Tenant with
satisfactory evidence of such insurance coverage upon Tenant's written request.
In case of loss or damage covered by said building insurance, the proceeds of
such insurance shall be used by Landlord to restore the Premises as provided
in this Lease to the extent that such proceeds are required for such purpose.
Tenant shall reimburse Landlord for Tenant's Proportionate Share (as
defined above in Article 4. Property Taxes.) of such
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<PAGE> 29
insurance premium costs as additional rent hereunder within ten (10) days of
receipt from Landlord of an invoice evidencing payment of such premium. If
Landlord is required by its mortgagee, to maintain a building insurance premium
impound account, Tenant shall pay 1/12 of Tenant's proportionate share of the
estimated annual building insurance premium in advance each month along with
the minimum rental payment.
The policies for the foregoing insurance shall provide that the proceeds
thereof shall be payable to the Tenant and to the Landlord, as their respective
interests may appear. Such insurance policies shall provide that Landlord
shall be given thirty (30) days written notice of cancellation or alteration of
any policy.
Landlord and Tenant hereby waive any rights each may have against the
other on account of any liability claim, loss, or damage occasioned to Landlord
or Tenant, as the case may be, their respective property, the Premises (or its
contents) or to portions of the Building. Neither Landlord or Tenant or any
other parties of the Building shall not be liable to the other or anyone
claiming by, through or under such party, including an insurance carrier or
carriers, for any insurable loss or damage, and no such carriers shall have the
right to subrogate against the other party, or any other such parties. All of
the insurance policies required hereunder shall contain an endorsement by the
insurance carrier or carriers waiving any and all rights of subrogation against
Landlord, Tenant and any other parties, a copy of which endorsement or
endorsements, or evidence thereof by way of certificate shall be furnished to
the Landlord and Tenant by the other hereto.
ARTICLE 5. TENANT'S USE. The Tenant may use the premises for conducting
its research, development and manufacturing of artificial limbs and other
medical devices. Tenant shall use the Premises only for lawful and proper
purposes, which are permissible under applicable law (including under
applicable zoning laws). Tenant shall not make any use of
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<PAGE> 30
the Premises which will cause cancellation of any insurance policy covering the
same and shall not keep or use on the Premises any article, item, or thing
which is prohibited by the terms of the hazard insurance policy covering the
Premises. Tenant shall not commit any waste upon the Premises and shall not
conduct or allow any business, activity or thing on the Leased Premises which
is or becomes unlawful, prohibited, or a nuisance or which may cause damage to
Landlord, to occupants in the vicinity of the Premises, or to other third
parties.
Compliance with Laws. Tenant covenants to Landlord, and Landlord covenants
to Tenant, not to violate any health, building or zoning laws, ordinance, rule
or regulation of any governmental authority pertaining to the Premises, the
Building, or Common Areas, as the case may be.
ARTICLE 6. POSSESSION/LANDLORD'S TITLE. Landlord represents, warrants and
covenants the Premises shall be delivered to the Tenant by Landlord as herein
provided, free and clear of all tenants and occupants and the rights of either.
The Premises shall also be free of liens (except those presently of record),
encumbrances and violations of laws, ordinances and regulations including
mortgages and trust deeds none of which Landlord represents shall adversely
affect the use and occupancy of the Premises. Prior to the Commencement Date
and upon Tenant's written request to Landlord, Landlord shall furnish evidence
that title to the Premises is in the condition required hereunder.
ARTICLE 7. RENT.
Minimum Rent. The Tenant agrees to pay the Landlord at such address as
shall from time to time be designated by Landlord, as minimum rental during the
initial Term and commencing on the first day of the Term without right of
offset or deduction, the monthly amount of:
1st Lease year - $1,550.00/mo. 1st-4th mo.
- $3,065.00/mo. 5th-8th mo.
- $4,550.00/mo. 9th-12th mo.
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<PAGE> 31
2nd Lease year - $5,300.00/mo.
3rd Lease year - $5,300.00/mo.
4th Lease year - $5,300.00/mo.
The minimum rental shall be payable monthly, in advance, without demand on
the first day of each calendar month throughout the Term. Should the Term of
this Lease commence on any day other than on the first (1st) day of the
calendar month, the monthly rental for such fractional month shall be prorated
accordingly.
Late Penalty. After written notice has been provided to Tenant and the ten
(10) day "cure period" provided in said notice has expired, (as further
clarified in Lease Article 15) such unpaid amounts shall bear interest at a rate
equal to fifteen percent (15%) ("Default Interest Rate") from such date to the
date of payment.
ARTICLE 8. SIGNS. With the prior written approval of Landlord, which
approval shall not be unreasonably withheld or delayed, Tenant shall have the
right to place on the Building or Premises signage necessary for the operation,
identification, and advertisement of Tenant's business. Such sign installation
shall not adversely affect or damage the physical structure of the Building,
nor detract from the overall harmony of he Building and the Metro Business Park
development. All such signs must conform with the codes and regulations of West
Valley City and adhere to the signage criteria for the development. (See
Exhibit "D" attached hereto and incorporated herein.)
ARTICLE 9. FIXTURES, PERSONAL PROPERTY, AND ALTERATIONS. All fixtures (not
including trade fixtures) permanently installed or attached to the Premises by
and/or at the expense of Tenant shall become the property of Landlord upon the
expiration or earlier termination of this Term. Any trade fixtures installed in
the Premises by Tenant or personal property of Tenant located within or on the
Premises shall remain the property of the Tenant or Tenant's Lessors, and the
Landlord agrees that so long as Tenant is not in default hereunder, Tenant or
its Lessors shall
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<PAGE> 32
have the right at any time, and from time to time or within thirty (30) days
after the expiration or earlier termination of this Term or any extension or
renewal thereof, to remove any and all of its trade fixtures or personal
property which it may have stored or installed in the Premises, provided,
however, that (a) Tenant will repair all damage to the Premises occasioned by
such removal, and (b) if Tenant utilizes all or any portion of the thirty (30)
day period allowed for removal of such fixtures and equipment beyond the Term
or renewal thereof, it shall pay to the Landlord as rental therefore, a sum
equal to the monthly rental or a pro rata portion thereof. Landlord expressly
agrees to waive and/or subordinate any claim or lien which Landlord may or
might have against the Premises or trade fixtures and personal property of
Tenant in favor of a lessor who intends to lease any of the same to Tenant or
any entity providing financing for acquisition of the same. Tenant shall make
no structural alteration, additions, or deletions to interior leasehold
improvements in the Premises without express written consent of Landlord, such
consent not to be unreasonably withheld or delayed.
ARTICLE 10. UTILITIES. During the Term, the Tenant shall pay for all
water, gas, electricity, and other costs of utilities connected with, consumed,
or used by it in connection with its occupancy of the Premises. Prior to the
Commencement Date, Landlord shall cause, at its sole expense, the natural gas
and electrical power utility facilities to be separately metered to the Premises
and Tenant shall pay for such metered consumption directly to the appropriate
utility company. Additionally, prior to the Commencement Date Landlord shall
install an "inline" water meter to determine Tenant's consumption and use of
water and sewer utilities for billing purposes. Landlord shall "read" said
inline meter every other month and shall bill Tenant for such usage every other
month based upon such readings. Tenant shall pay Landlord for such usage within
10 days after receipt of such billing as additional rent hereunder.
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<PAGE> 33
In the event any utility service to the Premises is interrupted or
temporarily discontinued for any reason other than the intentional acts or
negligence of Landlord or unless covered by the warranty given hereafter,
Landlord shall not be liable therefor to Tenant and the rent required to be
paid hereunder shall not be abated as a result thereof, and Tenant waives any
claims it might otherwise have against Landlord as a result of any such
interruption or discontinuation.
ARTICLE 11. CONSTRUCTION WARRANTY. Subject to the required adequate
maintenance by Tenant as defined in Article 12, and in addition to Landlords
obligation of repair, Landlord hereby warrants to Tenant that the materials,
machinery, equipment, and workmanship of the Premises and Building are and
shall be free of defects for a period of one (1) year commencing with the
Commencement Date. Additionally, Landlord hereby warrants the roof of the
Building against leakage for a two (2) year period commencing with completion
of the interior improvements as further defined in Article 3 herein. Landlord
shall promptly repair any defects in the items covered in this warranty. After
such warranty periods, Landlord shall assign to Tenant, any equipment and
fixture warrantys issued by manufactures which shall extend beyond Landlord's
warranty period. Landlord shall not be responsible for any maintenance or
repair caused by the fault or neglect of the Tenant.
ARTICLE 12. MAINTENANCE AND REPAIRS.
(a) Landlord agrees to make and pay for all structural repairs, to
exterior walls, structural columns and systems and the structural floor of the
Building which collectively enclose or affect the Premises including without
limitation, structural support portions of the roof, foundation, structure
supports, and walls. Landlord further agrees to make and pay for all repairs to
the interior of the Premises which may be of a structural nature and which are
not made necessary by the negligent use of the Premises by Tenant, and such
other repairs structural or otherwise, to the interior of the Building as may
be necessary by
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<PAGE> 34
reason of Landlord's failure to maintain the exterior.
(1) Landlord shall be liable for damages sustained by Tenant, including
damage to Tenant's trade fixtures, supplies, inventory and other property on the
Premises (unless covered by insurances Tenant is required to furnish under the
provisions of Article 4 Insurance) resulting from the failure of Landlord to
make any repairs required to be made by Landlord; provided, however, Landlord
shall not be so liable unless Tenant has given written notice to Landlord of the
need for such repairs and Landlord has failed to make the same with due
diligence.
(2) Landlord agrees that if in an emergency it shall become necessary to
make any repairs thereby required to be made by Landlord and Landlord cannot be
timely notified of the need for such emergency repairs; or in the event Landlord
fails to make repairs it is obligated to make pursuant to this article, Tenant
may, at its option, have the repairs made and pay the cost thereof and in such
event Landlord agrees to reimburse Tenant within thirty (30) days after receipt
from Tenant of true and correct copies of any reasonable invoices and/or
reasonable billing statements received by Tenant from the persons making any
such repairs providing said amounts do not exceed the reasonable value for the
work performed and the materials supplied. If Landlord fails to do so, Landlord
will also pay Tenant interest on such amounts at the Default Interest Rate until
paid. The rights of Tenant hereunder specifically do not include the right to
offset or deduct any amounts claimed hereunder from rentals due.
Landlord reserves the right, after reasonable notice to Tenant, to enter
upon the Premises (in a manner that will not unnecessarily interfere with the
business of Tenant) during business hours at any time to inspect the same and to
make necessary repairs to fulfill Landlord's obligation hereunder.
(3) Landlord shall be responsible for the initial painting of the
improvements and Tenant shall be responsible for painting thereafter. Landlord
shall not be responsible for any
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<PAGE> 35
maintenance or repair caused by the fault or neglect of the Tenant, or due to
hazards and risks covered or required to be covered by insurance hereunder
except as insurance proceeds are available therefor.
(b) Tenant agrees to make and pay for all other maintenance and repairs
which are not the responsibility of Landlord, to the Premises, including
painting of interior walls, maintenance, repair and replacement of equipment,
the roof, interior walls, wires, conduits, sewers, drains and other utility
facilities, except for such maintenance and repairs as defined under Article 11.
Construction Warranty. Tenant further agrees to make and pay for all repairs to
the Premises which may be of a structural nature which are made necessary by the
negligent use of the Premises by Tenant, and such other repairs structural or
otherwise to the Building as may be necessary by reason of Tenants failure to
maintain the Premises.
(1) Tenant shall be liable for damages sustained by Landlord including
damage to the Building and other property on the Premises (unless covered by
insurances Landlord is required to furnish), resulting from the failure of
Tenant to make any repairs required to be made by Tenant provided, however,
Tenant shall not be so liable unless Landlord has given written notice to Tenant
of the need for such repairs and Tenant has failed to make the same with due
diligence.
(2) Tenant agrees that if in an emergency it shall become necessary to
make any repairs thereby required to be made by Tenant and Tenant cannot be
timely notified of the need for such emergency repairs; or in the event Tenant
fails to make repairs it is obligated to make pursuant to this article, Landlord
may, at its option, have the repairs made and pay the cost thereof and in such
event Tenant agrees to reimburse Landlord within thirty (30) days after receipt
from Landlord of true and correct copies of any reasonable invoices and/or
reasonable billing statements received by Landlord from the persons making any
such repairs providing said amounts do not exceed the reasonable value for the
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work performed and materials supplied. If Tenant fails to do so, Tenant will
also pay Landlord interest on such amounts at the Default Interest Rate until
paid.
(c) It is understood and agreed that should either party to this
Agreement fail or refuse to start and to proceed thereafter with due diligence
to make any repairs or maintenance as may be reasonably necessary for the
purpose of fulfilling the terms and conditions of the agreements herein set
forth within a reasonable length of time (not to exceed seven (7) days) after
being notified in writing of the need thereof, that the other party hereto may
make such repairs at the cost and expense of the party so failing or refusing.
ARTICLE 13. RESTORATION OF DAMAGE. If the Premises or the Building are
damaged by fire, the elements or other casualty, Landlord shall promptly repair
all damage and restore the Premises to their condition immediately prior to the
occurrence of such damage including any improvements or alterations or Tenant's
improvements made by Landlord or Tenant. During the period of reconstruction
referred to above, rent or other sums payable by Tenant shall ratably abate,
based upon the percentage of the Premises usable during reconstruction or upon
the degree Tenants use of the same is impaired. The Term of the Lease shall
extend one additional day for each day the Premises are not usable due to the
reconstruction process.
If the Premises shall be totally destroyed or the Building damaged to such
extent and/or shall it be determined that more than 120 days will be required
to rebuild the Premises, and/or the Building (as the case may be) both Landlord
and Tenant shall have the right to terminate this Lease upon written notice to
the other within 30 days of the occurrence at which time this Lease shall become
null and void, and Landlord shall refund any prorated amount of prepaid rent.
ARTICLE 14. EMINENT DOMAIN.
(a) In the event that at any time during the continuance of this Lease,
the Premises, or any portion thereof, be taken or
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appropriated or condemned by reason of eminent domain, there shall be such
division of the proceeds and awards in such condemnation proceedings in
accordance with the respective interests of the parties in the condemned
property as specified in paragraph (b) below. If legal title to more than
thirty percent (30%) of the entire Premises be taken by condemnation, or if
condemnation makes the Premises unsuitable for the use it was being put to at
the time of the notice of condemnation, then the Lease shall be, at the option
of the Tenant, terminated at the time of possession by the governmental
authority. In the event that less than 30% of the Premises shall be taken, or
Tenant shall determine not to so terminate the Lease as provided herein, then
the rent shall be abated or reduced according to the extent Tenant is deprived
of the use or benefit of the Premises.
(b) In any taking of the premises or any part thereof, whether or not
this Lease is terminated as in this Article provided, the parties hereto shall
claim and shall be entitled to receive an award or compensation therefore in
accordance with their respective legal rights.
ARTICLE 15. DEFAULT IN PAYMENT OF RENT OR ABANDONMENT. In the event of
default by Tenant in the performance of its obligation to pay rent hereunder,
or in the event Tenant shall abandon the premises, (after written notice has
been provided from Landlord to Tenant stating Tenant's default for non payment
of rent or abandonment of the Premises said notice providing Tenant a "cure
period" of ten (10) days after such written notice), or in the event Tenant, or
any guarantor hereunder, shall be adjudicated as bankrupt for the benefit of
creditors, or enter into an arrangement or participate voluntarily or
involuntarily in any bankruptcy or related proceeding under Federal or State
Law, Landlord shall have the right to terminate this Lease and to re-enter the
Premises or any part thereof with or without process of law; or Landlord, at
his option, without terminating this Lease, shall have the right to re-enter
the Premises and sublet the whole or any part thereof, for the
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account of the Tenant, upon as favorable terms and condition as the market will
allow provided Landlord shall use reasonable efforts to obtain the best rent
available thereon. In the latter event, the Landlord shall have the right to
collect any rent which may thereafter become payable under such sublease and to
apply the same first to the payment of any reasonable expenses incurred by the
Landlord in the dispossessing the Tenant and in subletting the Premises, and
Landlord may charge interest at the rate equal to one percentage point higher
than the price bank rate of Valley Bank & Trust in Salt Lake City, which rate
shall vary from time to time as the prime bank rate varies, per annum on such
expenses; and, second, to the payment of the rental herein reserved and the
fulfillment of Tenant's covenants hereunder, and the Tenant shall be liable for
amounts equal to the installments of rent as they become due, less any amounts
actually received by the Landlord and applied on account of rental as
aforesaid. The Landlord shall not be deemed to have terminated this Lease by
reason of taking possession of the Premises unless written notice of such
termination has been served on the Tenant.
ARTICLE 16. OTHER DEFAULTS OF TENANT. It is mutually agreed that if the
Tenant shall default in performing any of the terms or provisions of this Lease
other than as provided in the preceding Article, and if the Landlord shall give
to the Tenant notice in writing of such default, and if the Tenant shall fail
to cure such default within fifteen (15) days after the date of receipt of such
notice, or if the default is of such a character as to require more than
fifteen (15) days to cure, and if Tenant shall fail to use reasonable diligence
in curing such default, then in such applicable event the Landlord may cure
such default for the account of and at the cost and expense of Tenant, plus
interest at the rate equal to one percentage point higher than the prime bank
rate of Valley Bank & Trust, in Salt Lake City, which rate shall vary from time
to time as the prime bank rate varies, per annum, and the sum so expended by
the Landlord and
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interest thereon shall be deemed to be additional rent and on demand shall be
paid by the Tenant on the day when rent shall next become due and payable.
Failure to pay any additional rent as provided in this Article shall be deemed a
failure to pay rent within the meaning of Article 15. Default in Payment of
Rent or Abandonment. Subject to the cure period provided for therein.
ARTICLE 17. LANDLORD DEFAULT. If Landlord fails to make any repairs or do
any work required of Landlord by the provision of this Lease or in any other
respect fails to perform any of the covenants, terms or conditions of this
Lease to be performed by Landlord and, unless another time limit is elsewhere in
this Lease specifically provided, such default continues for a period of thirty
(30) days after written demand for performance is given by Tenant, then and in
any of such events, Tenant may, in addition to any other remedies provided for
in this Lease or by law (including the right to sue for damages, an injunction,
specific performance or termination), elect to make such payments and cure such
defaults on behalf of Landlord and, in connection therewith, do all work
and make all reasonable payments deemed necessary by Tenant, including costs and
charges in connection with any legal action which may have been commenced or
threatened. Landlord agrees to reimburse Tenant upon demand the amounts so paid
by Tenant providing said amounts do not exceed the reasonable value for the
work performed and material supplied and accrued interest at Default Rate.
ARTICLE 18. QUIET ENJOYMENT AND SUBORDINATION. Landlord warrants and
covenants it is lawfully seized of the Building and Premises, has full
authority to grant this Lease and perform the Terms hereof to be performed by
Landlord and that Tenant shall and may peacefully and quietly have, hold and
enjoy the Premises for the full term of this Lease. Tenant understands that
other persons and entities conduct businesses in the Building. Tenant covenants
and agrees to conduct its business in such a manner as to not unreasonably
interfere with other occupants of the Building. Landlord shall take all
reasonable efforts, including
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covenants given to Landlord in leases to other Tenants in the Building, to
assure other Tenants will conduct their businesses in the Building so as not to
be a nuisance or to interfere with Tenants occupation of the Premises.
Without waiving or releasing Landlord from its obligation of quiet
enjoyment herein contained, Tenant agrees that upon written request of Landlord
it will subordinate its interest herein to any mortgages currently encumbering
the Premises and to renewals, extensions or refinancing thereof and, upon
reasonable request of Landlord, execute any and all documents reasonably
necessary to evidence that the leasehold interest of Tenant hereunder is
subordinate to existing mortgages and that Tenant will also execute such
documents as may be necessary and required to subordinate its leasehold
interest to mortgages that may hereafter be placed on the Premises by Landlord
or its successors or assignors, so long, as in both instances, the mortgage
holder agrees to Tenant that neither it nor any purchasers at foreclosure of
such mortgage shall terminate the Lease, or disturb the Tenant so long as it is
not in default hereunder. Landlord warrants that any mortgage presently
encumbering the premises provides for quiet enjoyment of the premises by Tenant
in the event of foreclosure by the mortgage holder, providing Tenant is not in
default hereunder and Landlord agrees to supply evidence of such rights of
quiet enjoyment.
ARTICLE 19. WAIVER. No delay or omission by either party hereto to
exercise any right or power accruing upon any non-compliance or default by the
other party with respect to any of the terms hereof shall impair any such right
or power to be construed to be a waiver thereof, and every such right and power
may be exercised at anytime during the continuance of such default. It is
further agreed that a waiver by either of the parties hereto of any of the
covenants and agreements hereof to be performed by the other shall not be
construed to be a waiver of any succeeding breach thereof or of any other
covenants or agreements herein contained.
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ARTICLE 20. ATTORNEY'S FEE. In the event of any action at law or in equity
between Landlord and Tenant to enforce any of the provisions and/or rights
hereunder or to recover damages for breach hereof, the unsuccessful party to
such litigation covenants and agrees to pay to the successful party all costs
and expenses, including reasonable attorney's fees, incurred therein by such
successful party, and if such successful party shall recover judgment in any
such action or proceeding, such costs and expenses and attorney's fees shall be
included in and as part of such judgment.
ARTICLE 21. NOTICES. Any notices or demand required or permitted to be
given under this Lease shall be deemed to have been properly given when, and
only when, the same is in writing and has been deposited in the United States
Mail, with postage prepaid, to be forwarded by certified mail and addressed as
follows:
TO THE LANDLORD AT: c/o F.C. Stangl Construction Co.
4455 South 700 East, Suite 300
Salt Lake City, Utah 84107
TO THE TENANT AT: 1290 West 2320 South
West Valley City, UT 84119
Notice shall be deemed effective upon receipt. Such addresses may be changed
from time to time by either party by serving notices as above provided.
ARTICLE 22. ASSIGNMENT AND SUBLEASING. With the specific prior written
consent of Landlord first obtained, which consent shall not be unreasonably
withheld or delayed, Tenant can, at any time, assign this Lease or sublet all
or any portion of the Premises. Any purported assignment or sublease without
Landlord's prior written approval shall be null and void and of no force and
effect whatsoever.
ARTICLE 23. SCOPE OF THE AGREEMENT. This Lease shall be considered to be
the only agreement between the parties hereto. All negotiations and oral
agreements acceptable to both parties
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are included therein. No term of this agreement shall be construed to deny the
parties of any provision under the laws of the State of Utah.
ARTICLE 24. OBLIGATIONS OF SUCCESSORS. Landlord and Tenant agree that all
of the provisions hereof are to be construed as covenants and agreements as
though the words importing such covenants and agreements were used in each
separate paragraph hereof, and that all of the provisions hereof shall bind and
inure to the benefit of the parties hereto, and their respective heirs, legal
representatives, successors and assigns.
ARTICLE 25. PARKING. Tenant shall have the right to non-exclusive use of
the parking stalls adjacent to the Premises and as set forth on Exhibit "A"
depict hereto. Such parking and maintenance thereof shall remain under the
control of Landlord (subject to reimbursement as hereinafter set forth) and
Landlord shall have the right from time to time to publish reasonable
non-discriminatory regulations for Tenant's use of the parking which shall not
unreasonably restrict Tenants use of the same, with which regulations Tenant
covenants to comply. Landlord shall provide four "handicapped" parking stalls
adequately identified in close proximity to the main entrance to the Premises
as designated on Exhibit "A".
ARTICLE 26. METRO BUSINESS PARK DEVELOPMENT. Exhibit "C" hereto contains a
proposed site plan for Landlord's entire construction project to be known as
Metro Business Park (hereinafter referred to as the "Development"). Tenant
acknowledges that the site plan for the Development is subject to change and
that Landlord may construct the Development in a totally different
configuration or may not develop certain portions; provided however nothing
herein contained shall allow Landlord to alter the Development in any manner
which would limit ingress or egress to the Building from adjacent streets or in
such a manner which would substantively increase Tenants cost of occupancy of
the Premises. Landlord reserves the right to sell the Development or portions
thereof as developed with buildings
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or as undeveloped property provided any sale of the property described on
Exhibit "A" shall be subject to this Lease. The parties understand that in the
event of Landlord's sale of portions of the property of the Development, prior
to such sale, Landlord shall place cross easement, access and parking
easements, suitable to Landlord upon released and unreleased portions of the
Development to facilitate its continued integral use. Common Area Maintenance
provisions contained in the next immediate paragraphs of this Lease shall be
unaffected by any such partial sale and the Landlord shall exercise its best
efforts to ensure the parking and common areas of the entire Development, as
built, will be under common management.
ARTICLE 27. COMMON AREAS. Those areas within the outer property lines of
the property as delineated on the plat attached hereto marked Exhibit "A",
exclusive of areas therein depicted as the Building area shall be known as
Building Common Areas, which areas shall be for the mutual non-exclusive use of
all Landlord's Tenants, including Tenants of the Building, their employees,
customers and invitees. All other areas of the Development, (exclusive of the
Building Common Area as defined above) for joint use of all Tenants within the
Development shall be known as Development Common Areas as shown on Exhibit "C"
attached hereto and incorporated herein. Landlord covenants and agrees at its
sole cost and expense to improve said Common Areas by installing and
constructing thereon access roads, pedestrian walkways, sidewalks, exterior
canopies, delivery and landscaped areas and lighting facilities as depicted
therein to the extent to which Landlord shall determine to be necessary.
Notwithstanding anything elsewhere herein contained, Landlord reserves the
right from time to time to make reasonable changes in, additions to and
deletions from the Common Areas (so long as parking is available to Tenant and
Tenant's ingress and egress shall not be effected by said changes), and the
purposes to which the same may be devoted, and the use of Common Areas shall at
all times be subject to such reasonable rules and regulations as may be
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promulgated by Landlord.
ARTICLE 28. COMMON AREA MAINTENANCE. Landlord will maintain or cause to
be maintained the Building Common Areas and Development Common Areas and Tenant
will reimburse Landlord for Tenant's Proportionate Share of the cost of such
maintenance and other Common Area expenses as hereinafter provided.
(a) Building Common Area maintenance costs and expenses shall be those
expenses incurred by Landlord in the operation, maintenance and repair of the
Building Common Area (as shown on Exhibit "A" attached hereto and incorporated
herein), which, in accordance with generally accepted accounting principles
consistently applied and allocated to any particular calendar year, are
properly chargeable and reasonably applicable to the operation, maintenance and
repair thereof including, but shall not be limited to, upkeep, exterior
painting, repairs, replacements and improvements in the Common Areas, snow
removal, sweeping and cleanup, repair of building components in common with
other Building Tenants, depreciation allowance (calculated on a straight-line
basis over the useful life of each item of equipment) on any machinery and
equipment owned by Landlord and used in connection therewith; payroll and
payroll costs of on-site employees (to the extent employed for the benefit of
maintenance of the Building common areas), utility services including fire line
water service charges, police protection, night watchmen, premiums for
property damage and fire insurance required hereunder which shall insure
Landlord in the Building Common Areas, any real estate tax consultant expense
incurred for the purpose of maintaining equitable tax assessments and all
property taxes or assessments levied or assessed against all Common Areas. In
addition, such costs shall include administrative costs equal to ten percent
(10%) of the total cost paid or incurred by Landlord under this paragraph.
Tenants proportionate share of the Building Common Area expenses shall be
determined in the same manner as previously defined in Article 4. Property
Taxes.
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(b) Development Common Area maintenance costs and expenses shall be those
expenses incurred by Landlord in the operation, maintenance and repair of the
Development Common area, roadways and other common facilities for use of all
Tenants within the Development (as shown on Exhibit "C" attached hereto and
incorporated herein), which, in accordance with generally accepted accounting
principles consistently applied and allocated to any particular calendar year,
are properly chargeable and reasonably applicable to the operation, maintenance
and repair thereof including, but shall not be limited to upkeep, exterior
painting, repairs, replacements and improvements in the Common Areas, snow
removal, sweeping and cleanup, depreciation allowance (calculated on a
straight-line basis over the useful life of each item of equipment) on any
machinery and equipment owned by Landlord and used in connection therewith;
payroll and payroll costs of on-site employees (to the extent employed for the
benefit of maintenance of the Development common areas), utility services
including fire line water service charges, police protection, night watchmen,
premiums for public liability, property damage and fire insurance required
hereunder which shall insure Landlord in the Development Common Areas, any real
estate tax consultant expense incurred for the purpose of maintaining equitable
tax assessments on the Development, all property taxes or assessments levied or
assessed against all Common Areas, which, if not separately assessed, shall be
determined, for land, by the ratio of land area designated for Common Area use
to the total land area in the Development and, for improvements, on a fair and
equitable allocation among the various improvements in the Development, giving
weight to the factors which determine the amount of the real property tax or
assessment in question. In addition, such costs shall include administrative
costs equal to ten percent (10%) of the total cost paid or incurred by Landlord
under this paragraph. Tenants Proportionate Share of the Development Common
Area expenses shall not be the Tenant's Proportionate Share as previously
defined but rather that portion
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of all such expenses which are equal to the proportion which the number of
square feet of gross leasable area of the Premises bears to the total number of
square feet of gross leasable area of buildings in the Development as are from
time to time completed as of the commencement of each calendar year.
(c) Those costs not considered to be Building Common Area Expenses or
Development Common Area Expenses (hereinafter referred to as the "Common Areas")
and which are to be excluded for purposes of determining any Common Area
Expenses payable by Tenant are: (a) wages and salaries of off-site personnel
employed by Landlord or affiliates of Landlord; (b) repairs, maintenance and
janitorial services for the Premises which are paid or contracted for directly
by Tenant; (c) costs of alterations to the Premises; (d) real estate brokers; or
agents; leasing commissions; (e) capital expenditures, being expenditures of
such a nature and amount or character which under generally accepted accounting
principles were or are required to be capitalized in the year made; (f) repairs
of a structural nature to the building as required by Landlord hereunder or for
cracking or breakage of glass, exterior doors, and exterior surface of the
Building caused by structural failures of the Building, design or construction
defects, foundation settlement, or Landlord's negligence; (g) depreciation and
other noncash expenses other than those expressly included above; (h) interest
and principal payments on mortgages, construction loans or other debt costs; (i)
costs of Building improvements, alterations, or work done by Landlord for other
tenants of the Building; (j) costs of installation, maintenance and repair of
tenant improvements for other tenants of the Building; (k) tenant operating
costs for other tenants of the Building which are separately, or directly
provided to such tenant or tenants by means of separate metering or separate
charges or otherwise.
(d) Tenant shall pay, as additional rent to Landlord, Tenant's
proportionate share of the Common Area expenses in the following manner:
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(1) From and after the Commencement Date of the Term, but subject to
adjustment as hereinafter in this subparagraph (1) provided, Tenant shall pay
Landlord in advance on the first day of each calendar month of the Term an
amount computed by applying the rate of two and one-half cents ($.025) per
square foot to the gross leasable area of the Premises. The foregoing rate per
square foot may be adjusted by Landlord by notice to Tenant at the end of any
calendar month on the basis of Landlord's experience and reasonably anticipated
costs.
(2) Within thirty (30) days following the end of each calendar year
of the Term, Landlord shall furnish Tenant a statement covering the calendar
year just expired, showing the total operating expenses for the Common Areas
the amount of Tenant's Proportionate Share of the Common Area expenses for such
calendar year and the payments made by Tenant with respect to such calendar year
as set forth in subparagraph (d) 1. If Tenant's Proportionate Share of such
Common Area expenses exceeds Tenant's prepaid and estimated payments so made,
Tenant shall pay Landlord the deficiency within ten (10) days after receipt of
such statement. If said payments exceed Tenant's prorata share of such common
area expenses, Landlord shall pay Tenant the excess within ten (10) days after
receipt of such statement and if Landlord fails to do so tenant shall be
entitled to offset such amount against any future Common Area amounts owing (not
to be interpreted as an offset against minimum rental).
Landlord will make available to tenant, at any reasonable time, upon ten
(10) days' prior written notice from Tenant, Landlord's books and records
relating to the Common Area expenses and Tenant will have the right to have
such records inspected and copied during normal business hours by tenant's
employees or agents. If such inspection discloses that a verifiable error has
been made in Landlord's favor which results in an overpayment by Tenant of five
percent (5%) or greater than the amount actually due on an annual basis,
Landlord will reimburse Tenant such overpaid amount. If Landlord does not
agree that there has been
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an overpayment, Tenant may request an audit of the Common Area expenses by an
independent certified public accountant. If such audit discloses an overpayment
by Tenant of more than five percent (5%) of the amount due, Landlord will pay
the cost of the audit, and will refund the overpayment to Tenant. Otherwise,
Tenant will pay the cost of the audit.
There shall be appropriate adjustment of Tenant's share of the Common Area
expenses as of the commencement and expiration of the term of this lease. The
term "Gross Leasable Area", as used herein, shall be deemed to mean and include
all fully enclosed areas for the exclusive use and occupancy by Tenant, measured
from exterior surface of exterior walls (and from the extensions thereof, in
the case of openings), including warehousing or storage areas, clerical or
office areas, mezzanines or the second levels of any space and employee areas.
"Gross Leaseable Area" shall not include docks, areas for truck loading and
unloading nor any utility and/or mechanical equipment vaults or rooms (to the
extent such facilities lie outside exterior building lines).
Anything to the contrary notwithstanding, in the event Landlord or his
designated agent do not maintain the entire Common Areas, then and in that
event, for the length of time such condition may exist, Landlord's
responsibility shall only be towards the maintenance and repair of those
portions of the Common Area not maintained by others, and the "expense in
connection with said Common Areas" shall only refer to such areas maintained by
Landlord. In this event, Tenant's proportionate share of the expenses shall be
determined on the basis of the proportion of such expenses which the number of
square feet of gross leasable area in the Premises bears to the total number of
square feet of gross leasable area of buildings in the entire Development which
are from time to time completed as of the commencement of each calendar year,
exclusive of the area occupied and maintained by others.
ARTICLE 29. RIGHT OF FIRST REFUSAL ON ADJACENT AND CONTIGUOUS SPACE. Tenant
shall have a right of first refusal
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(the "Right of First Refusal") on all space in the Building. Any vacant space
in the Building shall be offered by Landlord to Tenant at the same rent and on
the same terms as Landlord intends to offer it to a bona fide prospective
tenant who has made an offer to lease such space and Tenant shall have the same
rights to lease the entire space available that Landlord intends to extend to
such a prospective tenant. Following written notice by Landlord to Tenant that
such space is available, Tenant shall have ten (10) business days within which
to provide Landlord with written notice of its intention to lease such space
and such notice, if given, shall constitute an acceptance of Landlord's terms
on such space and failure to so respond shall be deemed a rejection thereof. In
the event Tenant does not exercise its Right of First Refusal, Owner may not
thereafter lease such space at an effective rent that is more than five percent
(5%) per net rentable square foot per year less than the effective rent
proposed to Tenant or upon other terms which are substantially more favorable
unless such space is first reoffered to Tenant at such lower rent and/or more
favorable terms, in which case, when reoffered, Tenant shall have three (3)
business days within which to provide Landlord with written notice of its
intention to lease such space and such written notice, if given, shall
constitute an acceptance of Landlords reoffer terms on such space. Failure to so
respond shall be deemed a rejection thereof.
ARTICLE 30. EXPANSION/RELOCATION. At such time as Tenant requires
substantial additional space, and if the adjacent and contiguous space is not
available, Landlord will use best efforts to relocate Tenant into larger space
within the Metro Business Park development or any other development or space
which is under Landlords control. Should Landlord be able to relocate Tenant as
defined above, a new Lease Agreement shall be entered into between the parties
and said new lease shall supersede and take the place of this Lease Agreement.
ARTICLE 31. LEASE RENEWAL OPTION. Landlord hereby grants Tenant the right
and option to renew this Lease Agreement for one
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(1) additional and successive four (4) year period under the same lease terms
and conditions subject to an adjustment of rental defined below. Tenant must
provide written notice to Landlord stating Tenant's desire to renew this Lease
at least One Hundred Twenty (120) days prior to the expiration of the Term.
Tenant must be current under all Lease terms and conditions for this Lease
renewal right and option to be effective.
The adjusted minimum monthly rental for the renewal term shall be as
follows:
1st lease renewal year - ****
2nd lease renewal year - ****
3rd lease renewal year - ****
4th lease renewal year - ****
ARTICLE 32. SECURITY DEPOSIT. Tenant shall pay Five Thousand Dollars and
00/100 cents ($5,000.00) at the time of signing of this lease, to be held by
Landlord as security for the faithful performance of Tenant throughout the
Lease term. The security deposit shall be refundable to tenant within 30 days
of the end of the Term.
ARTICLE 33. The submission of this Lease for examination does not
constitute a reservation of or option for the lease premises and this Lease
becomes effective as a Lease only upon execution and delivery thereof by
Landlord to Tenant.
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IN WITNESS WHEREOF, the Landlord and Tenant have duly executed and affixed
their respective seals to this Lease Agreement on the day and year first above
written.
LANDLORD: STANGL-ALLIANCE
a Joint Venture
By /s/ F.C. STANGL III
---------------------------
F.C. Stangl III
Managing Partner
TENANT: MOTION CONTROL, INC.
a Utah Corporation
By /s/ STEPHEN H. OBER
---------------------------
Stephen H. Ober, President
Attached hereto and incorporated herein:
Exhibit A - Building Site Plan
Exhibit B - Building Floor and Electrical Plan
Exhibit C - Overall Metro Business Park Site Plan
Exhibit D - Metro Business Park Signage Criteria
Exhibit E - Declaration of Easements and Covenants
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FIRST AMENDMENT TO LEASE AGREEMENT
This First Amendment to Lease Agreement is made and entered into this 9th
day of March, 1988, by and between Textron Collective Investment Trust, a Rhode
Island Trust (Landlord) and IOMED, Inc., a Utah Corporation (Tenant).
WHEREAS, on October 1, 1986, a Lease Agreement (the Lease) was entered
into between Stangl Alliance, a Joint Venture (Landlord) and Motion Control
Inc., a Utah Corporation (Tenant), relating to certain real property situated
at 1290 West 2320 South, West Valley City, Salt Lake County, State of Utah,
consisting of approximately 10,000 square feet of office/warehouse/research and
development space as further described in the Lease. Stangl Alliance, on
February 17, 1988, sold its interest in the subject property to Textron
Collective Investment Trust, hereinafter referred to as Landlord,. Motion
Control Inc. on December 18, 1987, changed its name to IOMED Inc., hereinafter
referred to as Tenant.
WHEREAS, Landlord and Tenant are desirous to amend the said Lease.
NOW, THEREFORE, for and in consideration of the payment of TEN DOLLARS AND
NO CENTS ($10.00) and other good and valuable consideration to Landlord, the
receipt and sufficiency of which is hereby acknowledged, the parties mutually
agree as follows:
1. Commencing May 1, 1988, Tenant hereby leases from Landlord an
additional and approximate 3,410 square foot contiguous
office/warehouse/research and development space improved as shown on
Exhibit "A", attached hereto and incorporated herein. As of May 1, 1988,
the Demised Premises shall mean the entire approximate 13,410 square foot
space and the Lease term for the entire Demised Premises shall be as
specified in the Lease Agreement.
2. Landlord shall provide and install at Landlord's expense, the
improvements in the subject additional space as shown on Exhibit "A" with
an improvement allowance of $78,280.00.
3. Article 7. Rent. shall be revised to read in its entirety as
follows:
Minimum Rent. The Tenant agrees to pay the Landlord at such address
as shall from time to time be designated by Landlord, as minimum rental
during the initial Term and commencing on the first day of the Term without
right of offset or deduction, the monthly amount of:
1st Lease Year (1-1-87/12-31-87) - $36,660.00 per year
$1,550.00 per month - (1-1-87/4-30-87)
$3,065.00 per month - (5-1-87/8-31-87)
$4,550.00 per month - (9-1-87/12-31-87)
2nd Lease Year (1-1-88/12-31-88) - $94,974.72 per year
$5,300.00 per month - (1-1-88/4-31-88)
$9,221.84 per month - (5-1-88/12-31-88)
3rd Lease Year (1-1-89/12-31-89) - $111,097.92 per year
$9,258.16 per month
4th Lease Year (1-1-90/12-31-90) - $111,538.08 per year
$9,294.84 per month
The minimum rental shall be payable monthly, in advance, without
demand on the first day of each calendar month throughout the Term. Should
the Term of this Lease commence on any day other than on the first (1st)
day of the calendar month, the monthly rental for such fractional month
shall be prorated accordingly.
<PAGE> 53
Late Penalty. After written notice has been provided to tenant
and the ten (10) day "cure period" provided in said notice has expired,
(as further clarified in Lease Article 15) such unpaid amounts shall
bear interest at a rate equal to fifteen percent (15%) ("Default
Interest Rate") from such date to the date of payment.
4. Article 31. Lease Renewal Option shall be revised to read in
its entirety as follows:
Article 31. Lease Renewal Option. Landlord hereby grants Tenant
the right and option to renew this Lease Agreement for one (1)
additional and successive four (4) year period under the same Lease
terms and conditions subject to an adjustment of rental defined below.
Tenant must provide written notice to Landlord stating Tenant's desire
to renew this lease at least one hundred twenty (120) days prior to the
expiration of the Term. Tenant must be current under all Lease terms and
conditions for this Lease renewal right and option to be effective.
The adjusted minimum monthly rental for the renewal term shall
be as follows:
1st Lease Renewal Year -- (1-1-91/12-31-91)
$82,308.00 per year -- $6,859.00 per month
2nd Lease Renewal Year -- (1-1-93/12-31-92)
$84,877.80 per year -- $7,073.15 per month
3rd Lease Renewal Year -- (1-1-93/12-31-93)
$87,504.00 per year -- $7,292.15 per month
4th Lease Renewal Year -- (1-1-94/12-31-94)
$90,240.00 per year -- $7,520.00 per month
5. Considering the increase in square footage Leased by Tenant
as of May 1, 1988, Tenant's proportionate share of property taxes,
insurance, utilities and common area maintenance (as referred to in the
Lease) shall apply as well to the subject additional space Leased.
All the terms, covenants and provisions of the Lease Agreement
including all Lease attachments shall remain unchanged and shall continue in
full force and effect except as specifically amended herein.
EXECUTED this day and year first above written.
LANDLORD: Stangl Property Management, as Agent for
Textron Collective Investment Trust,
a Rhode Island Trust
By /s/ C. STANGL, III
---------------------------
C. Stangl, III
AGENT
TENANT: IOMED Inc.
By /s/ STEPHEN H. OBER
---------------------------
STEPHEN H. OBER
PRESIDENT
<PAGE> 54
SECOND AMENDMENT TO LEASE AGREEMENT
This Second Amendment to Lease Agreement is made and entered into this 5th
day of May, 1989 by and between Textron Collective Investment Trust, a Rhode
Island Trust (Landlord) and IOMED Inc., a Utah Corporation (Tenant).
WHEREAS, on October 1, 1986, a Lease Agreement (the Lease) was entered
into between Stangl Alliance, a Joint Venture (Landlord) and Motion Control
Inc., a Utah Corporation (Tenant), relating to certain real property situated
at 1290 West 2320 South, West Valley City, Salt Lake County, State of Utah,
consisting of approximately 10,000 square feet of office/warehouse/research and
development space as further described in the Lease. Stangl Alliance, on
February 17, 1988, sold its interest in the subject property to Textron
Collective Investment Trust, hereinafter referred to as Landlord. Motion
Control Inc. on December 18, 1987, changed its name to IOMED Inc., hereinafter
referred to as Tenant.
WHEREAS on March 9, 1988, a First Amendment to Lease Agreement was entered
into between Landlord and Tenant relating to Tenant's Lease of approximately
3,410 square feet of additional and contiguous office/warehouse/research and
development space.
WHEREAS, Landlord and Tenant are desirous to further amend the said Lease.
NOW, THEREFORE, for and in consideration of the payment of TEN DOLLARS AND
NO CENTS ($10.00) and other good and valuable consideration to Landlord, the
receipt and sufficiency of which is hereby acknowledged, the parties mutually
agree as follows:
1. Commencing June 1, 1989, Tenant hereby leases from Landlord an additional
and approximate 4,107 square foot contiguous space as shown on Exhibit "A",
attached hereto and incorporated herein. As of June 1, 1989, the Demised
Premises shall mean the entire approximate 17,517 square foot space.
2. Tenant hereby accepts and leases from Landlord the subject additional and
contiguous 4,107 square foot space in its existing state of improvement, repair
and condition ("as is"). In the event Landlord should made any improvements,
modifications and/or repairs to the subject additional space on behalf of
Tenant, the cost of such shall be borne by Tenant in either a lump sum payment
to Landlord upon completion; or the cost of such shall be amortized over the
remaining initial Lease term and shall be repaid to Landlord as additional
rent, all to be agreed upon between Landlord and Tenant.
3. The base Lease term shall be extended for one (1) full year (January 1,
1991 - December 31, 1991) for an expiration date of December 31, 1991.
4. ARTICLE 7. RENT, as revised in the First Amendment to Lease Agreement,
shall be further revised to read in its entirety as follows:
Minimum Rent. The Tenant agrees to pay the Landlord at such address as
shall from time to time be designated by Landlord, as minimum rental during the
initial term and commencing on the first day of the term without right of
offset or deduction, the monthly amount of:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1st Lease Year (01-01-87/12-31-87) - $36,660.00/yr.
(01-01-87/04-30-87) $1,550.00/mo.
(05-01-87/08-31-87) $3,065.00/mo.
(09-01-87/12-31-87) $4,550.00/mo.
2nd Lease Year (01-01-88/12-31-88) - $94,974.72/yr.
(01-01-88/04-31-88) $5,300.00/mo.
(05-01-88/12-31-88) $9,221.84/mo.
3rd Lease Year (01-01-89/12-31-89) - $123,557.92/yr.
(01-01-89/05-31-89) $9,258.16/mo.
(06-01-89/12-31-89) $11,038.16/mo.
4th Lease Year (01-01-90/12-31-90) $11,146.04/mo. - $133,752.48/yr.
5th Lease Year (01-01-91/12-31-91) $8,784.25/mo. - $105,411.00/yr.
</TABLE>
<PAGE> 55
The minimum rental shall be payable monthly, in advance, without demand on
the first day of each calendar month throughout the Lease Term. Should the term
of this Lease commence on any day other than on the first (1st) day of the
calendar month, the monthly rental for such fractional month shall be prorated
accordingly.
Late Penalty. After written notice has been provided to Tenant and the ten
(10) day "cure period" provided in said notice has expired, (as further
clarified in Lease Article 15) such unpaid amounts shall bear interest at a rate
equal to fifteen percent (15%) ("Default Interest Rate") from such date to the
date of payment.
5. ARTICLE 31. LEASE RENEWAL OPTION, as revised in First Amendment to
Lease, shall be further revised to read in its entirety as follows:
ARTICLE 31. LEASE RENEWAL OPTION. Landlord hereby grants Tenant the right
and option to renew this Lease Agreement for one (1) additional and successive
three (3) year period under the same Lease terms and conditions subject to an
adjustment of rental defined below. Tenant must provide written notice to
Landlord stating Tenant's desire to renew this Lease at least one hundred twenty
(120) days prior to the expiration of the Term. Tenant must be current under all
Lease terms and conditions for this Lease renewal right and option to be
effective.
The adjusted minimum monthly rental for the renewal term shall be as
follows:
First Lease Renewal Year
(01-01-92/12-31-92) - $9,075.41/month - $108,904,92/year
Second Lease Renewal Year
(01-01-93/12-31-93) - $9,374.35/month - $112,492.20/year
Third Lease Renewal Year
(01-01-94/12-31-94) - $9,685.64/month - $116,227.68/year
6. Considering the increase in square footage leased by Tenant as of June
1, 1989, Tenant's proportionate share of property taxes, insurance, utilities
and common area maintenance (as referred to in the Lease) shall be appropriately
increased to reflect such increase in square footage leased and Tenant's
obligations, as referred to in the Lease, shall apply as well to the subject
additional space Leased.
All terms, covenants and provisions of the Lease Agreement and the First
Amendment to Lease Agreement, including all Lease attachments, shall remain
unchanged and shall continue in full force and effect except as specifically
amended herein.
EXECUTED this day and year first above written.
LANDLORD: STANGL PROPERTY MANAGEMENT, as Agent for
TEXTRON COLLECTIVE INVESTMENT TRUST,
a Rhode Island Trust
By /s/ F. C. STANGL, III
-----------------------------------
F. C. STANGL, III
Agent
TENANT: IOMED INC.
By /s/ STEPHEN H. OBER
-----------------------------------
STEPHEN H. OBER
President
<PAGE> 56
THIRD AMENDMENT TO LEASE AGREEMENT
This Third Amendment to Lease Agreement is made and entered into this 10th
day of July, 1989 by and between Textron Collective Investment Trust, a Rhode
Island Trust (Landlord) and IOMED Inc., a Utah Corporation (Tenant).
WHEREAS, on October 1, 1986, a Lease Agreement (the Lease) was entered into
between Stangl Alliance, a Joint Venture (Landlord) and Motion Control Inc., a
Utah Corporation (Tenant), relating to certain real property situated at 1290
West 2320 South, West Valley City, Salt Lake County, State of Utah, consisting
of approximately 10,000 square feet of office/warehouse/research and development
space as further described in the Lease. Stangl Alliance, on February 17, 1988,
sold its interest in the subject property to Textron Collective Investment
Trust, hereinafter referred to as Landlord. Motion Control Inc. on December 18,
1987, changed its name to IOMED Inc., hereinafter referred to as Tenant.
WHEREAS, on March 9, 1988, a First Amendment to Lease Agreement was entered
into between Landlord and Tenant relating to Tenant's Lease of approximately
3,410 square feet of additional and contiguous office/warehouse/research and
development space.
WHEREAS, on May 5, 1989, a Second Amendment to Lease Agreement was entered
into between Landlord and Tenant relating to Tenant's Lease of approximately
4,107 square feet of additional and contiguous office/warehouse space in
addition to an extension of the base Lease term for one (1) additional year.
WHEREAS, Landlord and Tenant are desirous to further amend the said Lease.
NOW, THEREFORE, for and in consideration of the payment of TEN DOLLARS AND
NO CENTS ($10.00) and other good and valuable consideration to Landlord, the
receipt and sufficiency of which is hereby acknowledged, the parties mutually
agree as follows:
1. LEASE ARTICLE 5. TENANT'S USE, which is a section of the Lease
Agreement, is hereby revised and rewritten to read in its entirety as follows:
ARTICLE 5. TENANT'S USE. The Tenant may use the premises for conducting
its research, development and manufacturing of artificial limbs and other
medical devices. Tenant shall use the Premises only for lawful and proper
purposes, which are permissible under applicable law (including under applicable
zoning laws). Tenant shall not make any use of the Premises which will cause
cancellation of any insurance policy covering the same and shall not keep or use
on the Premises any article, item, or thing which is prohibited by the terms of
the hazard insurance policy covering the Premises. Tenant shall not commit any
waste upon the Premises and shall not conduct or allow any business, activity or
thing on the Leased Premises which is or becomes unlawful, prohibited, or a
nuisance or which may cause damage to Landlord, to occupants in the vicinity of
the Premises, or to other third parties.
Compliance with Laws. Tenant covenants to Landlord, and Landlord covenants
to Tenant, not to violate any health, building or zoning laws, ordinance, rule
or regulation of any governmental authority pertaining to the Premises, the
Building, or Common Areas, as the case may be.
<PAGE> 57
Tenant represents to Landlord that neither Tenant or any affiliates of
Tenant will improperly generate, improperly store or improperly dispose of any
Hazardous Substances (as defined below) at or in the area of the Demised
Premises.
Tenant covenants with Landlord: a) to prohibit any unlawful generation,
unlawful storage or unlawful disposal of Hazardous Substances at the Premises,
b) to deliver promptly to Landlord true and complete copies of all notices
received by Tenant from any governmental authority with respect to the unlawful
generation, unlawful storage or unlawful disposal by Tenant of Hazardous
Substances; and c) to permit entry onto the Premises by Landlord or Landlord's
representative(s) at any reasonable time to verify Tenant's compliance with the
foregoing.
Tenant agrees to indemnify and defend Landlord (with legal counsel
reasonably acceptable to Landlord) from and against any costs, fees or expenses
(including, without limitation, cleanup expenses, third party claims and
environmental impairment expenses and reasonable attorneys' fees and expenses)
incurred by Landlord in connection with Tenant's unlawful generation, unlawful
storage, or unlawful disposal of Hazardous Substances at or near the Demised
Premises in accordance with the foregoing and with Tenant's compliance with the
foregoing representations and covenants. This indemnification by Tenant shall
survive up to five (5) years after termination or expiration of this Lease.
Landlord agrees to not hold Tenant responsible for the consequences of any
unlawful generation, unlawful storage, unlawful disposal, or cleanup or any
Hazardous Substances by any previous Tenants and that all costs, fees, or
expenses (including, without limitation, cleanup expenses, third party claims
and environmental impact expenses and reasonable attorney's fees and expenses)
associated with any previous Tenants Hazardous Substance activities will not be
the responsibility of Tenant.
"Hazardous Substances" shall mean (i) hazardous substances as defined in
the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, (ii) "PCBs", as defined in 40 C.F.R. 761 et seq. and "TCDD" as defined
in 40 C.F.R. 755 et seq. (or in either case analogous regulations promulgated
under the Toxic Substances Control Act, as amended), (iii) "asbestos" as
defined in 29 C.F.R. 1910.1001 et seq. (or analogous regulations promulgated
under the Occupational Safety and Health Act of 1970, as amended), and (iv)
waste oils.
All terms, covenants and provisions of the Lease Agreement, the First
Amendment to Lease Agreement and the Second Amendment to Lease Agreement,
including all Lease attachments, shall remain unchanged and shall continue in
full force and effect except as specifically amended herein.
EXECUTED this day and year first above written.
LANDLORD: STANGL PROPERTY MANAGEMENT, as Agent for
TEXTRON COLLECTIVE INVESTMENT TRUST,
a Rhode Island Trust
By /s/ F.C. STANGL III
-----------------------------
F.C. STANGL III - Agent
TENANT: IOMED INC.
By /s/ STEPHEN H. OBER
-----------------------------
STEPHEN H. OBER - President
<PAGE> 58
FOURTH AMENDMENT TO LEASE AGREEMENT
This Fourth Amendment to Lease Agreement is made and entered into this 18
day of July, 1989, by and between Textron Collective Investment Trust, a Rhode
Island Trust (Landlord) and IOMED Inc., a Utah Corporation ("Tenant").
WHEREAS, on October 1, 1986, a Lease Agreement (the Lease) was entered into
between Stangl Alliance, a Joint Venture (Landlord) and Motion Control Inc., a
Utah Corporation (Tenant), relating to certain real property situated at 1290
West 2320 South, West Valley City, Salt Lake County, State of Utah, consisting
of approximately 10,000 square feet of office/warehouse/research and development
space as further described in the Lease. Stangl Alliance on February 17, 1988,
sold its interest in the subject property to Textron Collective Investment
Trust, hereinafter referred to as Landlord. Motion Control Inc. on December 18,
1987, changed its name to IOMED Inc., hereinafter referred to as Tenant.
WHEREAS, on March 9, 1988 a First Amendment to Lease Agreement was entered
into between Landlord and Tenant relating to Tenant's lease of approximately
3,410 square feet of additional and contiguous office/warehouse/ research and
development space.
WHEREAS, on May 5, 1989, a Second Amendment to Lease Agreement was entered
into between Landlord and Tenant relating to Tenant's lease of approximately
4,107 square feet of additional and contiguous office/warehouse space in
addition to an extension of the primary Lease term for one (1) additional year.
WHEREAS, on July 10, 1989, a Third Amendment to Lease Agreement was
entered into between Landlord and Tenant relating to a revision of Lease
Article 5. Tenant's Use.
WHEREAS, Landlord and Tenant are desirous to further amend the said Lease.
NOW, THEREFORE, for and in consideration of the payment of Ten Dollars and
No Cents ($10.00) and other good and valuable consideration to Landlord, the
receipt and sufficiency of which is hereby acknowledged, the parties mutually
agree as follows:
1. Landlord shall provide and install, at Landlord's expense, the
improvements in the Demised Premises as shown and described on Exhibit "A" with
an improvement budget of $75,706.80. The rent structured and described below is
based on the improvement budget of $75,706.80, amortized over a twenty-nine (29)
month period commencing September 1, 1989 at eleven and one-half percent (11.5%)
interest rate. In the event the actual cost to improve (plus fifteen percent
(15%) for overhead and profit) is more or less than said budget, the rent shall
again be revised by Amendment to Lease to reflect the actual improvement costs,
plus fifteen percent (15%). The calculation formula for determining the rent
portion attributable to improvement costs shall be as follows:
Actual Improvement Cost + 15% x .0396599777 (monthly amortized constant at
11.5% interest over a 29 month period) = monthly improvement rent coefficient.
The monthly improvement rent coefficient shall then be added to the
minimum monthly rent specified in the Second Amendment to Lease Agreement
producing the total minimum monthly rental to be paid by Tenant. Landlord shall
use best reasonable efforts to complete said improvements by August 31, 1989.
2. Considering Landlord's amortization of the above described
improvements at the $75,706.80 budget price over the remaining primary Lease
term, ARTICLE 7. Rent. as revised in the Second Amendment to Lease Agreement,
shall be further revised to read in its entirety as follows:
<PAGE> 59
Minimum Rent. The Tenant agrees to pay the Landlord, at such address as
shall from time to time be designated by Landlord, as minimum rental during the
initial term and commencing on the first day of the term without right of
offset or deduction, the monthly amount of:
1st Lease Year (01-01-87/12-31-87 - $ 36,660.00/yr
(01-01-87/04-30-87) - $1,550.00/mo (4 months)
(05-01-87/08-31-87) - $3,065.00/mo (4 months)
(09-01-87/12-31-87) - $4,550.00/mo (4 months)
2nd Lease Year (01-01-88/12-31-88 - $ 94,974.72/yr
(01-01-88/04-31-88) - $5,300.00/mo (4 months)
(05-01-88/12-31-88) - $9,221.84/mo (8 months)
3rd Lease Year (01-01-89/12-01-89 - $135,330.71/yr
(01-01-89/05-31-89) - $9,258.16/mo (5 months)
(06-01-89/06-30-89) - $10,800.83/mo (1 month)
(07-01-89/08-31-89) - $11,038.16/mo (2 months)
(09-01-89/12-31-89) - $14,040.69/mo (4 months)
4th Lease Year (01-01-90/12-31-90) - $14,148.57/mo - $169,782.84/yr
5th Lease Year (01-01-91/12-31-91) - $11,786.78/mo - $141,441.36/yr
The minimum rental shall be payable monthly, in advance, without demand on
the first day of each calendar month throughout the Lease term. Should the term
of this Lease commence on any day other than on the first (1st) day of the
calendar month, the monthly rental for such fractional month shall be prorated
accordingly.
Late Penalty. After written notice has been provided to Tenant and the ten
(10) day "cure period" provided in said notice has expired, (as further
clarified in Lease Article 15, such unpaid amounts shall bear interest at a rate
equal to fifteen percent (15%) ("Default Interest Rate") from such date to the
date of payment.
All terms, covenants and provisions for the Lease Agreement and the First,
Second, and Third Amendments to the Lease Agreement, including all exhibits and
attachments, shall remain unchanged and shall continue in full force and effect
except as specifically amended herein.
EXECUTED this day and year first above written.
LANDLORD: STANGL PROPERTY MANAGEMENT, as Agent for
TEXTRON COLLECTIVE INVESTMENT TRUST,
a Rhode Island Trust
By /s/ F. C. Stangl III
---------------------------------------
F. C. STANGL III
Agent
TENANT: IOMED INC.
By /s/ Stephen H. Ober
---------------------------------------
STEPHEN H. OBER
President
<PAGE> 60
FIFTH AMENDMENT TO LEASE AGREEMENT
This Fifth Amendment to Lease Agreement is made and entered into this 7th
day of February, 1992, by and between Textron Collective Investment Trust, a
Rhode Island Trust (Landlord) and IOMED Inc., a Utah Corporation ("Tenant").
WHEREAS, on October 1, 1986, a Lease Agreement (the Lease) was entered
into between Stangl Alliance, a Joint Venture (Landlord) and Motion Control)
Inc., a Utah Corporation (Tenant), relating to certain real property situated
at 1290 West 2320 South, West Valley City, Salt Lake County, State of Utah,
consisting of approximately 10,000 square feet of office/warehouse/research and
development space as further described in the Lease. Stangl Alliance on
February 17, 1988, sold its interest in the subject property to Textron
Collective Investment Trust, hereinafter referred to as Landlord. Motion
Control Inc., on December 18, 1987, changed its name to IOMED Inc., hereinafter
referred to as Tenant.
WHEREAS on March 9, 1988 a First Amemdment to Lease Agreement was entered
into between Landlord and Tenant relating to Tenant's lease of approximately
3,410 square feet of additional and contiguous office/warehouse/research and
development space.
WHEREAS, on May 5, 1989, a Second Amendment to Lease Agreement was entered
into between Landlord and Tenant relating to Tenant's lease of approximately
4,107 square feet of additional and contiguous office/warehouse space in
addition to an extension of the primary Lease term for one (1) additional year.
WHEREAS, on July 10, 1989, a Third Amendment to Lease Agreement was
entered into between Landlord and Tenant relating to a revision of Lease
Article 5. Tenant's Use.
WHEREAS, on July 18, 1989, a Fourth Amendment to Lease Agreement was
entered into between Landlord and Tenant relating to Landlord's amortization of
the cost of additional improvements requested by Tenant and the modification of
rent derived therefrom.
WHEREAS, Landlord and Tenant are desirous to further amend the said Lease.
NOW, THEREFORE, for and in consideration of the payment of Ten Dollars and
No Cents ($10.00) and other good and valuable consideration to Landlord, the
receipt and sufficiency of which is hereby acknowledged, the parties mutually
agree as follows:
1. Landlord shall provide and install, at Landlord's expense, the
improvements in the Demised Premises as shown and described on Exhibit "A" with
an improvement budget of $113,936.00. The rent structured and described below
is based on the improvement budget of $113,936.00, amortized over a thirty-six
(36) month period commencing January 1, 1992 at ten and one-half percent
(10.5%) interest rate. In the event the actual construction cost to improve
(plus five percent (5%) for construction management fee) is more or less than
said budget, the rent shall again be revised by Amendment to Lease to reflect
the actual improvement costs, plus five percent (5%). The calculation formula
for determining the rent portion attributable to improvement costs shall be as
follows:
Actual Improvement Cost + 5% x .39 (annual amortization constant at 10.5%
interest over a 36 month period) = annual improvement rent coefficient.
2. Considering Tenant's renewal of the Lease for a three (3) year term
(January 1, 1992 through December 31, 1994), as specified in the Second
Amendment to Lease Agreement and considering Landlord's amortization of the
above described improvements at the $113,936.00 budget price over the three (3)
year Lease renewal term, ARTICLE 7. Rent. as revised in the Second Amendment to
Lease Agreement, shall be further revised to read in its entirety as follows:
<PAGE> 61
Article 7. Rent
Minimum Rent. The Tenant agrees to pay the Landlord, at such address
as shall from time to time be designated by Landlord, as minimum rental
during the lease renewal term and commencing on the first day of the term
without right of offset or deduction, the monthly amount of:
1/1/92 - 12/31/92 - $153,339.96/year - $12,778.33/month
1/1/93 - 12/31/93 - $156,927.24/year - $13,077.27/month
1/1/94 - 12/31/94 - $160,662.72/year - $13,388.56/month
The minimum rental shall be payable monthly, in advance, without
demand on the first day of each calendar month throughout the Lease term.
Late Penalty. After written notice has been provided to Tenant and the ten
(10) day "cure period" provided in said notice has expired, (as further
clarified in Lease Article 15), such unpaid amounts shall bear interest at
a rate equal to fifteen percent (15%) ("Default Interest Rate") from such
date to the date of payment.
All terms, covenants and provisions of the Lease Agreement and the First,
Second, Third and Fourth Amendments to the Lease Agreement, including all
exhibits and attachments, shall remain unchanged and shall continue in full
force and effect except as specifically amended herein.
EXECUTED this day and year first above written.
LANDLORD: S-PM, Inc., a Utah corporation, as Agent for
TEXTRON COLLECTIVE INVESTMENT TRUST,
a Rhode Island Trust
By /s/ F. C. Stangl, III
------------------------------------
F. C. STANGL, III
Agent
TENANT: IOMED INC.
By /s/ Stephen H. Ober
------------------------------------
STEPHEN H. OBER
President
<PAGE> 62
\ SIXTH AMENDMENT TO LEASE AGREEMENT
This Sixth Amendment to Lease Agreement is made and entered into this 20th
day of July, 1994, by and between Textron Collective Investment Trust, a Rhode
Island Trust (Landlord) and IOMED, Inc., a Utah Corporation ("Tenant").
WHEREAS, on October 1, 1996, a Lease Agreement (the Lease) was entered
into between Stangl Alliance, a Joint Venture (Landlord) and Motion Control
Inc., a Utah Corporation (Tenant), relating to certain real property situated
at 1290 West 2320 South, West Valley City, Salt Lake County, State of Utah,
consisting of approximately 10,000 square feet of office/warehouse/research and
development space as further described in the Lease. Stangl Alliance on
February 17, 1988, sold its interest in the subject property to Textron
Collective Investment Trust, hereinafter referred to as Landlord. Motion
Control Inc., on December 18, 1987, changed its name to IOMED Inc., hereinafter
referred to as Tenant.
WHEREAS, on March 9, 1988 a First Amendment to Lease Agreement was entered
into between Landlord and Tenant relating to Tenant's lease of approximately
3,410 square feet of additional and contiguous office/warehouse/research and
development space.
WHEREAS, on May 5, 1989, a Second Amendment to Lease Agreement was entered
into between Landlord and Tenant relating to Tenant's lease of approximately
4,107 square feet of additional and contiguous office/warehouse space in
addition to an extension of the primary Lease term for one (1) additional year.
WHEREAS, on July 10, 1989, a Third Amendment to Lease Agreement was
entered into between Landlord and Tenant relating to a revision of Lease
Article 5. Tenant's Use.
WHEREAS, on July 18, 1989, a Fourth Amendment to Lease Agreement was
entered into between Landlord and Tenant relating to Landlord's amortization of
the cost of additional improvements requested by Tenant and the modification of
rent derived therefrom.
WHEREAS, on February 7, 1992, a Fifth Amendment to Lease Agreement was
entered into between Landlord and Tenant relating to Landlord's amortization of
the cost of additional improvement requirements requested by Tenant and the
modification of rent derived therefrom.
WHEREAS, Landlord and Tenant are desirous to further amend the said Lease.
NOW, THEREFORE, for and in consideration of the payment of Ten Dollars and
No Cents ($10.00) and other good and valuable consideration to Landlord, the
receipt and sufficiency of which is hereby acknowledged, the parties mutually
agree as follows:
1. The term of the Lease shall be extended for three (3) years
commencing January 1, 1995 and expiring December 31, 1997.
2. The rental for the extended Lease term shall be as follows:
01/-1/95 - 12/31/95 $10,025.00/month - $120,300.00/year
01/-1/96 - 12/31/96 $10,376.00/month - $124,512.00/year
01/-1/97 - 12/31/97 $10,739.00/month - $128,868.00/year
Rental shall be payable in equal monthly payments, in advance, without
offset or demand on the first day of each calendar month throughout the
extended Lease term.
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<PAGE> 63
3. Tenant continues to lease the Demised Premises in its present
condition, configuration and state of improvement ("as is").
All terms, covenants and provisions of the Lease Agreement and the First,
Second, Third, Fourth and Fifth Amendments to the Lease Agreement, including
all exhibits and attachments, shall remain unchanged and shall continue in full
force and effect except as specifically amended herein.
EXECUTED this day and year first above written.
LANDLORD: Rhode Island Hospital Trust National Bank, as Trustee for the
TEXTRON COLLECTIVE INVESTMENT TRUST, a Rhode Island Trust
By RREEF America Partners, L.P.,
Its Investment Manager
By /s/ STEVEN N. BACKER
---------------------------------
Steven N. Backer
Authorized Representative
TENANT: IOMED, Inc.
By /s/ ROBERT J. LOLLINI
---------------------------------
Robert J. Lollini
Vice President & CFO
2
<PAGE> 64
EXHIBIT B
[IOMED EAST BUILDING MAP]
<PAGE> 1
EXHIBIT 10.19
AGREEMENT
BY AND BETWEEN
IOMED, INC.
AND
LABORATOIRES FOURNIER S.C.A.
DATED AS OF FEBRUARY 20, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. DEFINITIONS........................................................................... 1
ARTICLE II. REPRESENTATIONS AND WARRANTIES........................................................ 6
2.01. WARRANTIES OF IOMED............................................................. 6
2.02. WARRANTIES OF FOURNIER.......................................................... 7
ARTICLE III. CONVERSION OF THE NOTE................................................................ 8
3.01. CONVERSION...................................................................... 8
3.02. EFFECT OF CONVERSION............................................................ 8
3.03. RESERVATION OF CONVERSION SHARES................................................ 9
3.04. ADJUSTMENTS..................................................................... 9
ARTICLE IV. RESEARCH AND DEVELOPMENT AGREEMENT.................................................... 9
4.01. TERMINATION..................................................................... 9
4.02. RESEARCH COSTS.................................................................. 9
4.03. WAIVER OF CLAIMS................................................................ 9
4.04. RETURN OF INFORMATION........................................................... 10
4.05. FENTANYL BLOOD LEVEL STUDY...................................................... 10
4.06. ELECTRODES...................................................................... 10
ARTICLE ' V. MEETINGS OF IOMED'S BOARD OF DIRECTORS................................................ 10
5.01. MEETINGS........................................................................ 10
5.02. LIMITATION...................................................................... 11
5.03. DEFINITION...................................................................... 11
ARTICLE VI. LICENSES AND SUBLICENSES.............................................................. 11
6.01. OWNERSHIP....................................................................... 11
6.02. IOMED LICENSE TO FOURNIER....................................................... 12
6.03. FOURNIER LICENSE TO IOMED....................................................... 13
6.04. SUBLICENSES..................................................................... 13
6.05. RESTRICTIONS.................................................................... 14
6.06. ROYALTIES....................................................................... 15
ARTICLE VII. SALE OF TECHNOLOGY.................................................................... 15
7.01. RESTRICTION..................................................................... 15
7.02. RIGHT OF FIRST OFFER............................................................ 15
ARTICLE VIII. TERMINATION........................................................................... 17
8.01. TERM............................................................................ 17
8.02. EFFECT OF TERMINATION........................................................... 18
8.03. CONTINUING LIABILITY............................................................ 18
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IX. GENERAL PROVISIONS.................................................................... 18
9.01. AMENDMENTS...................................................................... 18
9.02. SEVERABILITY OF PROVISIONS...................................................... 18
9.03. GOVERNING LAW................................................................... 19
9.04. HEADINGS........................................................................ 19
9.05. COUNTERPARTS.................................................................... 19
9.06. NOTICES......................................................................... 19
9.07. SPECIFIC PERFORMANCE............................................................ 20
9.08. SUCCESSORS AND ASSIGNS.......................................................... 20
9.09. FURTHER ASSURANCES.............................................................. 20
9.10. EXPENSES........................................................................ 20
9.11. ASSIGNMENT...................................................................... 20
9.12. CONFIDENTIAL INFORMATION........................................................ 21
9.13. PUBLICITY....................................................................... 23
9.14. ENTIRE AGREEMENT................................................................ 23
EXHIBITS......................................................................................................... 25
A FOURNIER INVENTIONS.......................................................... 25
B FOURNIER TECHNOLOGY.......................................................... 26
C IOMED INVENTIONS............................................................. 28
D IOMED TECHNOLOGY............................................................. 29
</TABLE>
ii
<PAGE> 4
AGREEMENT
This Agreement ("Agreement"), dated as of February 20, 1996, is by
and between Iomed, Inc., a Utah corporation having its principal place of
business at 3385 West 1820 South, Salt Lake City, Utah 84104 ("Iomed"), and
Laboratoires Fournier S.C.A., a French corporation having its principal place of
business at 9 rue Petitot, 21000 Dijon, France ("Fournier").
RECITALS
A. Iomed and Fournier entered into a Research and Development Agreement
dated June 29, 1993 (the "Research and Development Agreement"), for the joint
development and commercialization of certain systems for iontophoretic
transdermal delivery.
B. Simultaneously with the execution and delivery of the Research and
Development Agreement, Fournier loaned to Iomed, and Iomed borrowed from
Fournier, an amount equal to Three Million Dollars ($3,000,000 U.S.), such loan
evidenced by a nonnegotiable subordinated convertible promissory note dated June
29, 1993 (the "Note").
C. Iomed and Fournier desire to terminate the Research and Development
Agreement, except as hereinafter provided, and to enter into this Agreement.
Accordingly, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Iomed and Fournier agree as follows:
ARTICLE I. DEFINITIONS
For purposes of this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
1.01. "Additional Conversion Shares" shall mean the
additional shares of Common Stock and/or the different class or classes of
shares, if any, to be issued to Fournier pursuant to Section 3.04 hereof. In the
case of an adjustment to the Conversion Price, the Additional Conversion Shares
to be issued to Fournier shall represent the difference between the number of
such shares Fournier (a) would receive by dividing the Principal Amount by the
Conversion Price as adjusted in accordance with Section 3.04 hereof and (b)
received pursuant to Section 3.01 hereof. In the case of a change in the class
or classes of stock, Fournier shall
<PAGE> 5
be entitled to receive, in lieu of the Additional Conversion Shares which it is
entitled to receive but for such change, the equivalent of the shares of such
other class or classes of stock that reflects what Fournier would have received
if it had been entitled to receive such Additional Conversion Shares immediately
prior to such change.
1.02. "Affiliate" shall mean, with respect to any Person, (a)
each other Person that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
such Person or any Affiliate of such Person and (b) each of such Person's
officers, directors, joint venturers and partners.
1.03. ****
1.04. "Applicable Law" shall mean any federal, state or local
statute, law, ordinance, rule, administrative interpretation, regulation, order,
writ, injunction, directive, judgment, decree or other requirement, whether
foreign or domestic, of any Governmental Authority applicable to a Person or its
properties, business or assets.
1.05. "Ciba" shall mean Ciba-Geigy Corporation and any
Affiliate thereof.
1.06. "Common Stock" shall mean fully paid and nonassessable
shares of common stock of Iomed.
1.07. "Confidential Information" shall mean, subject to the
limitations set forth in Section 9.12 hereof, any technical and business
information relating to a Party's research, development, inventions, products,
production, manufacturing, finances, marketing, customers, or future business
plans, including, without limitation, trade secrets, know-how, data, formulas,
processes, or other intellectual property, that is or has been disclosed to or
otherwise received or obtained by a Receiving Party, whether or not in
connection with or pursuant to this Agreement or the Research and Development
Agreement.
1.08. "Conversion Period" shall mean the period commencing
on June 29, 1995 and ending at the close of business on June 29, 1998.
1.09. "Conversion Price" shall mean $1.85, or as such price
may be adjusted in accordance with Section 3.04 hereof.
1.10. "Conversion Shares" shall mean the shares of Common
Stock into which the Note is converted pursuant to Section 3.01 hereof.
1.11. "Disclosing Party" shall mean the Party (a) who
discloses, and owns or otherwise possesses the rights and interests to and in,
the Confidential Information or (b) whose Confidential Information is the
subject of any process, subpoena or demand.
1.12. ****
2
<PAGE> 6
****
1.13. "Escrow Agent" shall mean an independent third party,
mutually acceptable to and designated by both Parties pursuant to Section 7.02
hereof.
1.14. "Floor Price" shall mean the average of the Fournier
Sealed Bid and the Iomed Sealed Bid rounded to the nearest whole dollar, as
determined by the Escrow Agent, where (a) the numerator is the sum of the
Fournier Sealed Bid and the Iomed Sealed Bid and (b) the denominator is 2.
1.15. "Fournier" shall have the meaning set forth in the
opening paragraph of this Agreement and shall include any Affiliate of Fournier.
1.16. "Fournier Inventions" shall mean the technology,
patents, patent applications, and non-patentable technological information as
ascribed to Fournier on Exhibit A hereto, and any improvements) thereto.
1.17. "Fournier Sealed Bid" shall mean a sealed bid
submitted by Fournier pursuant to Section 7.02 hereof, which bid shall set forth
the cash purchase price (in U.S. dollars) that Fournier offers to pay in order
to purchase all of the Offered Assets.
1.18. "Fournier Technology" shall mean the technology,
patents, patent applications, and non-patentable technological information as
ascribed to Fournier on Exhibit B hereto, and any improvements) thereto that do
not constitute Fournier Inventions.
1.19. "GAAP" shall mean generally accepted accounting
principles in the United States of America as in effect as of the date of the
Offer Notice, including, without limitation, those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board.
1.20. "Governmental Authority" shall mean any federal,
state or local governmental authority, court, government or self-regulatory
organization, commission, tribunal, organization, regulatory, administrative or
other
3
<PAGE> 7
agency, political or other subdivision, department, or instrumentality, or
branch of any of the foregoing, whether foreign or domestic.
1.21. "Iomed" shall have the meaning set forth in the
opening paragraph of this Agreement and shall include any Affiliate of Iomed.
1.22. "Iomed Assets" shall mean any asset of Iomed,
including, without limitation, Iomed Inventions and Iomed Technology, or any
portion thereof; provided, however, that the defined term "Iomed Assets" shall
not include (a) for the purpose of Section 7.01 hereof, Iomed assets typically
sold by Iomed in the ordinary course of business, such as electrodes and
iontophoretic power supply units or (b) for the purpose of Section 7.02 hereof,
(i) Iomed assets typically sold by Iomed in the ordinary course of business,
such as electrodes and iontophoretic power supply units or (ii) Iomed laboratory
equipment.
1.23. "Iomed Inventions" shall mean the technology,
patents, patent applications, and non-patentable technological information as
ascribed to Iomed on Exhibit C hereto, and any improvement(s) thereto.
1.24. "Iomed Sealed Bid" shall mean a sealed bid submitted
by Iomed pursuant to Section 7.02 hereof, which bid shall set forth the cash
purchase price (in U.S. dollars) that Iomed is willing to accept for the sale of
the Offered Assets.
1.25. "Iomed Technology" shall mean the technology, patents,
patent applications, and non-patentable technological information as ascribed to
Iomed on Exhibit D hereto, and any improvement(s) thereto that do not constitute
Iomed Inventions.
1.26. "Mandated Research" shall mean the research and
development obligations assigned to a Party pursuant to the Research and
Development Agreement.
1.27. "Mini-Integrated System" shall mean any
mini-integrated wearable system, consisting of a current source, a controller, a
drug containment device, and dispersive electrodes (whether or not the foregoing
components are all present at the treatment site), intended to permit
iontophoretic transdermal delivery of medicaments.
1.28. "Note" shall have the meaning set forth in the recitals
of this Agreement.
1.29. "Offer Notice" shall mean a written notice by Iomed
to Fournier, indicating that a sale of Iomed Assets is under consideration and
specifying the Iomed Assets subject to such sale.
1.30. "Offer Period" shall mean the sixty (60)-day period
commencing upon the later of Fournier's (a) receipt of the Offer Notice, (b)
receipt of Iomed's financial statements, and (c) access to Iomed's facilities,
books, and records pursuant to Section 7.02(a) hereof; provided, however, that,
in the event the Offered Assets identified in the Offer Notice do not include
any Iomed Inventions or Iomed Technology, or any portion thereof, then the
4
<PAGE> 8
defined term "Offer Period" shall mean the ten (10)-day period commencing upon
Fournier's receipt of such Offer Notice, in which case Iomed shall grant to
Fournier access to Iomed's facilities, books, and records relating to such
Offered Assets within seven (7) days of Fournier's receipt of such Offer Notice.
1.31. "Offered Assets" shall mean the Iomed Assets
specified in each Offer Notice.
1.32. "Parties" shall mean Iomed and Fournier, and "Party"
shall mean Iomed or Fournier.
1.33. "Person" shall mean any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity, Affiliate, or Governmental Authority.
1.34. "Principal Amount" shall mean the principal sum of
Three Million Dollars ($3,000,000 U.S.), as evidenced by the Note.
1.35. "Qualifying Affiliate" shall mean any Affiliate of
Iomed as to which: (a) Iomed owns or controls fifty percent (50%) or more of the
issued and outstanding capital stock (or other corresponding equity interests)
of such Affiliate and (b) none of the issued and outstanding capital stock (or
other corresponding equity interests) of such Affiliate is owned by any Person
with whom Iomed or such Affiliate has entered into an agreement regarding the
research, development, and/or commercialization of any product, which research,
development, and/or commercialization is being conducted, in whole or in part,
by such Affiliate.
1.36. "Receiving Party" shall mean the Party who (a)
receives or otherwise obtains Confidential Information of the Disclosing Party
or (b) is served with any process, subpoena or demand.
1.37. "Research and Development Agreement" shall have
the meaning set forth in the recitals of this Agreement.
1.38. "Research Costs" shall mean the costs incurred by a
Party in connection with Mandated Research.
1.39. ****
5
<PAGE> 9
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.01. Warranties of Iomed. Iomed hereby represents and
warrants to Fournier that, as of the date of this Agreement, the following
statements are and shall be true and correct in all material respects:
(a) Organization and Good Standing. Iomed is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Utah, has the corporate power and authority to conduct the
business in which it presently is engaged, to enter into this Agreement, and to
perform its obligations hereunder, is qualified to do business as a foreign
corporation, and is in good standing in each jurisdiction in which the failure
to be so qualified would have a material adverse effect upon its business or
financial condition.
(b) Authorization and Binding Effect. All corporate
action on the part of Iomed and its officers and directors necessary for the
authorization, execution, and delivery of this Agreement and for the performance
of all of Iomed's obligations hereunder has been taken, and this Agreement, when
executed and delivered, shall constitute a valid and legally binding obligation
of Iomed enforceable against Iomed in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency and other laws affecting
creditors' rights generally or by general equitable principles.
(c) Execution, Delivery and Performance. The
execution, delivery, and performance by Iomed of this Agreement do not (i)
violate or breach the certificate of incorporation or bylaws of Iomed, (ii)
violate or conflict with any Applicable Law, (iii) violate, breach, cause a
default under, or otherwise give rise to a right of termination, cancellation or
acceleration with respect to (presently, with the giving of notice or the
passage of time), any agreement, contract or instrument to which Iomed is a
party or by which any of its assets are bound, or (iv) result in the creation or
imposition of any lien, pledge, mortgage, claim, charge, or encumbrance upon any
assets of Iomed.
(d) Governmental and Other Consents. No consent,
authorization, license, permit, registration or approval of, or exemption or
other action by, any Governmental Authority or any other Person is required in
connection with Iomed's execution and delivery of this Agreement or with the
performance or grant by Iomed of its obligations or any license or sublicense
hereunder.
(e) Non-Infringement. Except as specifically
disclosed in writing by Iomed to Fournier on or before the date of this
Agreement, Iomed is not aware of any active patents that would be infringed by
the license or use of Iomed Inventions or Iomed Technology contemplated hereby.
(f) Common Stock. The authorized capital stock of
Iomed consists of 40,000,000 shares of Common Stock, having a par value per
share of $0.001, of which 12,229,409 shares are presently outstanding, and
4,215,618 shares of preferred stock, having a par value per share of $0.001, of
which 981,363 shares are presently outstanding.
6
<PAGE> 10
(g) Outstanding Rights. There are no outstanding
rights (preemptive or otherwise) or options to subscribe for or purchase, or
warrants or other agreements providing for or requiring the issuance by Iomed
of, capital stock or securities convertible into capital stock, except as
follows: (i) the Note; (ii) the Common Stock issuable upon conversion of the
981,363 outstanding shares of preferred stock of Iomed; (iii) a total of
1,475,829 shares of Common Stock issuable upon exercise of options outstanding
under Iomed's 1988 Stock Option Plan as of December 31, 1995; and (iv) a warrant
to purchase 10,000 shares of Common Stock.
(h) Conversion Price. No event has occurred since the
date of the execution of the Note that would require or otherwise result in any
adjustment(s) in the Conversion Price (as defined in, and in accordance with
Section 3.2 of; the Note) that would result in lowering the amount of such
price.
(i) Conversion Shares. The Conversion Shares, when
issued and delivered in accordance with the terms of this Agreement, shall be
duly and validly issued, fully paid and nonassessable, and, assuming that
Fournier acquires such shares for investment and not with a view to or for
resale in connection with a distribution, shall be issued in compliance with
Applicable Law, including, without limitation, federal and state securities
laws.
2.02. Warranties of Fournier. Fournier hereby represents
and warrants to Iomed that, as of the date of this Agreement, the following
statements are and shall be true and correct in all material respects:
(a) Organization and Good Standing. Fournier is a
corporation duly organized, validly existing and in good standing under the laws
of France and has the corporate power and authority to conduct the business in
which it presently is engaged, to enter into this Agreement, and to perform its
obligations hereunder.
(b) Authorization and Binding Effect. All corporate
action on the part of Fournier and its officers and directors necessary for the
authorization, execution, and delivery of this Agreement and for the performance
of all of Fournier's obligations hereunder has been taken, and this Agreement,
when executed and delivered, shall constitute a valid and legally binding
obligation of Fournier enforceable against Fournier in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
other laws affecting creditors' rights generally or by general equitable
principles.
(c) Execution, Delivery and Performance. The
execution, delivery, and performance by Fournier of this Agreement do not (i)
violate or breach the certificate of incorporation or bylaws of Fournier, (ii)
violate or conflict with any Applicable Law, (iii) violate, breach, cause a
default under, or otherwise give rise to a right of termination, cancellation or
acceleration with respect to (presently, with the giving of notice or the
passage of time), any agreement, contract or instrument to which Fournier is a
party or by which any
7
<PAGE> 11
of its assets are bound, or (iv) result in the creation or imposition of any
lien, pledge, mortgage, claim, charge, or encumbrance upon any assets of
Fournier.
(d) Governmental and Other Consents. No consent,
authorization, license, permit, registration or approval of, or exemption or
other action by, any Governmental Authority or any other Person is required in
connection with Fournier's execution and delivery of this Agreement or with the
performance or grant by Fournier of its obligations or any license or sublicense
hereunder.
(e) Non-Infringement. Except as specifically
disclosed in writing by Fournier to Iomed on or before the date of this
Agreement, Fournier is not aware of any active parents that would be infringed
by the license or use of Fournier Inventions contemplated hereby.
(f) Non-Affiliation. Fournier is not an Affiliate of,
or a successor in interest to, any of the following entities: **** Fournier does
not derive more than fifty percent (50%) of its income from, and is not an
Affiliate of, or successor in interest to, any entity that derives more than
fifty percent (50%) of its income from, the development, licensing, and/or sale
of drug delivery systems to other pharmaceutical companies.
ARTICLE III. CONVERSION OF THE NOTE
3.01. Conversion. Simultaneously with the execution and
delivery of this Agreement, (a) Fournier shall convert the Principal Amount into
Common Stock, by surrendering, or causing to be surrendered, the Note, duly
endorsed, to Iomed, and (b) Iomed shall issue the Conversion Shares and shall
deliver, or cause to be delivered, to Fournier a certificate for the number of
Conversion Shares. The number of Conversion Shares shall be 1,621,622, or as
otherwise adjusted in accordance with Section 3.04 hereof. Such conversion shall
be deemed to have been made simultaneously with the execution of this Agreement,
and Fournier shall be treated for all purposes as the holder of record of the
shares of Common Stock issued upon conversion from and as of such time. Except
as provided in Sections 3.03 and 3.04 hereof, from and after the time of such
conversion, Fournier shall have no further rights, and Iomed shall have no
further obligations, pursuant to the Note.
3.02. Effect of Conversion. Conversion of the Note shall
not constitute a waiver or release of, or otherwise be deemed to prejudice or
affect in any way, a breach by Iomed of any representation or warranty made
pursuant to Section 2.01 hereof. In the event of such breach by Iomed, Fournier
shall have the right to seek monetary and/or injunctive relief.
8
<PAGE> 12
3.03. Reservation of Conversion Shares. Iomed shall, at all
times during the Conversion Period, reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the issuance of Additional Conversion Shares, such number of its
shares of Common Stock as shall be sufficient to effect the issuance of such
Additional Conversion Shares. If, at any time, the number of authorized but
unissued shares of Common Stock is not sufficient to effect the issuance of
Additional Conversion Shares, then Iomed shall immediately take such corporate
action as is necessary to increase its authorized but unissued shares of Common
Stock to such number of shares of Common Stock as shall be sufficient for such
purpose. In the event that Iomed fails to take such corporate action in order to
permit Fournier to receive the Additional Conversion Shares in accordance with
Section 3.04 hereof, (a) such failure shall not affect or otherwise prejudice
Fournier's to such Additional Conversion Shares, and (b) Fournier shall have the
right to (i) receive such Additional Conversion Shares as soon as practicable
after Iomed takes such corporate action and/or (ii) seek other monetary or
injunctive relief.
3.04. Adjustments. Anything herein to the contrary
notwithstanding, during the Conversion Period the substantive effect of the
adjustment provisions set forth in Section 3.2 et seq. of the Note shall
survive, shall be made a part of this Agreement, and shall apply in all respects
as if set forth in full herein so as to effect an adjustment of the number of
Conversion Shares and/or of the Conversion Price in the same manner and to the
same extent, but to no greater extent, as if the Note had not been converted on
the date hereof; provided, however, that the initial Conversion Price shall be
$1.85. It is the intention of the Parties that during the Conversion Period the
adjustment provisions of the Note shall continue to inure to the benefit of
Fournier, subject to the foregoing proviso. If Iomed takes any action during the
Conversion Period that would have the effect of reducing the Conversion Price,
then Fournier shall be entitled to receive Additional Conversion Shares from
Iomed, and Iomed shall deliver to Fournier a certificate for the applicable
number of Additional Conversion Shares.
ARTICLE IV. RESEARCH AND DEVELOPMENT AGREEMENT
4.01. Termination. Simultaneously with the execution and
delivery of this Agreement, the Parties agree that the Research and Development
Agreement is hereby terminated.
4.02. Research Costs. The Parties agree that, by virtue of
the termination of the Research and Development Agreement, neither Party shall
be required to equalize its Research Costs (or to make any payment whatsoever to
the other Party with respect to such Research Costs), as provided under the
terms of that agreement.
4.03. Waiver of Claims. Each of Iomed and Fournier waives
any and all claims it has and may have against the other under the terms of the
Research and Development Agreement.
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<PAGE> 13
4.04. Return of Information. Except as otherwise herein
provided, each Party shall (a) simultaneously with the execution and delivery of
this Agreement, discontinue the use of Confidential Information of the other
Party and (b) upon the written request of the other Party, return to such Party,
within thirty (30) days of such request, all items of Confidential Information
of such Party that are identified specifically in such written request;
provided, however, that, if and to the extent that any license or sublicense
granted pursuant to Section 6.02, 6.03, or 6.04 hereof shall relate to such
Confidential Information, a Receiving Party shall be permitted to retain only
such Confidential Information as is reasonably necessary for the continued
exercise of its license or sublicense rights and to use such Confidential
Information within the scope of such license or sublicense.
4.05. Fentanyl Blood Level Study. Fournier shall, within
forty-five (45) days of the date of this Agreement, deliver to Iomed the results
of the human fentanyl blood level study that was conducted pursuant to Mandated
Research for the period ended June 30, 1995, and a complete copy of the final
written report with respect thereto, all without charge to Iomed.
4.06. Electrodes. Iomed shall, within forty-five (45) days of
the date of this Agreement, deliver to Fournier **** electrodes identical to the
electrodes used to perform the human fentanyl blood level study referenced in
Section 4.05 hereof, together with the control analysis data and the batch
manufacturing report with respect thereto. It is understood and agreed by the
Parties that Fournier shall pay to Iomed, and Iomed shall accept from Fournier,
for such electrodes a sum equal to ****, which sum represents ****, and that,
except for such sum, Fournier shall not be required to make any other payment
whatsoever for or in connection with such electrodes, data or report.
ARTICLE V. MEETINGS OF IOMED'S BOARD OF DIRECTORS
5.01. Meetings.
(a) Simultaneously with the execution and delivery of
this Agreement, Iomed shall deliver to Fournier a schedule of the date(s) of
each previously scheduled meeting of Iomed's board of directors. In addition,
Iomed shall (1) with respect to each meeting of Iomed's board of directors,
provide to Fournier timely notice of the date, time, place, and purpose of each
such meeting and any change in such date, time, place, or purpose thereof, (ii)
timely provide to Fournier (subject to Section 5.02 hereof) such other
information and documents that are given to members of Iomed's board of
directors (including, without limitation, minutes of board meetings), and (iii)
permit (subject to Section 5.02 hereof) a representative of Fournier to attend
each such meeting. Any written or other information obtained by Fournier
pursuant to this Section 5.01 shall constitute Confidential Information of
Iomed. All costs and expenses associated with the attendance by Fournier's
representative at such meetings shall be borne by Fournier.
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(b) Fournier may elect not to exercise its right to
have its representative attend any such meeting of Iomed's board of directors,
but any such election shall not prejudice or otherwise preclude Fournier's right
to have its representative attend any other meeting (subject to Section 5.02
hereof) nor cause Iomed to fail to provide the notice and other information and
documents required to be furnished to Fournier pursuant to Section 5.01(a)
hereof.
5.02. Limitation. The rights of Fournier pursuant to
Section 5.01 hereof shall terminate automatically upon the earlier of (a) the
date on which Iomed becomes subject to the reporting requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or (b) the
date on which Fournier ceases to own, in the aggregate, less than 692,551 shares
of Common Stock or such other stock or securities of Iomed (as adjusted for
stock. splits, combinations and the like). Fournier's right to have its
representative attend meetings of Iomed's board of directors and to receive
information and documents pursuant to Section 5.01 hereof shall not apply if and
to the extent that Fournier is a competitor as of such time with respect to a
business venture in which Iomed, either by itself or in conjunction with any
Person, is engaged or proposes to engage, and such business venture is a subject
of such meeting, in which case Iomed may, acting in good faith and upon written
notice to Fournier, exclude Fournier's representative from that portion of the
meeting and not provide such information and documents related to such portion
of the meeting. It is understood and agreed by the Parties that, if Iomed
intends to exercise its right to exclude Fournier's representative from any
portion of a meeting pursuant to this Section 5.02, Iomed shall notify Fournier
of such intent at the same time it delivers the written notice of such meeting
pursuant to Section 5.01 hereof (or, if the decision to exclude Fournier's
representative is made after the written notice of the meeting is delivered,
then immediately upon becoming aware that any such matter will be discussed at
such meeting, so long as the notice of such intent is received by Fournier not
less than three (3) days prior to the date of such meeting). Iomed shall provide
sufficient information, consistent with the purpose of this Section 5.02 that
competitively sensitive information not be disclosed, to establish that Fournier
is a competitor as of such time with respect to a business venture in which
Iomed, either by itself or in conjunction with any Person, is engaged or
proposes to engage. Fournier shall have the right to challenge the basis for any
exclusion from a meeting.
5.03. Definition. As used in this Article V, the defined
term "Iomed" shall include any Qualifying Affiliate, but not any other Affiliate
of Iomed.
ARTICLE VI. LICENSES AND SUBLICENSES
6.01. Ownership.
(a) As between Iomed and Fournier, Iomed shall have
all right, title and interest to and in Iomed Technology and Iomed Inventions,
subject to the licenses and sublicenses granted pursuant to this Article VI. As
between Iomed and Fournier, Fournier
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shall have all right, title and interest to and in Fournier Technology and
Fournier Inventions, subject to the licenses and sublicenses granted pursuant to
this Article VI.
(b) Except as otherwise expressly provided in this
Agreement, neither Party, as a result of this Agreement or any license or
sublicense granted hereunder, shall obtain any ownership, interest or other
right in or to any patents, pending patent applications, inventions, know-how,
formulas, processes, trade secrets, or other technology or products of the other
Party. It is understood and agreed by the Parties that this Agreement does not
grant to either Party any license or other right to use in advertising,
publicity or otherwise any trademark, service mark, trade name or their
equivalent, or any contraction, abbreviation or simulation thereof, of the other
Party.
6.02. Iomed License to Fournier.
(a) Iomed hereby grants to Fournier, and Fournier
hereby accepts, a **** license to (i) Iomed Technology to make, have made,
manufacture, use, disclose, distribute, market, have marketed or distributed,
sell or have sold Mini-Integrated Systems based upon or incorporating, or
developed or manufactured through processes based upon or incorporating, Iomed
Technology and (ii) Iomed Inventions to make, have made, manufacture, use,
disclose, distribute, market, have marketed or distributed, sell or have sold
any products, including, without limitation, Mini-Integrated Systems, based upon
or incorporating, or developed or manufactured through processes based upon or
incorporating, Iomed Inventions.
(b) It is understood and agreed by the Parties that
(i) the license granted pursuant to Section 6.02(a) hereof shall not be
exclusive and (ii) subject to Article VII hereof, there shall be no other
restriction or limitation on Iomed's right to sell, convey, transfer, pledge,
encumber, license, sublicense, or otherwise dispose of, Iomed Technology or
Iomed Inventions.
(c) It is understood by the Parties that there is (i)
an agreement dated ****, by and between Iomed and **** involving the acquisition
of certain rights under their respective patents and patent applications (the
"**** License"), and (ii) an agreement dated ****, by and between Iomed and the
**** involving the development and utilization of certain inventions (the "****
License"), and that the license granted to Fournier pursuant to this Section
6.02, insofar as it relates to the subject of the **** License or the ****
License, is subject to all of the conditions and limitations set forth in those
Licenses.
(d) Fournier shall not assign to any Person all or
any portion of the Iomed Technology or the Iomed Inventions licensed to it
pursuant to Section 6.02(a) hereof, except in connection with a sale of all or
substantially all of its business or pursuant to Section 9.11 hereof.
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6.03. Fournier License to Iomed.
(a) Fournier hereby grants to Iomed, and Iomed hereby
accepts, a **** license to Fournier Inventions to make, have made, manufacture,
use, disclose, distribute, market, have marketed or distributed, sell or have
sold any products, including, without limitation, Mini-Integrated Systems, based
upon or incorporating, or developed or manufactured through processes based upon
or incorporating, Fournier Inventions.
(b) It is understood and agreed by the Parties that
(i) the license granted pursuant to Section 6.03(a) hereof shall not be
exclusive and (ii) there shall be no restriction or limitation on Fournier's
right to sell, convey, transfer, pledge,-encumber, license, sublicense, or
otherwise dispose of, Fournier Technology or Fournier Inventions.
(c) Iomed shall not assign to any Person all or any
portion of the Fournier Inventions licensed to it pursuant to Section 6.03(a)
hereof, except in connection with a sale of all or substantially all of its
business or pursuant to Section 9.11 hereof.
6.04. Sublicenses.
(a) Fournier shall be free to grant sublicenses
(which may include the right of any sublicensee to grant lower level licenses),
freely and without restriction of any type, and on any terms Fournier, in its
sole discretion, deems desirable, covering all or any portion of the Iomed
Inventions licensed to it pursuant to Section 6.02(a)(ii) hereof;, provided,
however, that any such sublicense shall (i) not be granted to **** for a period
of two (2) years from the date of this Agreement and (ii) be entered into in
conjunction with an agreement, joint venture or other collaboration by and
between Fournier and the recipient of such sublicense involving the research,
development, manufacture, production, commercialization, distribution, sale,
and/or marketing by Fournier and such recipient of any products, including,
without limitation, a Mini-Integrated System.
(b) Iomed shall be free to grant sublicenses (which
may include the right of any sublicensee to grant lower level licenses), freely
and without restriction of any type, and on any terms Iomed, in its sole
discretion, deems desirable, covering all or any portion of the Fournier
Inventions licensed to it pursuant to Section 6.03(a) hereof; provided, however,
that any such sublicense shall (i) not be granted to **** for a period of two
(2) years from the date of this Agreement and (ii) be entered into in
conjunction with an agreement, joint venture or other collaboration by and
between Iomed and the recipient of such sublicense involving the research,
development, manufacture, production, commercialization, distribution, sale,
and/or marketing by Iomed and such recipient of any products, including, without
limitation, a Mini-Integrated System.
(c) Fournier may (subject to Section 6.02(c) hereof),
without the prior consent of Iomed, grant to any Person (including, without
limitation, ****) a sublicense covering all or any portion of the Iomed
Technology licensed to Fournier pursuant to Section 6.02(a)(i) hereof; provided,
however, that any such sublicense (i)
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may not be granted to **** for a period of two (2) years from the date of this
Agreement, (ii) shall be entered into in conjunction with an agreement, joint
venture or other collaboration by and between Fournier and any such Person
involving the research, development, manufacture, production, commercialization,
distribution, sale, and/or marketing by Fournier and any such Person of any
Mini-Integrated System, and (111) may include the right to grant lower level
licenses within the scope of such agreement, joint venture or other
collaboration.
(d) It is understood and agreed by the Parties that
this Section 6.04 shall not apply to any assignment by a Party of all or any
portion of its respective rights hereunder, whether by operation of law or
otherwise, and that assignments are the subject matter of Sections 6-02(d),
6.03(c) and 9.11 hereof; provided, however, that the provisions of this Section
6.04 shall remain binding on any permitted assignee of either Party.
6.05. Restrictions.
(a) Iomed, by itself or in conjunction with any
Person, shall not:
(i) have any right, license, sublicense,
interest or access to or in, or employ, implement, insert, duplicate, utilize,
use or otherwise make use of, any Fournier Technology;
(ii) knowingly employ, implement, insert,
duplicate, utilize, use or otherwise make use of DDU3.as described in Exhibit B
hereto, or any portion or component thereof, or any prior model, version,
configuration, prototype or other form of DDU3, for any purpose, including,
without limitation, any research, development, inventions, products, production,
manufacturing or other processes or activities;
(iii) employ, implement, insert, duplicate,
utilize, use or otherwise make use of (A) ASIC as described in Exhibit B hereto,
including, without limitation, the software and algorithms relating thereto,
developed by Fournier and **** or (B) the external design and user interface
developed with ****, for, in each case, any purpose, including, without
limitation, any research, development, inventions, products, production,
manufacturing or other processes or activities; or
(iv) enter into any joint venture, contract,
agreement, understanding or other arrangement with (A) **** for the invention,
creation, development, production, manufacturing, commercialization or marketing
of ASIC for iontophoretic systems or (B) **** for iontophoretic delivery system
design.
(b) For a period of two (2) years from the date of
this Agreement, Iomed shall not develop, pursue or otherwise engage in, by
itself or in conjunction with any **** or other Person, research, development,
production, manufacture, commercialization or marketing of a Mini-Integrated
System or any other iontophoretic system
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for delivery of (i) fentanyl, (II) other natural or synthetic opiate/opioid
medicaments and/or (ill) medicaments that (A) are used or prescribed for severe
pain management in lieu of fentanyl or other natural or synthetic opiate/opioid
medicaments and (B) act specifically by blocking the pain sensation but not by
treating the underlying causative disease or other medical condition). After the
expiration of that two (2)-year period, Iomed shall be permitted to develop,
pursue or otherwise engage in any such system, subject to the restrictions and
limitations set forth in this Article VI. It is understood and agreed by the
Parties that, as used in this Section 6.05, the term "opiate" shall mean any
remedy containing or derived from opium, and the term "opioid" shall mean (x)
any synthetic narcotic that has opiate activities and is not derived from opium
and (y) any naturally occurring peptide (for example, enkephalins) that exerts
opiate-like effects by interacting with opiate receptors on cell membranes.
6.06. Royalties. Neither Party shall be required to pay to
the other Party a royalty or any other payment in consideration of any licenses
or sublicenses granted pursuant to this Article VI, except for any royalty
payment that may be required to be made to **** under an agreement dated ****,
between **** and Iomed for the Webster U.S. **** issued to ****, which royalty
payment, if any, shall be paid by Fournier to Iomed.
ARTICLE VII. SALE OF TECHNOLOGY
7.01. Restriction. For a period of two (2) years from the
date of this Agreement, Iomed shall not: (a) sell, convey, or otherwise transfer
any Iomed Assets to Ciba; (b) merge or consolidate with Ciba; or (c) issue any
securities to Ciba if and to the extent that the result of any such issuance
would be to make Ciba the beneficial owner of fifty percent (50%) or more of the
then outstanding voting securities of Iomed. Notwithstanding the foregoing,
Iomed and Ciba may, at any time, participate in the joint development and
commercialization of any products (including, without limitation, a
Mini-Integrated System, but subject to the limitations set forth in Sections
6.05(a) and 6.05(b) hereof) based upon or incorporating, or developed or
manufactured through processes based upon or incorporating, Iomed Technology,
Iomed Inventions, and Fournier Inventions, which joint development and
commercialization may contain, among other provisions not inconsistent with the
terms of this Agreement, licenses and sublicenses of Iomed Technology, Iomed
Inventions, and Fournier Inventions to Ciba and an investment by Ciba in Iomed.
7.02. Right of First Offer.
(a) Notice. If, at each and any time within five (5)
years from the date of this Agreement, Iomed decides to sell, convey or
otherwise transfer Iomed Assets, then Iomed shall, within seven (7) days after
such decision, forward to Fournier an Offer Notice; provided, however, that, in
the event of any sale, conveyance or other transfer of Iomed Assets to Ciba
(subject to Section 7.01 hereof), this Section 7.02 shall not apply. It is
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understood and agreed by the Parties that, during the Offer Period and pending
consummation of the transaction pursuant to Section 7.02(c) hereof, Iomed shall
not (i) sell, convey, or otherwise transfer, or offer to sell, convey, or
otherwise transfer, the Offered Assets to any Person other than Fournier or (ii)
permit any Person other than Fournier to purchase such Offered Assets. Iomed
shall, within ten (10) days of submission of the Offer Notice, submit to
Fournier true and correct copies of Iomed's most recent financial statements
prepared in accordance with GAAP and grant to Fournier reasonable access to
Iomed's facilities, books, and records relating to the Offered Assets.
(b) Sealed Bids. Fournier shall have the right to
purchase all, but not less than all, of the Offered Assets, which right shall be
exercisable by Fournier's delivery of a Fournier Sealed Bid to the Escrow
Agent-during the Offer Period. The Escrow Agent shall treat the Fournier Sealed
Bid as Confidential Information of Fournier within the meaning of this
Agreement, and shall not disclose to Iomed, except in accordance with this
Section 7.02(b), the contents of the Fournier Sealed Bid; provided, however,
that the Escrow Agent shall notify Iomed of the receipt of such Fournier Sealed
Bid. If Fournier submits a Fournier Sealed Bid during the Offer Period, then
Iomed shall, no later than fourteen (14) days of receipt by the Escrow Agent of
the Fournier Sealed Bid, deliver to the Escrow Agent an Iomed Sealed Bid. Upon
receipt of the Iomed Sealed Bid, the Escrow Agent shall open each of the sealed
bids submitted by the Parties and shall notify, in writing, the Parties of the
respective amounts of the Fournier Sealed Bid and the Iomed Sealed Bid and of
the Floor Price.
(c) Consummation of Transaction. If the Fournier
Sealed Bid is greater than, or not more than **** less than, the Iomed Sealed
Bid, then Iomed shall be obligated to sell the Offered Assets to Fournier, and
Fournier shall be obligated to purchase the Offered Assets from Iomed, at the
Floor Price within sixty (60) days of notification by the Escrow Agent of the
Floor Price, subject to (i) negotiation of a definitive agreement and (ii)
conditions customary for a transaction of the type contemplated, including,
without limitation, (A) representations and warranties by Iomed comparable to
those set forth in Section 2.01 hereof, (B) Iomed's good and marketable title to
the Offered Assets at the time of the sale, with full power to sell, transfer
and assign the same, free and clear of any security interest, lien, mortgage,
encumbrance or restriction of any kind, (C) the absence of any litigation or
other obligation that may affect the value of such Offered Assets, (D) the
absence of any material adverse change in such Offered Assets after submission
of the Offer Notice and prior to closing, and (E) Iomed's ownership of the
Offered Assets, including, without limitation, the Iomed Inventions, Iomed
Technology, patents, trademarks, and copyrights and exclusive right to use the
same (except as therein disclosed).
(d) Failure to Submit Sealed Bid. Iomed shall, for a
period of one (1) year from the expiration of the respective Offer Period, be
free to sell the Offered Assets (i) at a price not less than the Floor Price
determined by the Escrow Agent in accordance with this Section 7.02, in the
event that the Fournier Sealed Bid is less than the Iomed Sealed Bid by more
than One Hundred Fifty Thousand Dollars ($150,000 U.S.) or (ii) at any price, in
the
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event that Fournier fails to submit a Fournier Sealed Bid prior to the
expiration of the Offer Period. Any prospective sale, conveyance or other
transfer of the Offered Assets which has not been consummated within such one
(1)-year period shall become subject again to this Section 7.02.
(e) Limitations.
(i) The provisions of this Section 7.02
shall not apply to any sale, conveyance or other transfer of any Iomed Assets
(A) to any Affiliate of Iomed (other than an Affiliate formed or otherwise
created by Iomed and Ciba) or (B) that occurs at a time when Iomed is subject to
the reporting requirements of Sections 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended. It is understood and agreed by the Parties treat it
shall be a condition precedent to any sale, conveyance or other transfer
pursuant to clause (A) above that the transferee Affiliate agree in writing to
be bound by a right of first offer in favor of Fournier identical to this
Section 7.02 with respect to any subsequent sale, conveyance or other transfer
by such transferee Affiliate of the Iomed Assets transferred to it pursuant to
such clause (A).
(ii) If Iomed or any of its Affiliates
enters into an agreement, joint venture or other collaboration with Ciba for the
research, development, manufacture, marketing, distribution or sale of any
Mini-Integrated System or other product, and such agreement, joint venture or
other collaboration continues in force and effect for a term of not less than
one (1) year, then the provisions of this Section 7.02 shall terminate
automatically upon the expiration of the first year of such agreement, joint
venture or other collaboration, and without any further action by either Party.
It is understood and agreed by the Parties that any such agreement, joint
venture or other collaboration with Ciba shall be subject to the same
restrictions and other limitations imposed upon Iomed pursuant to Articles VI
and VII hereof.
(iii) The rights described in this Section
7.02 shall survive termination of this Agreement.
(f) Definitions. As used in this Section 7.02, (i)
the phrase "sell, convey or otherwise transfer," as used in relation to the
specified Iomed Assets, shall mean a sale, conveyance or other transfer of all
of the transferring Party's right, title and interest in and to such Iomed
Assets, and (ii) the defined term "Iomed" shall not include any Affiliate of
Iomed.
ARTICLE VIII. TERMINATION
8.01. Term. This Agreement shall become effective on the
day and year written in the opening paragraph of this Agreement and shall
continue in full force and effect for an indefinite term, unless sooner
terminated by mutual written agreement of the Parties and except as otherwise
expressly provided herein.
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8.02. Effect of Termination. It is understood and agreed by
the Parties that the following shall survive termination of this Agreement:
(a) the respective representations and warranties of
Iomed and Fournier pursuant to Article II hereof;
(b) the respective rights and obligations of Iomed
and Fournier pursuant to Articles III, IV and V hereof;
(c) the respective rights and obligations of Iomed
and Fournier pursuant to Article VI hereof, including, without limitation,
Iomed's continued ownership of Iomed Technology and Iomed Inventions, Fournier's
continued ownership of Fournier Technology and Fournier Inventions, the
respective licenses and sublicenses granted by Iomed and Fournier pursuant to
Sections 6.02, 6.03, and 6.04 hereof, the restrictions imposed pursuant to
Sections 6.04 and 6.05 hereof, and the royalty obligations pursuant to Section
6.06 hereof;
(d) the respective rights and obligations of Iomed
and Fournier pursuant to Article VII hereof;
(e) Sections 8.02, 8.03, 9.06, 9.07, 9.08, 9.09,
9.10, and 9.12 of this Agreement; and
(f) any right, remedy, claim, action or cause of
action a Party has or may have against the other Party for breach of a material
obligation under this Agreement.
8.03. Continuing Liability. Termination of this Agreement
for any reason shall not release a Party from any liability, obligation,
agreement or other responsibility under this Agreement that already has accrued
or arisen, nor shall any termination constitute a waiver or release of, or
otherwise be deemed to prejudice or affect, any rights, remedies, claims,
actions or causes of action, whether for damages or otherwise, that a Party may
have hereunder or which may arise out of or in connection with such termination.
ARTICLE IX. GENERAL PROVISIONS
9.01. Amendments. Neither this Agreement nor any of the
terms hereof may be amended, supplemented, waived or modified except by an
instrument in writing signed by the Party against whom enforcement of such
change is sought.
9.02. Severability of Provisions. Any provision of this
Agreement that may be finally determined by a Governmental Authority to be
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability, without
invalidating or rendering unenforceable any remaining provisions hereof, and any
such invalidity or unenforceability in any jurisdiction shall not invalidate or
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render unenforceable such provision in any other jurisdiction. The Parties shall
negotiate in good faith to replace any such provision with an appropriate, legal
provision and, to the extent permitted by law, hereby waive any provision of law
that renders any provision hereof invalid or unenforceable in any respect.
9.03. Governing Law. This Agreement and all issues arising
under or relating to this Agreement, including, without limitation, its
construction, interpretation, breach, and damages for breach, shall be governed
by the laws of the State of New York (without regard to its conflict of laws
principles). Any action, cause of action or dispute arising under or relating to
this Agreement shall be brought only in the courts of the State of New York or
the federal court of the United States, located in the Borough of Manhattan,
County of New York, the State of New York, and each of the Parties expressly
consents-to personal jurisdiction in the State of New York with respect to such
action, cause of action or dispute.
9.04. Headings. The division of this Agreement into
sections, the provision of a table of contents, and the insertion of headings
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
9.05. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which taken together shall constitute one and the same instrument.
9.06. Notices. All communications and notices provided for
under this Agreement shall be in writing and be given in person, by courier or
by means of telex, telecopy or other wire transmission (with provision for
assurance of receipt in a manner typical with respect to communications of that
type), or be mailed by registered or certified first class mail, return receipt
requested, at the address set forth below (or to such other person, address or
telecopy (FAX) number as a Party may, from time to time, designate by written
notice):
(a) If to Iomed-
Iomed, Inc.
3385 West 1820 South
Salt Lake City, Utah 84104 U.S.A.
Att'n: Mr. Ned M. Weinshenker
FAX: (801) 972-9072
With a copy to-
Morrison & Foerster LLP
345 California Street
San Francisco, California 94104-2675
Att'n: C. Patrick Machado, Esq.
FAX: (415) 677-7522;
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(b) If to Fournier-
Laboratoires Fournier S.C.A.
42, rue de Longvic
21300 Chenove, France
Att'n: Mr. Bernard Majoie
FAX: (33) 80-44-70-04
With a copy to-
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Att'n: Peter G. Bergmann, Esq.
FAX: (212) 504-6666
All such communications and notices given in such manner shall be deemed given
when received by (or when proffered to, if receipt is refused) the Party or
Person to whom it is addressed.
9.07. Specific Performance. Each Party hereto acknowledges
that the payment of monetary damages may be an inadequate remedy for the breach
of its obligations under this Agreement, and agrees that the other Party shall
be entitled to specific performance of such obligations.
9.08. Successors and Assigns. This Agreement, including the
terms and provisions hereof, shall be binding upon, and inure to the benefit of,
each of Iomed and Fournier and their respective successors and permitted
assigns.
9.09. Further Assurances. Each of the Parties shall perform
such acts, execute and deliver such instruments and documents, and do all such
other things as may be reasonably necessary to accomplish the transactions
contemplated under this Agreement.
9.10. Expenses. Each of the Parties shall bear its
respective costs and expenses (including attorneys' fees and expenses) incurred
in connection with the negotiation and preparation of this Agreement and
consummation of the transactions contemplated hereby. In any action, cause of
action or dispute arising under or relating to this Agreement, a court shall
have the right and authority to assess the costs of the proceedings.
9.11. Assignment. Except as expressly provided to the
contrary in this Agreement, neither Party may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
Party, which consent shall not be unreasonably withheld. Notwithstanding the
foregoing, it is understood and agreed by the Parties that each Party may assign
its rights and obligations under this Agreement in conjunction with the
incorporation of any unit of such Party as a wholly owned Affiliate and, in the
case of Fournier, the disposition of any of its units, including, without
limitation, Tilderm Systems;
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provided, however, that Fournier shall not be permitted to assign its rights
under Article V or Section 7.02 hereof to any Person other than an Affiliate of
Fournier.
9.12. Confidential Information.
(a) Confidentiality. A Receiving Party agrees that it
shall, and that it shall use diligent efforts to ensure that each of its
officers, directors, employees and agents shall, protect and hold in confidence
all Confidential Information of the Disclosing Party and shall not disclose, or
cause to be disclosed, such information to third parties, except as expressly
provided to the contrary in this Agreement. In furtherance, and not in
limitation, of the foregoing, each Party agrees that it shall (i) leave in place
any proprietary or confidential legends or markings placed upon any Confidential
Information by the Disclosing Party, (ii) restrict disclosure of Confidential
Information to those of its officers, directors, employees and agents who have a
"need to know" in respect to such information, and (iii) instruct and require
such officers, directors, employees and agents to maintain the confidentiality
of Confidential Information and not to use such information except as expressly
permitted herein. Such obligations shall apply with respect to Confidential
Information for the term of this Agreement and for a period of ten (10) years
after any termination of this Agreement.
(b) Rights to Confidential Information. All
Confidential Information shall remain the sole property of the Disclosing Party,
and the Receiving Party shall have no rights or interests (except as hereinafter
provided) to or in such information.
(c) Return of Confidential Information. Immediately
upon any termination of this Agreement, each Party shall discontinue the use of
Confidential Information of the other Party, and the Receiving Party shall, upon
the written request of the Disclosing Party, return to such Party, within thirty
(30) days of such request, all items of Confidential Information of such Party,
including, without limitation, all copies and originals of such items of
Confidential Information, that are identified specifically in such written
request; provided, however, that, if and to the extent that any license or
sublicense granted pursuant to Section 6.02, 6.03 or 6.04 hereof shall remain in
effect notwithstanding such termination, a Receiving Party shall be permitted to
retain only such Confidential Information as is reasonably necessary for the
continued exercise of its license or sublicense rights hereunder and to use such
Confidential Information within the scope of such license or sublicense.
(d) Exceptions. Notwithstanding any other provisions
of this Agreement, nothing obtained by a Receiving Party shall be deemed
Confidential Information of the Disclosing Party if such information: (i) is not
marked or otherwise designated in writing as confidential and is provided for a
purpose that reasonably contemplates disclosure to or use by any other Person,
(ii) becomes a matter of public knowledge through no action or inaction of the
Receiving Party, (iii) is disclosed by the Disclosing Party to a third party
without a duty of confidentiality, (iv) is rightfully received by the Receiving
Party from a third party without a duty of confidentiality, or (v) was known to
the Receiving Party before it first was received from the Disclosing Party, as
shown by files and records of the Receiving Party
21
<PAGE> 25
existing at the time of initial disclosure. Information shall not be deemed to
be a matter of public knowledge, for the purpose of the exclusion (ii) above
with respect to each Party, merely because it (x) is embraced by more general
information in the prior possession of a Party or any other Person or (y) is
expressed in public literature in general terms not specifically in accordance
with the Confidential Information.
(e) Disclosure.
(i) A Receiving Party shall immediately
notify a Disclosing Party of receipt of any process, subpoena or demand by any
Governmental Authority or any other Person, requiring production of Confidential
Information of the Disclosing Party, and shall, within one (1) day after such
receipt, furnish to the Disclosing Party a copy of such process, subpoena or
demand and of all materials and facts relating thereto. The Disclosing Party
shall have the right to take any legal action to prevent disclosure of its
Confidential Information, including, without limitation, the right to appear on
behalf of the Receiving Party, to represent the Receiving Party, and to employ
counsel of its choice for these purposes, all at its expense.
(ii) The Disclosing Party shall have the
right to make any legal arguments and to take any legal action, including,
without limitation, trials and appeals on behalf of itself and the Receiving
Party, to prevent disclosure of its Confidential Information. If a Disclosing
Party elects to exercise its rights under this Section 9.12(e), it shall do so
at its expense and shall protect, hold harmless, defend, and indemnify the
Receiving Party from and against any and all legal responsibility or liability
from the exercise of these rights. If a Disclosing Party elects not to exercise
any such rights or if, in the absence of a protective order or other remedy or
the receipt of a waiver by the Disclosing Party, the Receiving Party is
nonetheless legally compelled to disclose Confidential Information of the
Disclosing Party, then the Receiving Party may, without liability hereunder,
disclose only that portion of such Confidential Information that it is legally
compelled to disclose.
(f) Confidentiality of Agreement. The provisions of
this Section 9.12 also shall apply to the contents of this Agreement; provided,
however, that the contents hereof may be disclosed: (i) as required by
Applicable Law; (ii) to accountants, banks, financing sources, lawyers,
consultants, prospective clients, sublicensees, and any Person with whom a Party
has a written contractual collaboration, so long as such recipients keep such
contents confidential; (iii) in connection with the enforcement of this
Agreement; (iv) in connection with a financing, merger, acquisition, public
offering, or proposed financing, merger, acquisition or public offering; or (v)
pursuant to joint press releases prepared in accordance with Section 9.13
hereof.
(g) Notification of Breach. Each Party shall notify
the other Party in the event of any breach of this Section 9.12, including,
without limitation, conditions or circumstances that indicate Confidential
Information has been or may have been prejudiced or otherwise exposed to loss or
unauthorized disclosure or use. A Receiving Party shall, upon request of the
Disclosing Party, take all steps reasonably necessary to recover any and all
22
<PAGE> 26
Confidential Information that has been or may have been compromised, prejudiced,
improperly disclosed or otherwise exposed to loss or unauthorized use. The
expense of taking such steps shall be borne solely by the Receiving Party.
(h) Equitable Relief. Each Party acknowledges and
agrees that (i) any breach of the obligations under this Agreement, including,
without limitation, the confidentiality provisions under this Section 9.12, is
likely to cause or threaten irreparable harm to the other Party and (ii) in such
event, each Party shall be entitled to equitable relief to protect its
interests, including, without limitation, preliminary and permanent injunctive
relief, as well as money damages.
9.13. Publicity. The Parties shall jointly review, discuss
and agree upon any statement to the public regarding the subject matter of this
Agreement after full consideration of (a) the accuracy of the disclosure, (b)
the requirements for confidentiality under Section 9.12 hereof, (c) the
advantage a competitor of either Party might gain from any public or third-party
statements, (d) disclosure requirements under any Applicable Law (including,
without limitation, securities laws and regulations relating to public
offerings), and (e) the standards and customs in the pharmaceutical industry for
such disclosures by companies comparable to both of the Parties. Notwithstanding
the foregoing, neither of the Parties nor any of their respective officers,
directors, employees, agents or advisors shall publicize, advertise, announce or
describe to any Governmental Authority or any other Person the terms of this
Agreement, either of the Parties, or the transactions contemplated hereby,
except as required by Applicable Law or as required or expressly permitted
pursuant to this Agreement.
9.14. Entire Agreement. This Agreement contains the entire
agreement between the Parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements and understandings, oral and
written, with respect to such
23
<PAGE> 27
transactions, including, without limitation, Iomed's Letter of Understanding
(along with its attachments) dated October 3, 1995 and each and every provision
of the Research and Development Agreement (including, without limitation, the
provisions of Article 8 thereof).
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly executed as of the date first above written.
IOMED, INC.
By:/s/ Ned M. Weinshenker
------------------------------------------
Ned M. Weinshenker
Title: President and Chief Executive Officer
LABORATOIRES FOURNIER S.C.A.
By:/s/ Bernard Majoie
------------------------------------------
Bernard Majoie
Title: Monsieur Le Gerant
24
<PAGE> 28
EXHIBIT A - FOURNIER INVENTIONS
****
25
<PAGE> 29
EXHIBIT B - FOURNIER TECHNOLOGY
****
26
<PAGE> 30
****
27
<PAGE> 31
EXHIBIT C - IOMED INVENTIONS
****
28
<PAGE> 32
EXHIBIT D - IOMED TECHNOLOGY
I. PRIOR TECHNOLOGY
Patents
- U.S. Patent 4,141,359 licensed form the University of Utah ****
- U.S. Patent 4,383,529 cross-licensed from Alza Corporation and Wescor,
Inc. ****
- U.S. Patent 4,416,274 licensed from the University of Utah ****
- U.S. Patent 4,752,285 licensed for the University of Utah ****
- U.S. Patents 4,747,819, 4,744,787, 5,135,477 and pending CIP's
cross-licensed from Alza Corporation ****
- U.S. Patent 4,915,685 ****
- U.S. Patents 5,087,242, 5,236,412, 5,328,455, 5,374,241, WO 9,210,235
and EP 515667 ****
- U.S. Patent 5,037,380 ****
- U.S. Patent 4,968,297 ****
- U.S. Patent 5,248,295 ****
Also included are all foreign equivalents, PCT equivalents, and all
related CIP to the above patents.
Other Technology and know-how
****
29
<PAGE> 33
EXHIBIT D - IOMED TECHNOLOGY (CONTINUED)
II. IMPROVEMENTS ON PRIOR TECHNOLOGY
****
30
<PAGE> 1
EXHIBIT 10.21
SUPPLY AGREEMENT
This Agreement is made this 27th day of April, 1993 by and between Iomed,
Inc. ("Iomed"), 1290 West 2320 South, Salt Lake City, Utah 84119 and Abbott
Laboratories, One Abbott Park Road, Abbott Park, Illinois 60064-3500.
Iomed desires to purchase its requirements of Lidocaine 2% and Epinephrine
1:100,000 injection, USP, from Abbott and Abbott agrees to sell to Iomed its
requirements of such Product. Iomed will market the Product for use in
conjunction with Iomed's proposed medical device for iontophoretic
administration.
Therefore, in consideration of the premises and the mutual promises and
agreements contained herein, Iomed and Abbott agree as follows:
1. Product.
For purposes of this Agreement, the term "Product" shall mean Lidocaine 2%
and Epinephrine 1:100,000 injection, USP, packaged in 30ml SVP fliptop
containers and labeled for iontophoretic administration with Iomed medical
devices.
2. Custom Product Development.
Promptly after the execution of this Agreement, the parties shall
undertake a project to develop a custom packaged product suitable for marketing
with Iomed's iontophoretic medical administration device and suitable for
manufacturing on Abbott's standard packaging equipment for
<PAGE> 2
fliptop containers. The parties shall use their reasonable best efforts to
complete successfully the product development and to obtain U.S. Food and Drug
Administration ("FDA") marketing approval of the Product. It is understood and
agreed that there is no guarantee that the product development project will be
successful and no representation or warranty of any kind is given by either
party that a marketable Product will result from the project.
3. Abbott's Development Responsibilities.
-------------------------------------
The objective of the product development project shall be for Abbott to
assist Iomed as required in obtaining regulatory approval for sale of the
Product. The Product will then be manufactured by Abbott and sold to Iomed for
resale by Iomed. Abbott shall have the following development responsibilities:
a. Manufacture at Abbott's Rocky Mount plant 1,000 units of Product for
clinical and stability supplies for testing to be carried out by Iomed to
support FDA filings for device and drug marketing approvals.
b. Provide authorization to reference Abbott's Abbreviated New Drug
Application, as appropriate for Pre-market Approval submissions by Iomed.
2
<PAGE> 3
c. Assist Iomed, as reasonably requested, in preparation of regulatory
submissions for the Product and provide such other assistance as Iomed may
reasonably require.
d. Submit Investigational New Drug application and Supplemental New Drug
Application as Abbott's responsibilities in the development process
require.
e. Using Abbott's graphics studio, typeset final label and carton copy from
artwork provided by Iomed and generate proofs and negatives suitable for
printing.
4. Iomed's Regulatory Submissions.
Iomed agrees that Abbott shall have the right to review Iomed's proposed
Pre-market Approval submissions. Abbott shall complete its review within a
reasonable period of time after receipt from Iomed of the proposed regulatory
submission. Iomed further agrees that Abbott shall participate with Iomed in
responding to questions from the FDA regarding regulatory submissions
applicable to the Product. Iomed shall respond to questions relating to its
device. Abbott shall respond to questions relating to the product.
5. ****Abbott's Development Efforts.
5.1 ****
3
<PAGE> 4
****.
5.2 Changes in Project Scope. If unanticipated changes occur in the
product development project or Product Specifications, or if technical
difficulties result in the requirement for Abbott to perform either additional
or repeat work, Abbott's costs for such work shall be paid by Iomed, subject to
Iomed's prior approval.
6. Manufacture and Supply of Product.
6.1 Purchase and Sale of Product - Iomed Requirements. During the terms
of this Agreement and pursuant to the terms and conditions hereof, Abbott
agrees to manufacture, sell and deliver Product exclusively to Iomed and Iomed
agrees to purchase its total requirements of Product from Abbott.
6.2 Orders and Delivery Variances. Unless otherwise agreed to by the
parties, the order quantity shall be a whole number in multiples of ****. The
maximum order quantity shall be two hundred thousand (200,000) units per month.
The maximum and minimum order sizes may be adjusted from time to time by written
agreement of the parties. Delivery of Product by Abbott may vary from quantities
ordered by Iomed plus or minus ****
4
<PAGE> 5
****. Such deliveries shall be in full compliance with this Agreement.
6.3 Manufacture of Product.
6.3.1 Abbott shall manufacture Product in accordance with the Product
Specifications for ****, as modified from time to time by Abbott. Product
shall be labeled by Abbott in accordance with FDA approved lable copy and as
mutually approved by the parties.
6.3.2 Abbott's quality control procedures and in-plant quality
control checks on the production of Product for Iomed shall be applied in the
same manner as those procedures and checks are applied to products manufactured
for sale directly by Abbott as Abbott products. Abbott shall provide a
certificate of analysis with each shipment of Product.
6.3.3 Iomed shall have a period of ****days from the date of receipt
to inspect and reject any shipment of Product on the grounds that it does not
conform with the Product Specifications. Iomed shall have the right to return
any Product which does not conform. All of part of any shipment may be held for
Abbott's disposition if found to be not in conformance with the Product
Specifications, provided Abbott confirms such nonconformance through generally
accepted quality control procedures. Abbott shall have **** days from the
effective date of rejection (written notice) by Iomed in which to confirm
5
<PAGE> 6
nonconformance. Failure to confirm within such **** day period shall constitute
agreement with Iomed's rejection of Product. After Abbott confirms
nonconformance, Abbott shall have a period of **** days to replace such
nonconforming Product. Replacement of Product with conforming Product shall be
Iomed's sole and exclusive remedy for any nonconforming Product delivered
hereunder. Any Product not rejected by Iomed pursuant to this subparagraph 6.3.3
shall be deemed accepted for all purposes and all claims with respect to such
Product waived by Iomed. Shipment of rejected Product to Abbott and shipment of
replacement Product to Iomed shall be at Abbott's expense and by the carrier
designated by Abbott.
6.3.4 Abbott hereby approves placement of a descriptive private label
with Iomed's tradename and/or Iomed's trademark on the Product. Any material
changes to the descriptive label must be approved by Abbott prior to
implementing such changes.
6.5 Price and Payment.
6.5.1 Product shall be delivered by Abbott at prices set forth in Exhibit
A of this Agreement. The prices are based on standard Abbott packaging
components with custom Iomed print copy as approved by Abbott for
manufacturability.
6
<PAGE> 7
6.5.2 Abbott shall invoice Iomed upon delivery of Product. ****.
6.5.3 Any federal, state, county or municipal sales or use tax,
excise or similar charge, or any other tax assessment (other than that assessed
against income), license or other charge lawfully assessed and normally charged
on the manufacture, sale or transportation of Product sold pursuant to this
Agreement shall be paid by Iomed.
6.6 Delivery. Product shall be delivered to Iomed F.O.B. Abbott's Rocky
Mount, North Carolina plant and title shall pass to Iomed at such point.
6.7 Orders and Forecasts.
6.7.1 Abbott and Iomed shall cooperate fully in estimating and
scheduling production for the first firm order to be placed by Iomed. The first
firm order shall cover a period of three (3) consecutive calendar months.
Thereafter, firm orders shall be placed monthly and shall cover the next
succeeding third month. At the time Iomed places its firm monthly orders, Iomed
shall provide to Abbott Iomed's estimate of its monthly requirements for the
next succeeding nine (9) calendar month
7
<PAGE> 8
period. It is the intent that at all times Abbott shall have in hand firm
monthly orders covering the current three (3) calendar month period and Iomed's
estimates of its monthly requirements for the next succeeding nine (9) calendar
month period.
6.7.2 Each Iomed purchase order for Product shall be governed by the
terms of this Agreement and none of the provisions of such purchase order shall
be applicable except those specifying quantity ordered, delivery dates, shipping
instructions and invoice information.
6.8 Guarantees and Warranties.
6.8.1 Abbott guarantees to Iomed that Product delivered to Iomed
pursuant to this Agreement shall, at the time of delivery, not be adulterated
or misbranded within the meaning of the Federal Food, Drug, and Cosmetic Act,
as amended, or within the meaning of any applicable state or municipal law in
which the definitions of adulteration and misbranding are substantially the
same as those contained in the Federal Food, Drug, and Cosmetic Act, as such
Act and such laws are constituted and effective at the time of delivery and
will not be an article which may not under the provisions of Sections 404 and
505 of such Act be introduced into interstate commerce.
6.8.2 Abbott warrants that Product delivered to Iomed pursuant to
this Agreement shall conform with the Product Specifications
8
<PAGE> 9
and shall have been manufactured pursuant to current Good Manufacturing
Practice, as prescribed by regulations promulgated by the FDA. ****.
6.8.3 ****.
****
9
<PAGE> 10
****
7. Term and Termination.
7.1 This Agreement shall commence on the date first above written and the
initial term shall expire on December 31, 1998. Thereafter, the term shall
continue automatically until terminated. This agreement may be terminated on
December 31, 1998 or at anytime thereafter upon not less than one hundred
eighty (180) day's prior written notice from one party to the other. Iomed may
terminate this Agreement at anytime by giving Abbott one hundred eighty (180)
days prior written notice if Iomed discontinues sale of its iontophoretic
administration devices.
7.2 Either party may terminate this Agreement by giving to the other
sixty (60) days prior written notice as follows:
a. Upon the bankruptcy or the insolvency of the other party; or
b. Upon the breach of any warranty or any other material provision of
this Agreement by the other party if the breach is
10
<PAGE> 11
not cured within sixty (60) days after written notice thereof to the
party in default.
7.3 Termination, expiration, cancellation or abandonment of this Agreement
through any means and for any reason shall not relieve the parties of any
obligation accruing prior thereto and shall be without prejudice to the rights
and remedies of either party with respect to any antecedent breach of any of
the provisions of this Agreement.
8. Force Majeure.
Any delay in the performance of any of the duties or obligations of either
party hereto (except the payment of money) shall not be considered a breach of
this Agreement and the time required for performance shall be extended for a
period equal to the period of such delay, provided that such delay has been
caused by or is the result of any acts of God; acts of the public enemy;
insurrections; riots; embargoes; labor disputes, including strikes, lockouts,
job actions, or boycotts; fires; explosions; floods; shortages of material or
energy; or other unforeseeable causes beyond the control and without the fault
or negligence of the party so affected. The party so affected shall give prompt
notice to the other party of such cause, and shall take whatever reasonable
steps are necessary to relieve the effect of such cause as rapidly as possible.
11
<PAGE> 12
9. Confidential Information.
9.1 It is recognized by the parties that during the term of this
Agreement the parties may exchange Confidential Information. Each party agrees
not to disclose to any third person Confidential Information received from the
other party and not to use Confidential Information received from the other
party, except as authorized by the disclosing party. For purposes of this
Agreement, Confidential Information shall include all information disclosed
hereunder in writing and identified as being confidential or if disclosed
orally is reduced to writing within thirty (30) days of oral disclosure and
identified as being confidential, except any portion thereof which:
a. is known to the recipient before receipt thereof under this Agreement;
b. is disclosed in good faith to the recipient after acceptance of this
Agreement by a third person lawfully in possession of such information and
not under an obligation of nondisclosure;
c. is or becomes part of the public domain through no fault of the recipient;
d. is developed by the recipient independently of and without reference to
Confidential Information; or
e. is required by law to be disclosed.
12
<PAGE> 13
Notwithstanding the above, nothing contained in this Agreement shall
preclude Iomed or Abbott from utilizing Confidential Information as may be
necessary in prosecuting patent rights of the parties, or obtaining
governmental marketing approvals, or in manufacturing Product pursuant to this
Agreement. The obligations of the parties relating to Confidential Information
shall expire three (3) years after the termination of this Agreement.
10. Independent Contractors.
The relationship of Iomed to Abbott established by this Agreement is that
of an independent contractor. Nothing contained in this Agreement shall be
construed to constitute Iomed as a partner, agent or joint venturer with Abbott
or as a participant in a joint or common undertaking with Abbott.
11. Notices.
All notices hereunder shall be delivered personally or by registered or
certified mail, postage prepaid, to the following addresses of the respective
parties:
13
<PAGE> 14
Abbott Laboratories
One Abbott Park Road
Abbott Park, Illinois 60064-3500
Attention: General Counsel
With copy to: President
Hospital Products Division
Iomed, Inc.
1290 West 2320 South
Salt Lake City, Utah 84119
Attention: President
With copy to: Vice President Operations
Notices shall be effective upon receipt if personally delivered, or on
the third business day following the date of mailing. A party may change its
address listed above by notice to the other party.
12. Applicable Law.
This Agreement shall be construed, interpreted and governed by the
laws of the State of Illinois, except for choice of law rules.
13. Assignment.
Neither party shall assign this Agreement or any part thereof without
the prior written consent of the other party; provided, however, Abbott may
assign this Agreement to a wholly-owned subsidiary and either party, without
such consent, may assign or sell the same in connection with the transfer or
sale of substantially its entire business
14
<PAGE> 15
to which this Agreement pertains or in the event of its merger or consolidation
with another company. Any permitted assignee shall assume all obligations of
its assignor under this Agreement. No assignment shall relieve any party of
responsibility for the performance of any accrued obligation which such party
then has hereunder.
14. Entire Agreement
This Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof and supersedes all written or oral prior
agreements or understandings with respect thereto. No course of dealing or
usage of trade shall be used to modify the terms hereof.
15. Severability.
This Agreement is subject to the restrictions, limitations, terms and
conditions of all applicable laws, governmental regulations, approvals and
clearances. If any term or provision of this Agreement shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other term or provision
hereof, and this Agreement shall be interpreted and construed as if such term
or provision, to the extent the same shall have been held to be invalid,
illegal or unenforceable, had never been contained herein.
15
<PAGE> 16
16. Waiver -- Modification of Agreement.
No waiver or modification of any of the terms of this Agreement shall be
valid unless in writing and signed by authorized representatives of both
parties. Failure by either party to enforce any rights under this Agreement
shall not be construed as a waiver of such rights nor shall a waiver by either
party in one or more instances be construed as constituting a continuing waiver
or as a waiver in other instances.
17. Product Recalls.
If (a) any government authority issues a request, directive or order that
the Product be recalled, or (b) a court of competent jurisdiction orders such a
recall, or (c) Iomed or Abbott reasonably determine after consultation with the
other that the Product should be recalled, the parties shall take all
appropriate corrective actions. If such recall results from any cause or event
for which Abbott is responsible, Abbott shall be responsible for the expenses
of recall. In all other cases, Iomed shall be responsible for the expenses of
recall. For the purposes of this Agreement, the expenses of recall shall
include, without limitation, the reasonable expenses of notification and
destruction or return of the recalled Product and the costs for the Product
recalled which shall be equal to the purchase price paid for such Product.
16
<PAGE> 17
The parties intending to be bound by the terms and conditions hereof have
caused this Agreement to be signed by their fully authorized representatives on
the date first above written.
ABBOTT LABORATORIES IOMED, INC.
By: By:
------------------------------ ---------------------------
Title: President Hospital Products Title: President
Division
17
<PAGE> 18
Exhibit A
Price
Price per unit for the 30 mL fliptop container of Product is as follows:
Quantity Per Contract Year Price/Unit
-------------------------- ----------
0 - 300,000 Units $****
300,001 Units and above $****
1) Prices are based on Product purchased by delivery during each Contract
Year. A Contract Year shall be the twelve (12) month period beginning on the
first day of the month following the month in which Iomed receives final FDA
approval to market the Product.
2) Beginning January 1, 1994, and on each succeeding January 1 during the
term hereof, prices may be increased by Abbott. ****
<PAGE> 1
EXHIBIT 10.24
LICENSE AGREEMENT
between
IOMED, INC.
and
UNIVERSITY OF UTAH RESEARCH FOUNDATION
<PAGE> 2
TABLE OF CONTENTS
Article No..................................................... Page
1. DEFINITIONS.............................................. 2
2. GRANT.................................................... 3
3. ROYALTIES................................................ 4
4. CONFIDENTIALITY.......................................... 4
5. BOOKS AND RECORDS........................................ 5
6. LIFE OF THE AGREEMENT.................................... 5
7. TERMINATION BY LICENSOR.................................. 6
8. DISPOSITION OF PRODUCTS ON HAND UPON TERMINATION......... 6
9. PATENT PROSECUTION AND MAINTENANCE....................... 7
10. WARRANTY BY LICENSOR..................................... 8
11. AFFIRMATIONS BY LICENSOR................................. 9
12. PRIOR AGREEMENTS......................................... 10
13. INFRINGEMENT............................................. 10
14. WAIVER................................................... 11
15. ASSIGNABILITY............................................ 12
16. INDEMNITY................................................ 12
17. LATE PAYMENTS............................................ 12
18. NOTICES.................................................. 12
19. FOREIGN LAWS............................................. 13
20. GOVERNING LAWS........................................... 14
21. MISCELLANEOUS............................................ 14
i
<PAGE> 3
LICENSE AGREEMENT
This LICENSE AGREEMENT is made and is effective as of October 1, 1992 (the
"Effective-,,Date") by and between the UNIVERSITY OF UTAH RESEARCH FOUNDATION,
having a principal place of business at 421 Wakara Way, Suite 170, Salt Lake
City, UT, 84108, hereinafter referred to as "LICENSOR", and IOMED, INC., having
a principal place of business at 1290 West 2320 South, Suite A, Salt Lake City,
UT 84119, hereinafter referred to as "LICENSEE".
W I T N E S S E T H:
WHEREAS, certain inventions, as listed in Exhibit "All and hereinafter
collectively referred to as "the Inventions", were made in the course of
research at the University of Utah by **** and are covered by LICENSORIS PATENT
RIGHTS as defined below;
WHEREAS, LICENSOR is desirous that the Inventions be developed and
utilized to the fullest extent so that the benefits can be enjoyed by the
general public; and
WHEREAS, LICENSOR and LICENSEE (hereinafter "the Parties") are party to
several agreements covering the Inventions dated ****, and the Parties wish to
terminate those agreements and to replace them with an agreement which better
suits the needs of their relationship;
NOW THEREFORE, for and in consideration of the covenants, conditions and
undertakings hereinafter set forth, it is agreed by and between the parties, as
follows:
1. DEFINITIONS
1.1 "LICENSORIS PATENT RIGHTS", as used herein, means patent rights to any
subject matter contained in the invention disclosures listed in Exhibit A and
claimed in or covered by the pending or issued U.S. and/or foreign patents and
applications recited in Exhibit "Bl' assigned to LICENSOR; any continuing or
divisional applications thereof assigned to LICENSOR; and any patents issuing on
said applications, continuing or divisional applications including reissues
assigned to LICENSOR.
1.2 "PRODUCTS" as used herein shall mean power supply units and electrode
kits for iontophoretic drug delivery; Utah Artificial Arms and ProControls where
such products are manufactured by or where such products are manufactured for
LICENSEE to LICENSEE'S design and specifications, whether Covered By LICENSOR'S
PATENT RIGHTS or not.
1.3 "...Covered By...", as used herein, means PRODUCTS that when made,
used, or sold would constitute, but for the license granted to LICENSEE pursuant
to this Agreement, an infringement of any claim or claims of LICENSOR'S PATENT
RIGHTS.
1
<PAGE> 4
1.4 "NET SALES", as used herein, means sales revenue received by LICENSEE
for "PRODUCTS" sold by LICENSEE ****.
2. GRANT
2.1 LICENSOR hereby grants to LICENSEE an exclusive license under
LICENSORIS PATENT RIGHTS to make, have made, use, and sell PRODUCTS throughout
the world where LICENSOR may lawfully grant such a license.
2.2 LICENSEE shall have full and exclusive right to all LICENSOR'S PATENT
RIGHTS with right to sell, sublicense or crosslicense under any terms to any
party with no consideration due to LICENSOR except as specifically set forth in
Paragraphs 3.1 and 3.2.
2.3 LICENSEE agrees to provide LICENSOR with copies of all such
sublicenses or cross-licenses, and LICENSOR agrees to keep such copies
confidential per Paragraph 4.
2.4 Pursuant to Paragraph 2.2, LICENSOR further agrees that LICENSEE may
specifically enter into a royalty-free cross-licensing agreement covering any or
all of the LICENSOR'S PATENT RIGHTS with ****.
2.5 Should this Agreement terminate for whatever reason, LICENSOR agrees
to negotiate in good faith with any sublicensee or cross-licensee per Paragraph
2.2 or 2.3 in order for a continuation of its rights on terms and conditions
similar to those granted LICENSEE.
2.6 LICENSOR reserves the right to use the Inventions for educational and
research purposes at the University of Utah.
3. ROYALTIES
3.1 As consideration for this license, LICENSEE shall pay to LICENSOR an
earned royalty of **** of NET SALES for the life of this Agreement. All monies
due to LICENSOR shall be payable in United States funds. Royalties accruing to
LICENSOR shall be paid to LICENSOR within forty-five (45) Days following the
calendar quarter in which NET SALES are made.
3.2 ****.
4. CONFIDENTIALITY
4.1 LICENSEE acknowledges that LICENSOR is subject to the Utah
Governmental Records Access and Management Act (GRAMA) and that pursuant to
GRAMA, confidential information of LICENSEE disclosed to LICENSOR must be in
written or other tangible form
2
<PAGE> 5
and appropriately marked as proprietary. In addition a claim stating the reasons
supporting such business confidentiality must also accompany the confidential
information (Utah Code Annotated 63-2-308). LICENSOR agrees to keep such
confidential information confidential to the extent allowable under the
applicable law.
5. BOOKS AND RECORDS
5.1 LICENSEE shall keep books and records accurately showing all PRODUCTS
manufactured, used, or sold under the terms of this Agreement. Such books and
records shall be open to inspection by representatives or agents of LICENSOR at
reasonable times and after reasonable advance notice, for the purpose of
verifying the accuracy of the quarterly reports and the royalties due or paid.
5.2 The fees and expenses of the representatives performing such an
examination shall be borne by LICENSOR.
5.3 These books and records required herein shall be preserved for at
least Five (5) Years from the date of the royalty payment to which they pertain.
6. LIFE OF THE AGREEMENT
6.1 This Agreement shall be in full force and effect from the Effective
Date and shall remain in effect until September 30, 2007; unless otherwise
terminated by operation of law or by acts of the parties in accordance with the
terms of this Agreement. After September 30, 2007, LICENSEE shall have a fully
paid-up license to practice LICENSOR'S PATENT RIGHTS pursuant to Article 2
without any further consideration to LICENSOR.
7. TERMINATION BY LICENSOR
7.1 It is expressly agreed that if LICENSEE should fail to make any
payment at the time that the same should be due or if LICENSEE should violate or
fail to perform any material covenant, condition, or undertaking- of this
Agreement on its part to be performed hereunder, then and in such event LICENSOR
may give written notice of such default to LICENSEE. If LICENSEE should fail to
repair such default within Sixty (60) Days of such notice or, in the
alternative, to request Arbitration in accordance with the rules of the American
Arbitration Association, LICENSOR shall have the right to terminate this
Agreement and the license granted herein-by written notice to LICENSEE. Upon
such notice of termination, this Agreement shall automatically terminate. Such
termination shall not relieve LICENSEE of its obligation to pay any royalty due
or owing at the time of such termination and shall not impair any accrued right
of LICENSOR. LICENSEE shall pay all attorney's fees and costs incurred by
LICENSOR in enforcing any obligation of LICENSEE or accrued right of LICENSOR
after termination.
8. DISPOSITION OF PRODUCTS ON HAND UPON TERMINATION
8.1 Upon termination of this Agreement by LICENSOR., LICENSEE shall
provide LICENSOR with a written inventory of all PRODUCTS in process of
manufacture, in use or in
3
<PAGE> 6
stock and shall have the privilege of disposing of such PRODUCTS, but not more,
within a period of Ninety (90) Days, provided, however, that LICENSEE shall pay
royalties thereon and shall render reports thereon in the manner herein
provided.
9. PATENT PROSECUTION AND MAINTENANCE
9.1 LICENSEE shall diligently prosecute and maintain LICENSOR'S PATENT
RIGHTS using counsel of its choice and after due consultation with LICENSOR.
LICENSEE shall provide LICENSOR with copies of all relevant documentation so
that LICENSOR may be informed and apprised of the continuing prosecution, and
LICENSOR agrees to keep this documentation confidential to the extent allowable
under the law.
9.2 Pursuant to Paragraph 9.1 above LICENSEE shall be able .to exercise
sole and reasonable judgment in its decisions regarding the prosecution and
maintenance of LICENSOR'S PATENT RIGHTS. Should LICENSEE decide to abandon the
prosecution, maintenance or reinstatement of LICENSOR'S PATENT RIGHTS, it shall
notify LICENSOR of such decision within Forty Five (45) Days of any applicable
deadline. LICENSOR shall then have the opportunity to take over such
prosecution, maintenance or reinstatement at its own expense. LICENSEE shall
have no further rights in any patents on which LICENSOR takes over the
prosecution, maintenance or reinstatement unless LICENSEE requests such rights
and reimburses LICENSOR for costs incurred.
9.3 Subject to Paragraphs 9.1 and 9.2, LICENSEE agrees to pay all costs and
legal fees incurred for the prosecution, maintenance, defense, reinstatement and
taxes for such patents. LICENSOR agrees to reimburse LICENSEE for **** of such
reasonable costs in excess of **** per year. Such reimbursements shall not
exceed **** in any one year. Such reimbursements may be offset against earned
royalty payments due LICENSOR, ****. Such reimbursement shall be on a pro rata
basis for any partial year this Agreement is in effect.
10. WARRANTY BY LICENSOR
10.1 LICENSOR warrants that it has the lawful right to grant this
license.
10.2 LICENSOR makes no express or implied warranties of merchantability or
fitness of the Inventions for a particular purpose.
10.3 Nothing in this Agreement shall be construed as:
(a) a warranty or representation by LICENSOR as to the validity
or scope of any LICENSOR'S PATENT RIGHTS; or
4
<PAGE> 7
(b) a warranty or representation that anything made, used, sold or
otherwise disposed of under any license granted in this Agreement is or
will be free from infringement of patents of third parties; or
(c) an obligation to bring or prosecute actions or suits
against third parties for patent infringement except as provided
herein; or
(d) conferring by implication, estoppel or otherwise any license or
rights under any patents of LICENSOR other than LICENSOR'S PATENT RIGHTS
as defined herein.
11. AFFIRMATIONS BY LICENSOR
11.1 LICENSOR affirms that to the best of its knowledge, other than what
has already been disclosed to LICENSEE per Exhibit "D", no invention disclosures
have been made to LICENSOR or the University of Utah Technology Transfer Office,
patents or patent applications pending relating to the PRODUCTS to which
LICENSEE may have certain rights under the agreements dated ****.
11.2 If LICENSOR becomes aware of any new invention disclosures with
creation dates prior to the Effective Date of this Agreement which LICENSEE may
have had rights to under the agreements referred to in Paragraph 11.1, LICENSOR
shall inform LICENSEE of such inventions. LICENSEE shall have Forty Five (45)
days to inform LICENSOR that it wants to include the rights to such inventions
in this Agreement.
11.3 Provided that this Agreement is currently in effect and remains in
effect for Fifteen (15) Years ending September 30, 2007, LICENSOR affirms the
assignment of any patents listed in Exhibit B.
12. PRIOR AGREEMENTS
12.1 The Parties agree to the following:
(a) ****
(b) This Agreement embodies the entire understanding of the parties
and shall supersede all previous communications, representations or
understandings either oral or written between the parties relating to the
subject matter hereof.
13. INFRINGEMENT
13.1 In the event that LICENSEE or LICENSOR learn of infringement of any
of LICENSOR'S PATENT RIGHTS licensed under this Agreement, they shall call such
infringement to the attention of the other party thereto in writing and shall
provide the other party
5
<PAGE> 8
with evidence of such infringement. LICENSOR and LICENSEE shall cooperate and
shall then attempt to terminate such infringement. In the event the Parties fail
to abate the infringing activity within Ninety (90) Days, LICENSEE or LICENSOR
may bring suit for patent infringement, naming the other as nominal party
plaintiff.
13.2 Any legal action as is brought shall be at the expense of the party
by whom suit is filed, hereinafter referred to as the Litigating Party. Any
damages or costs recovered by the Litigating Party in connection with such
infringement, after first reimbursing it for its costs and expenses of the
lawsuit, shall be equally divided between LICENSEE and LICENSOR except where
LICENSEE is the Litigating Party. In that case LICENSOR shall receive a royalty
per this Agreement from such damages and costs recovered with LICENSEE retaining
the remainder.
13.3 LICENSEE and LICENSOR agree to cooperate with the other in litigation
proceedings instituted hereunder but at the expense of the Litigating Party.
Such litigation shall be controlled by the Litigating Party. LICENSOR or
LICENSEE at their own expense, may be represented by counsel of their choice
pursuant to any suit brought by the Litigating Party.
14. WAIVER
14.1 It is agreed that no waiver by either party hereto of any breach or
default of any of the covenants or agreements herein set forth shall be deemed a
waiver as to any subsequent and/or similar breach or default.
15. ASSIGNABILITY
15.1 This Agreement is binding upon and shall inure to the benefit of
LICENSOR, its successors and assigns, but shall be personal to LICENSEE and
assignable by LICENSEE only with the written consent of LICENSOR; provided,
however, that LICENSEE, without consent, may assign or sell the same in
connection with the transfer or sale of all or substantially all of its business
relating- to its interest in LICENSOR'S PATENT RIGHTS as defined herein or in
the event of merger or consolidation with another company.
16. INDEMNITY
16.1 LICENSEE agrees to indemnify, hold harmless and defend LICENSOR, its
officers, employees, and agents, against any and all claims, suits, losses,
damage, costs, fees and expenses resulting from or arising out of exercise of
this license.
17. LATE PAYMENTS
17.1 In the event royalty payments or fees are not -received by LICENSOR
when due, LICENSEE shall pay to LICENSOR interest charges at the rate of ****
on the total royalties or fees due for the reporting period.
18. NOTICES
6
<PAGE> 9
18.1 Any payment, notice or other communication required or permitted to
be given to either party hereto shall be deemed tohave been properly given and
to be effective: (a) on the date of delivery if delivered in person; or (b) on
the date of delivery if delivered by courier, express mail service or
first-class certified mail. Such notice shall be sent or delivered to the
respective address given below, or to such other address as it shall designate
by written notice given to the other party as follows:
In the case of LICENSEE:
IOMED, INC.
Attention: President
1290 West 2320 South, Suite A Salt Lake City UT 84119
In the case of LICENSOR:
UNIVERSITY OF UTAH
TECHNOLOGY TRANSFER OFFICE
421 Wakara Way, Suite 170
Salt Lake City, UT 84108
19. FOREIGN LAWS
19.1 LICENSEE agrees to register this Agreement when required by
local/national law, to pay all costs and legal fees connected therewith, and to
otherwise insure that the local/ national laws affecting this Agreement are
fully satisfied. 19.2 LICENSEE further agrees to insure compliance with all
appropriate U.S. laws dealing with the export of technology or technical
information.
20. GOVERNING LAWS
20.1 This Agreement shall be interpreted and construed in accordance with
the laws of the State of Utah.
21. MISCELLANEOUS
21.1 The headings of the several sections are inserted for Convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
21.2 This Agreement will not be binding upon the parties until it has been
signed hereinbelow by or on behalf of each party, in which event, it shall be
effective as of the date first above written.
21.3 No amendment or modification hereof shall be valid or binding upon
the parties unless made in writing and signed as aforesaid.
7
<PAGE> 10
21.4 In case any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions hereof, but this Agreement shall be construed as if such
invalid or illegal or unenforceable provisions had never been contained herein.
IN WITNESS WHEREOF, both LICENSOR and LICENSEE have executed this
Agreement, in duplicate originals, by their respective officers hereunto duly
authorized, on the day and year hereinafter written.
8
<PAGE> 11
Page (1) of (1)
EXHIBIT "A"
To License Agreement between
University of Utah Research Foundation
and Iomed, Inc.
Inventions
(by University of Utah designation numbers and titles)
U-0671 EPIDERMAL IONTOPHORESIS DEVICE
Stephen Jacobsen, Robert Stephen, Richard Luntz, R. Todd Johnson and
David F. Knutti
U-1110 METHODS & APPARATUS FOR IONTOPHORESIS APPLICATION OF
MEDICAMENTS AT A CONTROLLED pH CIP
Stephen C. Jacobsen, Tomasz J. Petelenz, Robert L. Stephen and Jiri
Janata
U-1209 ARTICULATED PROSTHETIC WRIST
Stephen C. Jacobsen
U-1231 ELECTRICALLY DRIVEN ARTIFICIAL ARM
Stephen C. Jacobsen, R. Todd Johnson and David F. Knutti
U-1246 FLUID SELF-SEALING BIOELECTRODE
Stephen C. Jacobsen, Robert L. Stephen, Richard D. Luntz, Richard T.
Johnson, David F. Knutti and Carl F. Mandleco
<PAGE> 12
EXHIBIT "B"
To License Agreement between
University of Utah Research Foundation
and Iomed, Inc.
[Pg 1 of 3]
IOMED PATENTS, TRADEMARKS AND APPLICATIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
IOMED # WNJ NO. HHD NO. TITLE INVENTORS FILED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
IONTOPHORESIS
- -----------------------------------------------------------------------------------------------------------------------------------
IO-01 7247.25 2930.25 Epidermal Iontophorolic Device SCJ, RLS, et al. 8/16/76
- -----------------------------------------------------------------------------------------------------------------------------------
IO-02 7247.26 2930.02 Fluid Self-Sealing Bioelectrode SCJ, RLS, RDL, et al. 11/14/77
- -----------------------------------------------------------------------------------------------------------------------------------
IO-03 7247.27 2930.06 Non-Invasive Chemical Species SCJ, JCS, RLS, RDL 11/22/78
Delivery Apparatus and Method
- -----------------------------------------------------------------------------------------------------------------------------------
IO-03-EP 7247.27a 2930.06EP Non-Invasive Chemical Species RLS, RDL 11/20/79
Delivery Apparatus and Method
- -----------------------------------------------------------------------------------------------------------------------------------
IO-03-JP 7247.27b 2930.06JP Non-Invasive Chemical Species RLS, RDL 11/9/79
Delivery Apparatus and Method
- -----------------------------------------------------------------------------------------------------------------------------------
IO-04 7247.28 2930.20 Ion Mobility Limiting Iontophoretic SCJ, RDL 2/23/81
Bioelectrode
- -----------------------------------------------------------------------------------------------------------------------------------
IO-04-CN 7247.28a 2930.20CN Ion Mobility Limiting Iontophoretic SCJ, RDL 2/19/82
Bioelectrode
- -----------------------------------------------------------------------------------------------------------------------------------
IO-04-EP 7247.28b 2930.20EP Ion Mobility Limiting Iontophoretic SCJ, RDL 2/16/82
Bioelectrode
- -----------------------------------------------------------------------------------------------------------------------------------
IO-04-JP 7247.28c 2930.20JP Ion Mobility Limiting Iontophoretic SCJ, RDL 10/21/81
Bioelectrode
- -----------------------------------------------------------------------------------------------------------------------------------
IO-05-IFG 7247.29 2930.03 Infringement of #4,416,274 SCJ 5/10/91
- -----------------------------------------------------------------------------------------------------------------------------------
IO-06 7247.30 2930.09 Iontophoretic Electrode Structure SCJ, RDL, BKH 11/6/61
- -----------------------------------------------------------------------------------------------------------------------------------
IO-07 7247.30.1 2930.09.1 Iontophoretic Electrode Structure SCJ, RDL, BKH 9/27/83
- -----------------------------------------------------------------------------------------------------------------------------------
IO-08 7247.8 2930.14 Methods & Apparatus for Iontophoresis TJP, RLS, SCJ, JJ 3/19/86
(silver) Application of Medicaments
- -----------------------------------------------------------------------------------------------------------------------------------
IO-08-EP 7247.8a 2930.14EP Methods & Apparatus for Iontophoresis TJP, RLS, SCJ, JJ 3/11/87
Application of Medicaments
- -----------------------------------------------------------------------------------------------------------------------------------
IO-08-JP 7247.8b 2930.14JP Methods & Apparatus for Iontophoresis TJP, RLS, SCJ, JJ 3/19/87
Application of Medicaments
- -----------------------------------------------------------------------------------------------------------------------------------
IO-09 7247.8.1 2930.14C Methods & Apparatus for Iontophoresis TJP, RLS, SCJ, JJ 4/5/89
Vol. I & II Application of Medicaments
- -----------------------------------------------------------------------------------------------------------------------------------
IO-10 7247.15 2930.16 Flow-Through Methods & Apparatus SCJ, TJP, RLS 6/19/87
for Iontophoresis Application of
Medicaments at a Controlled pH
- -----------------------------------------------------------------------------------------------------------------------------------
5/14/93
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
IOMED # APPL. NO. STATUS. ISSUED NUMBER ASSIGNED TO ACTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
IONTOPHORESIS
- -----------------------------------------------------------------------------------------------------------------------------------
IO-01 714,942 issued 2/27/79 4,141,359 Univ. of Utah NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-02 851,082 issued 9/4/79 4,166,457 Univ. of Utah NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-03 963,029 issued 2/17/81 4,250,878 Motion Control Name change
filed
- -----------------------------------------------------------------------------------------------------------------------------------
IO-03-EP 79104616.2 issued 8/4/82 0011813 Motion Control MF due 11/93
- -----------------------------------------------------------------------------------------------------------------------------------
IO-03-JP 150793/79 issued 3/12/84 1,195,921 Motion Control A. due 5/13/93
- -----------------------------------------------------------------------------------------------------------------------------------
IO-04 236,753 issued 11/22/83 4,416,274 Motion Control NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-04-CN 396,679 issued 1/22/85 1181490 Motion Control NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-04-EP 82101141.8 issued 9/1/82 0058920 Motion Control A. pd. 2/93
- -----------------------------------------------------------------------------------------------------------------------------------
IO-04-JP 26921/82 issued 8/15/91 1,614,476 Motion Control NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-05-IFG NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-06 319,074 issued 12/6/83 4,419,092 Motion Control NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-07 536,304 issued 10/23/84 4,477,971 Motion Control NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-08 841,329 issued 6/21/88 4,752,285 UU Res. Found. Inquiry with
(silver) D. Seeley
- -----------------------------------------------------------------------------------------------------------------------------------
IO-08-EP 87302061.4 pending UU Res. Found. Resp. O/A filed
A. pd.
- -----------------------------------------------------------------------------------------------------------------------------------
IO-08-JP 65522/87 pending UU Res. Found. Exam decision
1/93
- -----------------------------------------------------------------------------------------------------------------------------------
IO-09 90/001,744 Re-exam 4,752,285 UU Res. Found. 9/30 complaint
Vol. I & II filed
- -----------------------------------------------------------------------------------------------------------------------------------
IO-10 7/064,813 issued 12/12/89 4,886,489 Univ. of Utah MF due 6/93
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 13
EXHIBIT "B"
To License Agreement between
University of Utah Research Foundation
and Iomed, Inc.
[Pg 2 of 3]
IOMED PATENTS, TRADEMARKS AND APPLICATIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
IOMED # WNJ NO. HHD NO. TITLE INVENTORS FILED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
IO-10-EP 7247.15a 2930.16EP Flow-Through Methods & Apparatus SCJ, TJP, RLS 2/6/88
for Ionlophoresis Application of
Medicaments at a Contolled pH
- -----------------------------------------------------------------------------------------------------------------------------------
IO-10-JP 7247.15b 2930.16JP Flow-Through Methods & Apparatus SCJ, TJP, RLS 6/20/88
for Iontophoresis Application of
Medicaments at a Controlled pH
- -----------------------------------------------------------------------------------------------------------------------------------
IO.11 7247.10 2930.15 Methods & Apparatus for Iontophoresis TJP, SCJ, RLS, JJ 6/19/87
Vol. I-85/88 Application of Medicaments at a
Vol. II 89- Contolled pH Through Ion Exchange
- -----------------------------------------------------------------------------------------------------------------------------------
IO-11-EP 7247.10a 2930.15EP Methods & Apparatus for Iontophoresis TJP, SCJ, RLS, JJ 6/8/88
Application of Medicaments at a
Controlled pH Through Ion Exchange
- -----------------------------------------------------------------------------------------------------------------------------------
IO-11-JP 7247.10b 2930.15JP Methods & Apparatus for Iontophoresis TJP, SCJ, RLS, JJ 6/20/86
Application of Medicaments at a
Controlled pH Through Ion Exchange
- -----------------------------------------------------------------------------------------------------------------------------------
IO-12 7237.31 2930.04 Iontophoretic Electrode With Solution SCJ, TJP, JEB, RLS 5/8/89
Containment System
- -----------------------------------------------------------------------------------------------------------------------------------
IO-12-EP 7247.31a 2930.04EP Iontophoretic Electrode With Solution SCJ, TJP, JEB, RLS 11/14/90
Containment System
- -----------------------------------------------------------------------------------------------------------------------------------
12-JP 7247.31b 2930.04JP Iontophoretic Electrode With Solution SCJ, TJP, JEB, RLS 5/9/90
Containment System
- -----------------------------------------------------------------------------------------------------------------------------------
IO-13 7247.31.1 2930.04.1 Iontophoretic Electrode With Solution SCJ, TJP, JEB, RLS 8/23/90
Containment System
- -----------------------------------------------------------------------------------------------------------------------------------
IO-14 7247.32 2930.1 Bioelectrode Seal SCJ, TJP, JEB, RLS 5/8/89
- -----------------------------------------------------------------------------------------------------------------------------------
IO-14.1 7247.32.1 2930.10.1 Bioelectrode Seal SCJ, TJP, JEB, RLS 5/21/91
- -----------------------------------------------------------------------------------------------------------------------------------
IO-14.2 2930.10.2 Bioelectrode Containing Silicon Gel Seal SCJ, TJP, JEB, RLS
- -----------------------------------------------------------------------------------------------------------------------------------
IO-15 7247.33 2930.01 Method of Iontophoretically Treating RLS, TJP, SCJ 5/11/89
Acne, Furuncies & Like Skin Disorders
- -----------------------------------------------------------------------------------------------------------------------------------
IO-15-EP 7247.33a 2930.01EP Method of Iontophoretically Treating RLS, TJP, SCJ 10/5/90
Acne, Furuncies & Like Skin Disorders
- -----------------------------------------------------------------------------------------------------------------------------------
IO-15-JP 7247.33b 2930.01JP Method of Iontophoretically Treating RLS, TJP, SCJ 5/11/90
Acne, Furuncies & Like Skin Disorders
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
IOMED # APPL. NO. STATUS ISSUED NUMBER ASSIGNED TO ACTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
IO-01-EP 8830566.6 pending Univ. of Utah U of U action
due 6/20/93
- -----------------------------------------------------------------------------------------------------------------------------------
IO-10-JP 152068/88 pending Univ. of Utah NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-11 7/064,769 issued 4/10/90 4,915,685 Univ. of Utah MF due 10/93
Vol. I-85/86 EMPIREX
Vol. II 89
- -----------------------------------------------------------------------------------------------------------------------------------
IO-12-EP 88305243.3 pending Iomed, Inc. A due 6/8/93
- -----------------------------------------------------------------------------------------------------------------------------------
IO-11-JP 152068/88 pending Iomed, Inc. Review
R for E due
1995
- -----------------------------------------------------------------------------------------------------------------------------------
IO-12 7/349,489 issued 11/5/90 4,968,297 Iomed, Inc. MF due 2/6/94
- -----------------------------------------------------------------------------------------------------------------------------------
IO-12-EP 90/108643.9 pending Iomed, Inc. MR due 5/93
- -----------------------------------------------------------------------------------------------------------------------------------
12-JP 117787/90 pending Iomed, Inc. NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-13 7/572,477 issued 8/6/91 5,037,380 Iomed, Inc. NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-14 7/348/596 abandoned Iomed, Inc. NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-14.1 7/703,456 allowed Iomed, Inc. issue fee pd.
- -----------------------------------------------------------------------------------------------------------------------------------
IO-14.2 in prep. Ready to file?
- -----------------------------------------------------------------------------------------------------------------------------------
IO-15 7/350.227 issued 12/25/90 4,979,938 Iomed, Inc. NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-15-EP 90108838.5 pending Iomed, Inc. A. due 5/93
- -----------------------------------------------------------------------------------------------------------------------------------
IO-15-JP 122780/90 pending Iomed, Inc. NAR
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 14
EXHIBIT "B"
To License Agreement between
University of Utah Research Foundation
and Iomed, Inc.
[Pg 3 of 3]
IOMED PATENTS, TRADEMARKS AND APPLICATIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
IOMED # WNJ NO. HHD NO. TITLE INVENTORS FILED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
IONTOPHORESIS
- -----------------------------------------------------------------------------------------------------------------------------------
IO-06 7247.34 2930.05 Hydratable Bioelectrode TJP, SCJ, RLS, JB, LL 7/21/89
- -----------------------------------------------------------------------------------------------------------------------------------
IO-16-CN 7247.34a 2930.05CN Hydratable Bioelectrode TJP, SCJ, RLS, JB, LL 9/29/89
- -----------------------------------------------------------------------------------------------------------------------------------
IO-16-EP 7247.34b 2930.05EP Hydratable Bioelectrode TJP, SCJ, RLS, JB, LL 7/11/90
- -----------------------------------------------------------------------------------------------------------------------------------
IO-16-JP 7247.34c 2930.05JP Hydratable Bioelectrode TJP, SCJ, RLS, JB, LL 7/18/90
- -----------------------------------------------------------------------------------------------------------------------------------
IO-17 7247.34.1 2930.05.1 Hydratable Bioelectrode TJP, SCJ, RLS, JB, LL 1/23/91
- -----------------------------------------------------------------------------------------------------------------------------------
IO-16 7247.34.2 2930.01.1 Rehydratable Product & Method of LBL, JEB, TJP, SCJ 12/14/90
(TransO) Preparation Thereof
- -----------------------------------------------------------------------------------------------------------------------------------
IO-19 7247.33.1 2930.37 Method of Treating Infection of a TJP, NMW, SCJ 11/2/90
Fingernail, Toenail and the Like
- -----------------------------------------------------------------------------------------------------------------------------------
IO-20 7247.33.2 2930.38 Apparatus For Treating & Preventing JEB, LBL, TJP, NW, 11/2/90
Infection of a Fingernail, Toenail & the Like SCJ
- -----------------------------------------------------------------------------------------------------------------------------------
IO-21 7247.34.2.1 2930.33 An iontophoretic Bioelectrode LBL, JEB, TJP, SCJ 6/2/92
Incorporating Hydratable Element and
Method of Preparation Thereof
- -----------------------------------------------------------------------------------------------------------------------------------
IO-21-PCT 7247.34.2.1a 2930.33PCT An iontophoretic Bioelectrode LBL, JEB, TJP, SCJ 12/16/91
Incorporating Hydratable Element and
Method of Preparation Thereof
- -----------------------------------------------------------------------------------------------------------------------------------
MOTION CONTROL
- -----------------------------------------------------------------------------------------------------------------------------------
MC-01 2930.19 Constant Tension Traction Device SCJ, DFK, RDL 7/22/82
- -----------------------------------------------------------------------------------------------------------------------------------
MC-02 2930.3 Electrically Driven Artificial Arm SCJ, DFK, RTJ 3/1/83
- -----------------------------------------------------------------------------------------------------------------------------------
MC-03 7247.40 2930.31 Articulated Prosthetic Wrist SCJ 10/5/84
- -----------------------------------------------------------------------------------------------------------------------------------
5/14/93
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
IOMED # APPL. NO. STATUS ISSUED NUMBER ASSIGNED TO ACTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
IONTOPHORESIS
- -----------------------------------------------------------------------------------------------------------------------------------
IO-16 7/383,939 issued 2/11/92 5,087,242 Iomed, Inc. NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-16-CN 614,496 pending Iomed, Inc. Rsp. to CN PTO
- -----------------------------------------------------------------------------------------------------------------------------------
IO-16-EP 90113284.5 pending Iomed, Inc. NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-16-JP 188182/90 pending Iomed, Inc. NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-17 7/645,028 pending Iomed, Inc. Refile case
- -----------------------------------------------------------------------------------------------------------------------------------
IO-18 7/627,714 allowed Iomed, Inc. Issue fee pd.
- -----------------------------------------------------------------------------------------------------------------------------------
IO-19 7/609,181 pending Iomed, Inc. Resp. to O/A
filed
- -----------------------------------------------------------------------------------------------------------------------------------
IO-20 7/608,565 pending Iomed, Inc. Resp. to O/A
filed 10/20/92
- -----------------------------------------------------------------------------------------------------------------------------------
IO-21 7/892,341 pending Iomed, Inc. NAR
- -----------------------------------------------------------------------------------------------------------------------------------
IO-21-PCT PCT/US91 pending Iomed, Inc. NAR
/09329
- -----------------------------------------------------------------------------------------------------------------------------------
MOTION CONTROL
- -----------------------------------------------------------------------------------------------------------------------------------
MC-01 400,914 issued 11/20/84 4,483,330 Motion Control MF not pd. uu?
- -----------------------------------------------------------------------------------------------------------------------------------
MC-02 470,927 issued 6/11/85 4,521,924 Univ. of Utah MF due pd.
- -----------------------------------------------------------------------------------------------------------------------------------
MC-03 658,192 issued 9/23/86 4,613,331 Univ. of Utah 2nd A. 3/94
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 15
EXHIBIT "C"
To License Agreement between
University of Utah Research Foundation
and Iomed, Inc.
[Pg 1 of 1]
IOMED PATENTS, TRADEMARKS AND APPLICATIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
IOMED # WNJ NO. HHD NO. TITLE INVENTORS FILED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DRUG DELIVERY
- -----------------------------------------------------------------------------------------------------------------------------------
DD-01 2930.4 Implantable Catheter System AF 2/14/77
- -----------------------------------------------------------------------------------------------------------------------------------
DD-02 2930.41 Peritoneal Dialysis Catheter WJK, TRK 8/26/77
- -----------------------------------------------------------------------------------------------------------------------------------
DD-03 5339.10 2930.42 Subcutaneous Peritoneal Injection RLS 10/27/80
Catheter
- -----------------------------------------------------------------------------------------------------------------------------------
DD-04 5339.10a 2930.43 Subcutaneous Peritoneal Injection RLS, CK, BKH, SCJ, 2/17/81
Catheter JJH
- -----------------------------------------------------------------------------------------------------------------------------------
DD-05 5339.23 2930.44 Apparatus & Methods for Minimizing DEG, RLS, DLC, SKH, 8/12/83
Cellular Adhesion on Peritoneal BKH, JJH
Injection Catheters
- -----------------------------------------------------------------------------------------------------------------------------------
DD-05-CN 5339.22b 2930.44CN Apparatus and Methods for Minimizing DEG, RLS, DLC, SKH, 11/13/84
Cellular Adhesion on Peritoneal BKH, JJH
Injection Catheters
- -----------------------------------------------------------------------------------------------------------------------------------
DD-06 5339.20 2930.46 Apparatus & Method of Minimizing RLS, CK, BKH, SCJ 8/12/83
Peritoneal Injection Catheter Obstruc.
- -----------------------------------------------------------------------------------------------------------------------------------
DD-07-EP 5339.22 2930.45EP Peritoneal Injection Catheter RLS, BKH, CK, SCJ, 8/22/83
Apparatus & Method JJH, DLC, DEG, SKH
- -----------------------------------------------------------------------------------------------------------------------------------
DD-07-CN 5339.22a 2930.45CN Peritoneal Injection Catheter RLS, CK, BKH, SCJ, 11/13/84
Apparatus & Method JJH
- -----------------------------------------------------------------------------------------------------------------------------------
5/14/93
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
IOMED # APPL. NO. STATUS. ISSUED NUMBER ASSIGNED TO ACTION
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DRUG DELIVERY
- -----------------------------------------------------------------------------------------------------------------------------------
DD-01 768,520 issued 7/10/79 4,160,454 Univ. of Utah Don't pay MF
- -----------------------------------------------------------------------------------------------------------------------------------
DD-02 828,019 issued 1/22/80 4,184,497 Univ. of Utah as above
- -----------------------------------------------------------------------------------------------------------------------------------
DD-03 200,830 issued 8/23/83 4,400,169 UU Res. Found. as above
- -----------------------------------------------------------------------------------------------------------------------------------
DD-04 235,185 issued 9/20/83 4,405,305 UU Res. Found. 3rd A. due
3/20/95
- -----------------------------------------------------------------------------------------------------------------------------------
DD-05 522,914 issued 12/10/85 4,557,724 UU Res. Found. 2nd A due
6/10/93
- -----------------------------------------------------------------------------------------------------------------------------------
DD-05-CN 467,690 issued 3/15/88 1234030 UU Res. Found. NAR
- -----------------------------------------------------------------------------------------------------------------------------------
DD-06 522,907 issued 12/17/85 4,559,033 UU Res. Found. 2nd A due
6/7/93
- -----------------------------------------------------------------------------------------------------------------------------------
DD-07-EP 83304828.3 issued 3/20/85 134,340 UU Res. Found. Don't pay MF
- -----------------------------------------------------------------------------------------------------------------------------------
DD-07-CN 467,671 issued 3/15/88 1,234,029 UU Res. Found. NAR
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 16
[UNIVERSITY OF UTAH LOGO]
EXHIBIT "D"
To License Agreement between
University of Research Foundation and Iomed, Inc.
[Pg. 1 of 11]
June 9, 1993
Ned Weinshenker
IOMED, Incorporated
1290 West 2320 South Suite A
Salt Lake City, Utah 84119
RE: IOMED License Agreement (U-671D)
Dear Ned:
In accordance with paragraph 11.1 of the revised agreement which we are
currently negotiating, the University and I want to disclose to IOMED that we
are aware of a Sarcos project on a mechanical artificial arm that Dr. Jaocobsen
is involved in.
It is our understanding that the Department of Veterans Affairs is funding
the project at Sarcos, and although some machining work may be done at the
University, no inventive work will be involved at the University.
Since this is a mechanical device and a Sarcos project without University
rights involved, paragraph 11.2 should not apply.
If you have any questions, please don't hesitate to call.
Yours truly,
/s/ TOM MAJOR
--------------------------
Tom Major
Director
TM/pls
cc: Steve Jacobsen
Technology Transfer Office
421 Wakara Way, Suite 170
Salt Lake City, Utah 84108
(801) 581-7792
FAX: (901) 581-7538
<PAGE> 1
EXHIBIT 10.25
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE STOCK
Corporation: IOMED, Inc. , a Utah corporation
---------------------- ---------
Number of Shares: 10,000
------------------
Class of Stock: Common
[strike descriptions that do not apply]
Initial Exercise Price: $As determined by Appendix 3 per share
-----
Issue Date: June 25 , 1992
-------------
Expiration Date: June 24 , 2002
-----------
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, SILICON VALLEY BANK ("Holder") is
entitled to purchase the number of fully paid and nonassessable shares of the
class of securities (the "Shares") of the corporation (the "Company") at the
initial exercise price per Share (the "Warrant Price") all as set forth above
and as adjusted pursuant to Article 2 of this Warrant subject to the provisions
and upon the terms and conditions set forth of this Warrant.
ARTICLE 1. EXERCISE.
1.1 Method of Exercise. Holder may exercise this Warrant in its
entirety subject to provisions in Appendix 3,by delivering a duly executed
Notice of Exercise in substantially the form attached as Appendix 1 to the
principal office of the Company. Unless Holder is exercising the conversion
right set forth in Section l.2, Holder shall also deliver to the Company a check
for the aggregate Warrant Price for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this Warrant as
specified in Section 1.1, Holder may convert this Warrant, in whole, into a
number of Shares determined by dividing (a) the aggregate fair market value of
the Shares or other securities otherwise issuable upon exercise of this Warrant
minus the aggregate Warrant Price of such Shares by (b) the fair market value of
one Share. The fair market value of the Shares shall be determined pursuant
Section 1.4.
1.3 Alternative Stock Appreciation Right. At Holder's option, the
Company shall pay Holder the fair market value of the Shares issuable upon
conversion of this Warrant pursuant to Section 1.2 in cash in lieu of such
Shares.
1
<PAGE> 2
1.4 Fair Market Value. As Amended by Appendix 3.
1.5 Delivery of Certificate and New Warrant. Promptly after Holder
exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
1.6 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, or surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
1.7 Repurchase on Sale, Merger, or Consolidation of the Company.
1.7.1. "Acquisition". For the purpose of this Warrant,
"Acquisition" means any sale, license, or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company where the holders of the Company's
securities before the transaction beneficially own less than 50% of the
outstanding voting securities of the surviving entity after the transaction.
1.7.2. Assumption of Warrant. If upon the closing of any
Acquisition the successor entity assumes the obligations of this Warrant, then
this Warrant shall be exercisable for the same securities, cash, and property as
would be payable for the Shares issuable upon exercise of this Warrant as if
such Shares were outstanding on the record date for the Acquisition and
subsequent closing. The Warrant Price shall be adjusted accordingly.
1.7.3. Nonassumption. If upon the closing of any Acquisition
the successor entity does not assume the obligations of his Warrant, then this
Warrant shall be deemed to have been automatically converted pursuant to Section
1.2 and thereafter Holder shall participate in the acquisition on the same terms
as other holders of the same class of securities of the Company.
2
<PAGE> 3
1.7.4. Purchase Right. Notwithstanding the foregoing, at the
election of Holder, the Company shall purchase the full amount of shares
issuable under this Warrant for cash upon the closing of any Acquisition for an
amount equal to (a) the fair market value of any consideration that would have
been received by Holder in consideration of the Shares had Holder exercised this
Warrant immediately before the record date for determining the shareholders
entitled to participate in the proceeds of the Acquisition, less (b) the
aggregate Warrant Price of the Shares, but in no event less than zero.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a
dividend on its common stock (or the Shares if the Shares are securities other
than common stock) payable in common stock, or other securities, subdivides the
outstanding common stock into a greater amount of common stock, or, if the
Shares are securities other than common stock, subdivides the Shares in a
transaction that increases the amount of common stock into which the Shares are
convertible, then upon exercise of this Warrant, for each Share acquired, Holder
shall receive, without cost to Holder, the total number and kind of securities
to which Holder would have been entitled had Holder owned the Shares of record
as of the date the dividend or subdivision occurred.
2.2 Reclassification, Exchange or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or
other event. Such an event shall include any automatic conversion of the
outstanding or issuable securities of the Company of the same class or series as
the Shares to common stock pursuant to the terms of the Company's Articles of
Incorporation upon the closing of a registered public offering of the Company's
common stock. The Company or its successor shall promptly issue to Holder a new
Warrant for such new securities or other property. The new Warrant shall provide
for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 2 including, without limitation,
adjustments to the Warrant Price and to the number of securities or property
issuable upon exercise of the new Warrant. The provisions of this Section 2.2
shall similarly apply to successive reclassifications, exchanges, substitutions,
or other events.
2.3 Adjustments for Combinations, Etc. If the outstanding Shares are
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased.
2.4 Adjustments for Diluting Issuances. The Warrant Price and the
number of Shares issuable upon exercise of this Warrant or, if the Shares are
Preferred Stock, the number of shares of common stock issuable upon conversion
of the Shares,
3
<PAGE> 4
shall be subject to adjustment, from time to time in the manner set forth on
Exhibit A in the event of Diluting Issuances (as defined on Exhibit A).
2.5 No Impairment. The Company shall not, by amendment of its
Articles of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out of all the provisions of
this Article 2 and in taking all such action as may be necessary or appropriate
to protect Holder's rights under this Article against impairment. If the Company
takes any action affecting the Shares or its common stock other than as
described above that adversely affects Holder's rights under this Warrant, the
Warrant Price shall be adjusted downward and the number of Shares issuable upon
exercise of this Warrant shall be adjusted upward in such a manner that the
aggregate Warrant Price of this Warrant is unchanged.
2.6 Fractional Shares. No fractional Shares shall be issuable upon
exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying Holder amount computed by
multiplying the factional interest by the fair market value of a full Share.
2.7 Certificate as to Adjustments. Upon each adjustment of the
Warrant Price, the Company at its expense shall promptly compute such
adjustment, and furnish Holder with a certificate of its Chief Financial Officer
setting forth such adjustment and the facts upon which such adjustment is based.
The Company shall, upon written request, furnish Holder a certificate setting
forth the Warrant Price in effect upon the date thereof and the series of
adjustments leading to such Warrant Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company hereby represents
and warrants to the Holder as follows:
(a) The initial Warrant Price referenced on the first page of
this Warrant is not greater than (i) the price per share at which the Shares
were last issued in an arms-length transaction in which at least $500,000 of the
Shares were sold and (ii) the fair market value of the Shares as of the date of
this Warrant.
(b) All Shares which may be issued upon the exercise of the
purchase right represented by this Warrant, and all securities, if any, issuable
upon conversion of the Shares, shall, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws.
4
<PAGE> 5
3.2 Notice of Certain Events. If the Company proposes at any time
(a) to declare any dividend or distribution upon its common stock, whether in
cash, property, stock, or other securities and whether or not a regular cash
dividend; (b) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or
other rights; (c) to effect any reclassification or recapitalization of common
stock; (d) to merge or consolidate with or into any other corporation, or sell,
lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; or (e) offer holders of registration rights the
opportunity to participate in an underwritten public offering of the company's
securities for cash, then, in connection with each such event, the Company shall
give Holder (1) at least 20 days prior written notice of the date on which a
record will be taken for such dividend, distribution, or subscription rights
(and specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; (2) in the case of the matters referred to in
(c) and (d) above at least 20 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the case of
the matter referred to in (e) above, the same notice as is given to the holders
of such registration rights.
3.3 Information Rights. So long as the Holder holds this Warrant
and/or any of the Shares, the Company shall deliver to the Holder (a) promptly
after mailing, copies of all notices or other written communications to the
shareholders of the Company, (b) within ninety (90) days after the end of each
fiscal year of the Company, the annual audited financial statements of the
Company certified by independent public accountants of recognized standing and
(c) within forty-five (45) days after the end of each of the first three
quarters of each fiscal year, the Company's quarterly, unaudited financial
statements.
3.4 Registration Under Securities Act of 1993, as Amended. The
Company agrees that the Shares or, if the Shares are convertible into common
stock of the Company, such common stock, shall be subject to the registration
rights set forth on Exhibit B, if attached.
ARTICLE 4. MISCELLANEOUS.
4.1 Term: Notice of Expiration. This Warrant is exercisable, in
whole or in part, at any time and from time to time on or before the Expiration
Date set forth above. The Company shall give Holder written notice of Holder's
right to exercise this Warrant in the form attached as Appendix 2 not more than
90 days and not less than 30 days before the Expiration Date. If the notice is
not so given, the Expiration Date shall automatically be extended until 30 days
after the date the Company delivers the notice to Holder.
5
<PAGE> 6
4.2 Legends. This Warrant and the Shares (and the securities
issuable, directly or indirectly, upon conversion of the Shares, if any) shall
be imprinted with a legend in substantially the following form:
THIS SECURITY AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED
OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED.
4.3 Compliance with Securities Laws on Transfer. This Warrant and
the Shares issuable upon exercise this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, if reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to an affiliate of Holder so long as an
affiliate is a financial institution who is in the business of lending funds or
buying and selling financial instruments, or if there is no material question as
to the availability of current information as referenced in Rule 144(c), Holder
represents that it has complied with Rule 144(d) and (e) in reasonable detail,
the selling broker represents that it has complied with Rule 144(f), and the
Company is provided with a copy of Holder s notice of proposed sale.
4.4 Transfer Procedure. Subject to the provisions of Section 4.2 and
Section 4.3, Holder may transfer all or part of this Warrant or the Shares
issuable upon exercise of this Warrant (or the securities issuable, directly or
indirectly upon conversion of the Shares, if any) by giving the Company notice
of the portion of the Warrant being transferred setting forth the name, address
and taxpayer identification number of the transferee and surrendering this
Warrant to the Company for reissuance to the transferee(s) (and Holder if
applicable). Unless the Company is filing financial information with the SEC
pursuant to the Securities Exchange Act of 1934, the Company shall have the
right to refuse to transfer any portion of this Warrant to any person who
directly or indirectly competes with the Company.
4.5 Notices. All notices and other communications from the Company
to the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such holder from time
to time.
4.6 Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
6
<PAGE> 7
4.7 Attorneys Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute, shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
4.8 Governing-Law, This Warrant shall be governed by and construed
in accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
"COMPANY"
President
--------------------------------------
By /s/ Stephen H. Ober
------------------------------------
Name Stephen H. Ober
---------------------------------
Title: Chairman of the Board,
President, or Vice President
By /s/ Mary A. Crowther
---------------------------------
Name Mary A. Crowther
--------------------------------
Title: Assistant Secretary
7
<PAGE> 8
APPENDIX 1
NOTICE OF EXERCISE
------------------
1. The undersigned hereby elects to purchase 10,000 shares of the Common
Stock of IOMED, Inc. pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price of such shares in full.
1. The undersigned hereby elects to convert the attached Warrant into
Shares/Cash [strike one] in the manner specified in the Warrant. This conversion
is exercised with respect to all of the Shares covered by the Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
-------------------------------------
(Name)
-------------------------------------
-------------------------------------
(Address)
3. The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any party and not with a view toward the
resale or distribution thereof except in compliance with applicable securities
laws.
-------------------------------------------
(Signature)
- ------------
(Date)
8
<PAGE> 9
APPENDIX 2
Notice that Warrant Is About to Expire
--------------------------------------
(Name of Holder)
(Address of Holder)
Attn: Chief Financial Officer
Dear:
---------------------
This is to advise you that the Warrant issued to you described below will
expire on , 19 .
--------------- ---
Issuer:
Issue Date:
Class of Security Issuable:
Exercise Price per Share:
Number of Shares Issuable:
Procedure for Exercise:
Please contact [name of contact person at (phone number)] with any
questions you may have concerning exercise of the Warrant. This is your only
notice of pending expiration.
----------------------------------------
(Name of Issuer)
By
---------------------------------------
Its
--------------------------------------
9
<PAGE> 10
APPENDIX 3
EXERCISE PERIOD
---------------
This Warrant may be exercised (i) only in connection with the first to occur of
the 10th day following the closing of the next round of Preferred Stock issue
or the 10th day following the effectiveness of an initial public offering of
the Company's Common Stock (an "IPO") or the closing of an acquisition of the
Company, whether by consolidation, merger, purchase of assets or otherwise (an
"Acquisition") (provided, however, that the Company shall give the holder of
this Warrant at least ten (10) days' prior notice of any such closing), or (ii)
at any time following the fourth anniversary of the Issue Date. This Warrant
shall terminate and cease to be exercisable upon the first to occur of (i) the
10th day following the closing of an IPO or (ii) the tenth anniversary of the
Issue Date subject to Article 4.1.
EXERCISE PRICE
--------------
Year Following Closing
during which Warrant
is Exercised Warrant Exercise Price
---------------------- ----------------------
1 Year 70% of the Base Price
2 Year 50% of the Base Price
3 Year 30% of the Base Price
4 Year 20% of the Base Price
5 Year $1 per share
For the purposes of this Agreement, the "Base Price" shall be determined by the
following: (i) in the case of the next issue of Preferred Stock, the "Base
Price" shall mean the price per Preferred Stock share; or (ii) in the case of
an IPO, the price per share at which the Common Stock of the Company is first
sold to the public pursuant to an effective registration statement on Form S-1
or S-18, before deductions for underwriting commissions and expenses of the
offering; or (iii) in the case of an Acquisition, the "Base Price" shall mean
the fair market value of the Company's Stock immediately prior to the
Acquisition (exclusive of any element of value arising from the expectation of
such Acquisition), as conclusively determined by the Company's Board of
Directors.
<PAGE> 1
EXHIBIT 10.27
JMW ACQUISITION CO.
PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT is made as of August 4, 1987,
by and among JMW Acquisition Co., a Utah corporation (the "Company"), Motion
Control, Inc., a Utah corporation ("MCI"), and the persons and entities listed
on the Schedule of Investors attached hereto as Exhibit A (the "Schedule of
Investors"). The persons and entities listed on the Schedule of Investors are
hereinafter collectively referred to as the "Investors" and each individually as
an "Investor".
A. MCI is a manufacturer and marketer of medical products. Cordis
Corporation ("Cordis") currently owns 2,913,750 shares of the common stock of
MCI, which is approximately 84% of MCI's outstanding common stock. Additionally,
MCI owes Cordis approximately $1,950,933 for loans made by Cordis to MCI,
$70,000 of which was loaned pursuant to a working capital line of credit and
shall be referred to as the "Working Capital Loan", and the remaining $1,880,933
of which shall be referred to as the "Loans". Cordis is also guarantor on a
certain loan in principal amount of $750,000 from the Continental Illinois
National Bank and Trust Company of Chicago to MCI (the "Guarantee").
B. The Company, Cordis and MCI entered into a Class A Convertible
Preferred Share Agreement dated February 1, 1986 (the "Cordis Agreement")
pursuant to which Cordis agreed, in general, to transfer its shares in MCI to
the Company in exchange for certain shares of the Company's preferred stock, and
to cancel the Loans, upon the closing of a financing in which the Company raised
at least $750,000 and upon the simultaneous purchase of shares of the Company's
common stock by certain subscribers in accordance with paragraph 3 of the Cordis
Agreement, all on the terms and conditions set forth in the Cordis Agreement.
C. The Investors other than Cordis (the "New Investors") desire to
purchase $1,500,000 of the Company's preferred stock, and the Company desires to
sell such preferred stock to the New Investors, on the terms and conditions set
forth herein.
D. In light of such investment, and as contemplated by the Cordis
Agreement, Cordis desires to transfer all of its shares in MCI to the Company in
exchange for certain shares of the Company's preferred stock, and to cancel the
Loans, on the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF STOCK.
1.1 Authorization. The Company will have authorized as of the
Closing (as defined below) the issuance
<PAGE> 2
pursuant to the terms and conditions hereof of 4,215,618 shares of preferred
stock, par value $0.01 per share, of which 67,200 shares shall be designated
Series A Preferred Stock (the "Series A Stock"), 3,975,618 shares shall be
designated Series B Preferred Stock (the "Series B Stock"), and 172,800 shares
shall be designated Series C Preferred Stock (the "Series C Stock") (the Series
A Stock, Series B Stock and Series C Stock to be referred to collectively as the
"Preferred Stock"), having the rights, preferences and privileges set forth in
the Revised Articles of Incorporation (the "Revised Articles") attached hereto
as Exhibit B.
1.2 Issuance and Sale. The Company shall issue and sell to each
Investor, and each Investor shall purchase from the Company, the number of
shares of Preferred Stock set forth opposite such Investor's name on Exhibit A
to this Agreement (all shares of Preferred Stock purchased hereunder being
collectively hereinafter referred to as the "Purchased Shares"). The
consideration for the Series B Stock shall be $0.3773 per share. The aggregate
consideration for the Series A Stock and Series C Stock, all of which is being
purchased by Cordis, and the release of Cordis from its obligations under the
Guarantee, shall be the transfer by Cordis to the Company of all shares in MCI
held by Cordis and the assignment to the Company of all of Cordis' right title
and interest in and to the Loans, all on the terms and conditions set forth in
this Agreement. The Company's agreements hereunder with each of the Investors
are separate agreements, and the sales of Preferred Stock to each of the
Investors hereunder are separate sales.
2. CLOSING. The purchase and sale of the Purchased Shares shall take
place at the offices of Fenwick, Davis & West, Two Palo Alto Square, Palo Alto,
CA 94306, at 1:00 p.m., on August 4, 1987, or at such other time and place as
the Company and the Investors mutually agree upon in writing (which time and
place are designated as the "Closing"). At the Closing, the Company shall
deliver to each Investor a certificate representing the Purchased Shares that
such Investor is purchasing hereunder against delivery to the Company by each
New Investor of the full purchase price of such Purchased Shares, which, shall
be paid in accordance with reasonable instructions from the Company provided to
each New Investor, in writing, at least two business days prior to the Closing,
and against delivery to the Company by Cordis of share certificates representing
all shares of MCI held by Cordis, properly endorsed for transfer to the Company,
free and clear of any liens or encumbrances. Additionally, Cordis shall deliver
to the Company the promissory note(s) evidencing the Loans endorsed and assigned
to the Company. The Company shall provide Cordis with evidence satisfactory to
Cordis that it has been released from the Guarantee.
-2-
<PAGE> 3
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MCI. The Company
and MCI each hereby represent and warrant, jointly and severally, to each
Investor, that, except as expressly set forth on the Schedule of Exceptions
("Schedule of Exceptions") attached hereto as Exhibit C, (which exceptions shall
be deemed to be representations and warranties as if made hereunder) the
statements in the following paragraphs of this Section 3 are all true and
correct:
3.1 Organization, Good Standing and Qualification. The Company and
MCI are each a corporation duly organized, validly existing and in good standing
under the laws of the State of Utah with all requisite corporate power and
authority to own their respective properties and assets, and to carry on their
business as now conducted and as proposed to be conducted in that certain Iomed
Systems, Inc. Five Year Business Plan 1987-1992, heretofore furnished to each of
the Investors and furnished to Fenwick, Davis & West, Investors' counsel, on May
27, 1987 (the "Business Plan"). The Company and MCI are both duly qualified to
transact intrastate business in the State of Utah and neither the Company nor
MCI is required to be qualified to do business as a foreign corporation in any
other jurisdiction.
3.2 Capitalization.
(a) The Company. Immediately prior to the Closing, the
authorized capitalization of the Company shall consist of:
(i) Preferred Stock. A total of 4,215,618 shares of
Preferred Stock; 67,200 of which shall be designated Series A Stock; 3,975,618
of which shall be designated Series B Stock; and 172,800 of which shall be
designated Series C Stock. None of the Preferred Stock shall be issued or
outstanding. The rights, preferences and privileges of the Preferred Stock will
be as stated in the Revised Articles.
(ii) Common Stock. A total of 15,000,000 shares of
common stock, $0.01 par value per share ("Common Stock"), of which 500,000
shares shall be issued and outstanding.
(iii) Options, Subscription Agreements, Reserved
Shares. Except for (A) the conversion privileges of the Preferred Stock, and (B)
certain Subscription Agreements to purchase 3,313,195 shares of Common Stock
(the "Subscription Agreements") which were entered into by the Company in
accordance with the specific terms, conditions and requirements of the Cordis
Agreement, there are not outstanding any options, warrants, rights, (including
conversion or preemptive rights, or rights of first refusal) or agreements for
the purchase or acquisition from the Company of any shares of its capital stock
or any securities convertible into or ultimately exchangeable or
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exercisable for any shares of the Company's capital stock. Except as to the
3,313,195 shares of Common Stock subject to purchase pursuant to the
Subscription Agreements, none of the Company's outstanding capital stock, or
stock issuable on exercise or exchange of any outstanding options, warrants or
rights, is subject to any rights of first refusal or other rights to purchase
such stock (whether in favor of the Company or any other person), pursuant to
any agreement or commitment of the Company.
(iv) Outstanding Shareholders, Option Holders and
Subscription Agreement Holders. Attached hereto as part of Exhibit D is a
complete list of all outstanding shareholders, option holders, parties to
Subscription Agreements, and other security holders of the Company immediately
prior to the Closing.
(b) MCI. Immediately prior to the Closing, the authorized
capitalization of the MCI shall consist of:
(i) Preferred Stock. A total of 100,000 shares of
preferred stock, $0.50 par value per share ("MCI Preferred Stock"), none of
which shall be designated or issued and outstanding.
(ii) Common Stock. A total of 10,000,000 shares of
common stock, $0.01 par value per share ("MCI Common Stock"), of which 3,487,875
shares shall be issued and outstanding, and 100,000 issued and held in treasury.
(iii) Options, Subscription Agreements Reserved
Shares. There are not outstanding any options, warrants, rights, (including
conversion, preemptive rights or rights of first refusal) or agreements for the
purchase or acquisition from MCI of any shares of its capital stock or any
securities convertible into or ultimately exchangeable or exercisable for any
shares of MCI's capital stock. None of the outstanding capital stock, or stock
issuable on exercise or exchange of any outstanding options, warrants or rights,
is subject to any rights of first refusal or other rights to purchase such stock
(whether in favor of the MCI or any other person), pursuant to any agreement or
commitment of MCI.
(iv) Outstanding Shareholders and Option Holders and
Subscription Agreement Holders. Attached hereto as part of Exhibit D is a
complete list of all outstanding shareholders, option holders, and other
security holders of MCI immediately prior to the Closing.
(c) Post-Closing Shareholder Status. Attached hereto as
part of Exhibit D is a complete list of all shareholders, option holders and
other security holders of the Company and MCI immediately after the Closing.
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3.3 Subsidiaries. The Company and MCI do not presently own or
control, directly or indirectly, any interest in any other corporation,
partnership, joint venture, association, or other business entity; except that,
contemporaneously with the Closing, the Company will acquire all right, title
and interest in and to not less than 95% of the issued and outstanding capital
stock of MCI, and all options, warrants, rights or agreements for the purchase
or acquisition from MCI of any shares of its capital stock, or any securities
convertible into or ultimately exchangeable or exercisable for any shares of
MCI's capital stock (except for options and warrants to purchase a total of
25,400 shares of MCI Common Stock).
3.4 Due Authorization.
(a) All corporate action on the part of the Company, its
officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement, and the Shareholder Agreement referred to in
Section 5.4 hereof (the "Shareholder Agreement"), the performance of all
obligations of the Company hereunder and under the Shareholder Agreement, and
the authorization, issuance (or reservation for issuance) and delivery of all of
the Purchased Shares being sold hereunder and of the Common Stock issuable on
conversion of the Purchased Shares (the "Conversion Shares") has been taken or
will be taken prior to the Closing, and this Agreement and the Shareholder
Agreement each constitute a valid and legally binding obligation of the Company,
enforceable in accordance with their respective terms, except as may be limited
by general principles of equity or by bankruptcy or similar laws affecting the
rights of creditors generally;
(b) all corporate action on the part of MCI, its officers,
directors and shareholders necessary for the authorization, execution and
delivery of this Agreement, and the performance of all obligations of MCI
hereunder has been taken or will be taken prior to the Closing and this
Agreement constitutes a valid and legally binding obligation of MCI, enforceable
in accordance with its terms, except as may be limited by general principles of
equity or by bankruptcy or similar laws affecting the rights of creditors
generally.
3.5 Valid Issuance of Stock.
(a) The Purchased Shares, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein, will be
duly and validly issued, fully paid and nonassessable. The Conversion Shares
have been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Revised Articles, will be duly and validly
issued, fully paid and nonassessable.
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Based in part on the representations made by the Investors in Section 4 hereof,
the Purchased Shares and, based on current facts and laws, the Conversion
Shares, will be issued in full compliance with all applicable federal and state
securities laws.
(b) The outstanding shares of Common Stock of the Company are
all duly and validly issued, fully paid and nonassessable, and such shares of
Common Stock and all outstanding options, warrants, and other securities of the
Company have been issued in full compliance with the registration requirements
of the 1933 Act and the registration and qualification requirements of all
applicable state securities laws.
(c) The outstanding shares of Common Stock of MCI are all duly
and validly issued, fully paid and nonassessable.
3.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, or local governmental authority on the part of
the Company or MCI is required in connection with the consummation of the
transactions contemplated by this Agreement, or the Shareholder Agreement,
except for (i) any filing which may be required pursuant to the Utah Securities
Laws (the "Law"), and the rules thereunder, and (ii) such other qualifications
or filings under the United States Securities Act of 1933 (the "1933 Act") and
the regulations thereunder and all other applicable federal and state securities
laws as may be required in connection with the transactions contemplated by this
Agreement. All such qualifications and filings, if required, will be listed on
the Schedule of Exceptions, and in the case of qualifications, will be effective
on the Closing date and, in the case of filings, will be made within the time
prescribed by law.
3.7 Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation pending or, to the best of the Company's and MCI's
knowledge, currently threatened against the Company or MCI or their respective
activities, properties or assets or, to the best of the Company's and MCI's
knowledge, against any officer, director, or employee of the Company or MCI, nor
is any officer of the Company or MCI aware of any factual or legal basis for any
such action, suit, proceeding, claim, arbitration or investigation, including,
without limitation, actions pending or, to the best of the Company's or MCI's
knowledge, threatened (or any basis therefor known to the Company or MCI)
relating to the prior employment of any of the Company's or MCI's employees or
consultants, their use in connection with the Company's or
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<PAGE> 7
MCI's business, of any information or techniques allegedly proprietary to any of
their former employers or clients, or their obligations under any agreements
with prior employers or clients. To the best of the Company's and MCI's
knowledge, none of the employees, officers or directors of the Company or MCI
are subject to any agreement with any of their former employers regarding
proprietary information of such former employers. Neither the Company nor MCI is
a party to or subject to the provisions of any order, writ, injunction, judgment
or decree of any court or government agency or instrumentality and there is no
action, suit, proceeding, claim, arbitration or investigation by the Company or
MCI currently pending or which the Company or MCI intends to initiate.
3.8 Employee Invention and Trade Secret Agreement. Each employee and
officer of the Company and MCI, and each consultant of the Company and MCI, has
entered into and executed an Invention and Trade Secret Agreement in the forms
attached hereto as Exhibit E-1 and E-2, respectively; provided, however, that
non-officer employees and consultants not involved in the creation or
development of inventions, improvements, works of authorship, formulas,
processes, computer programs, databases or trade secrets need only sign a Non
Disclosure Agreement in the form attached hereto as Exhibit E-3. To the best of
the Company's and MCI's knowledge, none of the employees, officers or
consultants of the Company or MCI are in violation of such agreements.
3.9 Status of Proprietary Assets. The Company and MCI have full
right, title and ownership of all patents, patent applications, trademarks,
service marks, trade names, copyrights, trade secrets, confidential and
proprietary information, compositions of matter, formulas, designs, proprietary
rights, know-how and processes (all of the foregoing collectively hereinafter
referred to as the respective "Proprietary Assets") necessary to enable them to
produce and market their current products and services; and proposed products
and services described in the Business Plan (the "Products") and to conduct
their businesses as now conducted and as proposed to be conducted as described
in the Business Plan, without any conflict with or infringement of the rights of
others. A complete list of all Proprietary Assets of the Company and of MCI is
included in Exhibit C. No third party has any ownership right, title, interest,
claim in or lien on any of the Proprietary Assets and the Company and MCI have
taken, and in the future the Company and MCI will take, all steps necessary to
preserve the secrecy of all of their Proprietary Assets, except those for which
disclosure is required for legitimate business or legal reasons. The Company and
MCI have and will maintain in place systems to preserve their rights in, and the
secrecy of, the Proprietary Assets, and will protect their rights in the
Proprietary Assets.
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<PAGE> 8
There are no outstanding options, licenses, or agreements of any kind relating
to any Proprietary Asset, nor is the Company nor MCI bound by or a party to any
option, license or agreement of any kind with respect to any patent, trademark,
service mark, trade name, copyright, trade secret, license, information,
composition of matter, formula, design, proprietary right, know-how or process
of any other person or entity. Neither the Company nor MCI is obligated to pay
any royalties or other payments to third parties with respect to the marketing,
sale, license or use of any Proprietary Asset. Neither the Company nor MCI has
received any communications alleging that the Company or MCI has violated or, by
conducting their respective businesses as proposed, would violate any patent,
trademark, service mark, trade name, copyright or trade secret, license,
composition of matter, formula, design, or other proprietary or contractual
rights of any other person or entity. Neither the Company nor MCI is aware that
any employee of the Company or MCI is obligated under any agreement (including
licenses, covenants or commitments of any nature) or subject to any judgment,
decree or order of any court or administrative agency, or any other restriction
that would interfere with the use of his or her best efforts to carry out his or
her duties for the Company or MCI or to promote the interests of the Company and
MCI or that would conflict with the Company's or MCI's business as proposed to
be conducted. To the best of the Company's and MCI's knowledge, neither the
execution nor delivery of this Agreement nor the carrying on of the Company's or
MCI's business by the employees of the Company or MCI, nor the conduct of the
Company's or MCI's business as proposed, will conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
any contract, covenant or instrument under which any of such employees is now
obligated. Neither the Company nor MCI believes it is or will be necessary to
utilize any inventions of any employees of the Company or MCI (or persons either
currently intends to hire) made prior to their employment by the Company or MCI.
Notwithstanding the foregoing, the Company's and MCI's interest in the
Proprietary Assets are subject to certain rights of the University of Utah, as
specifically described in the Schedule of Exceptions attached hereto as
Exhibit C.
3.10 Compliance with Law and Charter Documents. Neither the Company
nor MCI is in violation or default of any provisions of its Articles of
Incorporation or Bylaws, and, except for any violations which individually and
in the aggregate would have no material adverse impact on the Company's or MCI's
businesses, the Company and MCI are in compliance with all applicable statutes,
laws, regulations and executive orders of the United States of America and all
states, foreign countries or other governmental bodies and agencies having
jurisdiction over the Company's or MCI's
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<PAGE> 9
business or properties. Neither the Company nor MCI has received any notice of
any such violation of such statutes, laws, regulations or orders which has not
been remedied prior to the date hereof. The execution, delivery and performance
of this Agreement, the Shareholder Agreement and the consummation of the
transactions contemplated hereby and thereby will not result in any such
violation or default, or be in conflict with or constitute, with or without the
passage of time or the giving of notice or both, either a default under the
Company's or MCI's Articles of Incorporation or Bylaws, or a material default
under any statutes, laws, regulations or orders, or any agreement or contract of
the Company or MCI, or an event which results in the creation of any lien,
charge or encumbrance upon any asset of the Company or MCI.
3.11 Material Agreements. Set forth on Exhibit F attached hereto is
a complete list of all agreements, contracts, leases, licenses, instruments and
commitments to which the Company or MCI is a party or is bound which,
individually or in the aggregate, are material to the business, properties,
financial conditions or results of operations of the Company or MCI; provided
that for purposes of this Section 3.11 only, no agreement under which the only
remaining obligation of the Company or MCI is to make a payment of money in the
amount of $10,000 or less will be deemed to be material to its business,
properties, financial condition or results of operations if the failure to make
such payment will not result in the loss by the Company or MCI of any rights
that are material to the conduct of its business (provided that such agreements,
in the aggregate, do not require payment of more than $100,000). Neither the
Company nor MCI has breached, nor does the Company or MCI have any knowledge of
any claim or threat that the Company or MCI has breached, any term or condition
of (i) any agreement, contract, lease, license, instrument or commitment set
forth in Exhibit F, or (ii) any other agreement, contract, lease, license,
instrument or commitment if any such breach or breaches, whether individually or
in the aggregate, would have a material adverse effect on the business,
properties, financial condition or results of operations of the Company or MCI.
Each agreement set forth in Exhibit F is in full force and effect and, to the
Company's and MCI's knowledge, no other party to such agreement is in material
default thereunder. Neither the Company nor MCI is a party to any agreement that
restricts its ability to market or sell any Product (whether by territorial
restriction or otherwise).
3.12 Certain Actions. Since the Balance Sheet Date (as defined in
Section 3.17) neither the Company nor MCI has (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of capital stock, (ii) incurred any indebtedness for money
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<PAGE> 10
borrowed or incurred any other liabilities individually in excess of $10,000 or
in excess of $25,000 in the aggregate, (iii) made any loans or advances to any
person, other than advances made in the ordinary course of business (none of
which are material), (iv) sold, exchanged or otherwise disposed of any assets or
rights, other than the sale of inventory in the ordinary course of business, or
(v) entered into any transactions with any of their respective officers,
directors or employees or any entity controlled by such individuals.
3.13 Disclosure. The Company and MCI have provided each Investor
with all the information that such Investor has requested in writing in
connection with its purchase of the Purchased Shares. Neither this Agreement nor
any exhibit hereto or certificates of any officer of the Company or MCI
delivered at the Closing (when all of such written information is read together)
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements herein or therein not misleading. The
Business Plan has been prepared in a good faith effort to describe the Company's
present and proposed products, operations and projected growth, and neither the
Company nor any officer of the Company is aware of any untrue statement of a
material fact in the Business Plan, or any omission to state a material fact
necessary to be included in the Business Plan to make the statements therein not
misleading except for information otherwise provided to the Investors in
writing. With respect to any financial projections contained in the Business
Plan, the Company represents only that such projections were prepared in good
faith and that the Company reasonably believes there is a reasonable basis for
such projections.
3.14 Registration Rights. Except as provided in that certain
Employment and Consultation Agreement dated June 1, 1986 between MCI and Stephen
C. Jacobsen, and in the Cordis Agreement (which will be null and void as of the
Closing) and in Section 7 of this Agreement, neither the Company nor MCI has
granted or agreed to grant to any person or entity any rights (including
piggyback registration rights) to have any securities of the Company or MCI
registered with the United States Securities and Exchange Commission ("SEC") or
any other governmental authority.
3.15 Corporate Documents. The Revised Articles of Incorporation and
Bylaws of the Company and the Articles of Incorporation and Bylaws of MCI are in
the form previously provided to Fenwick, Davis & West, special counsel to the
Investors.
3.16 Title to Property and Assets. Except as set forth on the
Financial Statements attached hereto as
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Exhibit G, the Company and MCI own their respective properties and assets free
and clear of all mortgages, liens, encumbrances, security interests and claims
except for liens, encumbrances and security interests rich arise in the ordinary
course of business and do not affect their respective material properties. With
respect to the property and assets they each lease, the Company and MCI are in
compliance with such leases and hold valid leasehold interests free of any
liens, encumbrances, security interests or claims of any party other than the
lessors of such property and assets.
3.17 Financial Statements. MCI has delivered to each Investor its
unaudited financial statements (consisting of a balance sheet, income statement
and statement of changes in financial position) for the fiscal year ended June
30, 1986. MCI has also delivered to each Investor its unaudited, interim
financial statements (consisting of a balance sheet, income statement and
statement of changes in financial position) for the period ended May 31, 1987.
The Company has delivered to each Investor its unaudited interim balance sheet
at May 31, 1987. May 31, 1987 is hereinafter referred to as the "Balance Sheet
Date". Copies of such documents are attached hereto as Exhibits G-1, G-2 and G-3
(the respective "Financial Statements"). The Financial Statements present fairly
the financial condition and operating results of the Company and of MCI as of
the dates and for the periods indicated therein, in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated except that the interim statements are subject to customary
year-end adjustments permitted or required by generally accepted accounting
principles (which, as to MCI, are currently estimated to decrease net income by
approximately $20,000). Except as set forth in the Financial Statements, neither
the Company nor MCI has any liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to the
Balance Sheet Date and (ii) obligations under contracts and commitments incurred
in the ordinary course of business which are not required under generally
accepted accounting principles to be reflected in the Financial Statements and
which, individually and in the aggregate, are not material to the financial
condition or operating results of the Company or MCI. The Company and MCI
maintain and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.
3.18 Changes Since Date of Financial Statements. Since the
Balance Sheet Date there has not been:
(a) any change in the assets, liabilities, financial condition
or operating results of the Company or MCI from that reflected in the Financial
Statements, except changes
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in the ordinary course of business which have not been, in the aggregate,
materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company or MCI (as
presently conducted and as proposed to be conducted);
(c) any waiver by the Company or MCI of a valuable right or of
a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company or MCI, except such a
satisfaction, discharge or payment made in the ordinary course of business that
is not material to the assets, properties, financial condition, operating
results or business of the Company;
(e) any material change or amendment to a material contract or
arrangement by which the Company or MCI or any of their respective assets or
properties are bound or subject, except for changes or amendments which are
expressly provided for in this Agreement;
(f) any material change in any compensation arrangement or
agreement with any present or prospective employee; or
(g) any other event or condition of any character which the
Company or MCI has reason to believe would materially and adversely affect the
assets, properties, financial condition, operating results or business of the
Company or MCI.
3.19 ERISA Plans. Neither the Company nor MCI has any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974,
as amended.
3.20 Tax Returns and Payments. The Company and MCI have timely
filed all tax returns and reports required by law and have never been audited by
any state or federal taxing authority. All tax returns and reports of the
Company and MCI are true and correct in all material respects. The Company and
MCI have paid all taxes and other assessments due, except those, if any,
contested by them in good faith which are listed in the Schedule of Exceptions.
The provisions for taxes of the Company and MCI as shown in the Financial
Statements are adequate for taxes due or accrued as of the date thereof.
3.21 Insurance. The Company and MCI have in full force and effect
(i) fire and casualty insurance policies, with
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extended coverage, sufficient in amount (subject to reasonable deductibles) to
allow them to replace any of their respective properties that might be damaged
or destroyed (except for properties that, in the aggregate, are not material)
and (ii) such amount of product liability insurance as the Board of Directors
deems reasonable.
3.22 Labor Agreements and Actions. Neither the Company nor MCI is
bound by or subject to any contract, commitment or arrangement with any labor
union, and no labor union has requested or, has sought to represent any of the
employees, representatives or agents of the Company or MCI. There is no strike
or other labor dispute involving the Company or MCI pending or, to the knowledge
of the Company and MCI, threatened, nor is the Company or MCI aware of any labor
organization activity involving the Company's or MCI's employees. Neither the
Company nor MCI is aware that any officer, employee or consultant intends to
terminate their employment or relationship with the Company or MCI, nor does the
Company or MCI have any present intention to terminate the employment or
relationship of any of the foregoing.
3.23 Real Property Holding Corporation Status. Since their
respective dates of incorporation (and that of their earliest predecessor)
neither the Company nor MCI has been a "United States real property holding
corporation", as defined in Section 897(c)(2) of the Internal Revenue Code of
1986 (the "Code"), and in Section 1.897-2(b) of the Treasury Regulations issued
thereunder (the "Regulations").
3.24 Shareholder Agreement. Except for the Shareholder Agreement
referred to in Section 5.4, and the Cordis Agreement (which will be null and
void upon the Closing) neither the Company nor MCI has any agreement, obligation
or commitment with respect to voting of any shares of its capital stock, and to
the best of the Company's and MCI's knowledge, there is no voting agreement or
other arrangement among its shareholders with respect to the voting of any
shares of its capital stock.
3.25 FDA Approval. After due investigation, (i) the Company and MCI
have no reason to believe that the United States Food and Drug Administration
("FDA") will ultimately prohibit the marketing, sale, license or use in the
United States of any of the Products and (ii) neither the Company nor MCI know
of any product or process which the FDA has prohibited from being marketed or
used in the United States which in function and composition is substantially
similar to any Product.
4. REPRESENTATIONS AND WARRANTIES OF INVESTORS. Except as to
Section 4.8, which shall apply only to Cordis, each Investor hereby
represents and warrants to the Company, severally and not jointly, that:
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4.1 Authorization. This Agreement constitutes its valid and legally
binding obligation. Each Investor represents that it has full power and
authority to enter into this Agreement. Each Investor has duly and validly taken
all corporate or partnership action necessary for the execution, delivery and
performance of this Agreement by such Investor.
4.2 Purchase for Own Account. The Purchased Shares to be purchased
by such Investor hereunder and the Conversion Shares issuable upon conversion
thereof (collectively hereinafter referred to as the "Securities") will be
acquired for investment for such Investor's own account, not as a nominee or
agent, and not with a view to the public resale or distribution thereof within
the meaning of the 1933 Act, and such Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same.
4.3 Disclosure of Information. Such Investor believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Purchased Shares to be purchased by it hereunder. Such
Investor further represents that it has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the
offering of the Purchased Shares. The foregoing, however, does not in any way
limit or modify the representations and warranties made by the Company and MCI
in Section 3.
4.4 Investment Experience. Such Investor has experience as an
investor in securities of companies in the development stage and acknowledges
that it is able to fend for itself, can bear the economic risk of its investment
in the Purchased Shares and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of this
investment in the Purchased Shares. Such Investor also represents that it has
not been organized for the purpose of acquiring the Purchased Shares and that
the amount of this investment does not exceed 10% of such Investor's net worth.
4.5 Restricted Securities. Such Investor understands that the
Securities such Investor is purchasing are characterized as "restricted
securities" under the 1933 Act inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that under the 1933
Act and applicable regulations thereunder such Securities may be resold without
registration under the 1933 Act only in certain limited circumstances. In this
connection, each Investor represents that it is familiar with Rule 144 of the
SEC, as presently in effect, and understands the resale limitations imposed
thereby and by the 1933 Act.
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4.6 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, each Investor further agrees not
to make any disposition of all or any portion of the Purchased Shares or the
Conversion Shares unless and until:
(a) there is then in effect a registration statement under the
1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) (i) such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a statement of
the circumstances surrounding the proposed disposition, and (ii) such Investor
shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
of such securities under the 1933 Act.
Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be required: (i) for any
transfer of any Purchased Shares or Conversion Shares in accordance with SEC
Rule 144, or (ii) for any transfer of any Purchased Shares or Conversion Shares
by an Investor that is a partnership to the estate of any such partner, or for
the transfer by gift, will or intestate succession by any partner to his or her
spouse or lineal descendants or ancestors, provided that in each of the
foregoing cases the transferee agrees in writing to be subject to the terms of
this Section 4 to the same extent as if the transferee were an original Investor
hereunder.
4.7 Legends. It is understood that the certificates evidencing the
Purchased Shares and the Conversion Shares may bear the legend set forth below,
together with other legends required by the laws of the State of Utah or any
other state:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
The legend set forth above shall be removed by the Company from any certificate
evidencing Purchased Shares or Conversion Shares upon delivery to the Company of
an opinion by counsel,
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in form and substance reasonably satisfactory to the Company, that a
registration statement under the 1933 Act is at that time in effect with respect
to the legended security or that such security can be freely transferred in a
public sale without such a registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from registration
pursuant to which the Purchased Shares or Conversion Shares were issued.
4.8 Cordis Representations. Cordis hereby represents and
warrants to the Company, MCI and the New Investors that:
(a) the shares of MCI Common Stock being transferred to the
Company in connection with the Closing are the only securities of MCI held by
Cordis, or in which Cordis has any interest, and such shares shall be
transferred to the Company free and clear of any liens or encumbrances.
(b) it owns no securities in the Company, other than the
Series A Stock and Series C Stock to be issued pursuant to this Agreement.
(c) it has not assigned or otherwise transferred any part of
its interest in the Loans or Working Capital Loan, and upon the Closing and
repayment of the Working Capital Loan, neither the Company nor MCI will owe any
sums to Cordis; and
(d) upon the Closing the Cordis Agreement will be null and
void, and of no further effect.
(e) the consummation of the transactions contemplated herein
do not violate any obligation of the Company or MCI to Cordis.
Except for the Subscription Agreements referred to in the Cordis Agreement,
which shall remain in effect, Cordis hereby waives, to and including the date of
the Closing, each and every provision of the Cordis Agreement that may be in
conflict with the terms or conditions of this Agreement, or which may be
necessary, required or appropriate for MCI or the Company to carry out and
perform their obligations under this Agreement.
5. CONDITIONS TO INVESTOR'S OBLIGATIONS AT CLOSING. The obligations of
each Investor under Sections 1.2 and 2 of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
thereto, which consent may be given by written, oral or telephonic communication
to special counsel to the Investors:
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5.1 Representations and Warranties True. Each of the
representations and warranties of the Company and MCI contained in Section 3
shall be true and correct on and as of the Closing with the same effect as
though such representations and warranties had been made on and as of the date
of the Closing.
5.2 Performance. The Company and MCI shall have performed and
complied with all material agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by each of
them on or before the Closing and the Company shall have obtained all approvals,
consents and qualifications necessary to complete the purchase and sale of the
Purchased Shares described herein.
5.3 Certificate Effective. The Revised Articles shall have
been duly adopted by the Company by all necessary corporate action of its Board
of Directors and shareholders, and shall have been duly filed with the Secretary
of State of the State of Utah.
5.4 Shareholder Agreement. Stephen Jacobsen and Stephen Ober
shall have executed and delivered the Shareholder Agreement in the form attached
hereto as Exhibit H.
5.5 Company Compliance Certificate. The Company shall have
delivered to the Investors at the Closing a certificate signed on its behalf by
the President of the Company certifying that the conditions specified in
Sections 5 have been fulfilled and stating that there shall have been no
material adverse change in the business, affairs, prospects, operations,
properties, assets or condition of the Company not previously disclosed to the
Investors in writing.
5.6 Securities Exemptions. The offer and sale of the Purchased
Shares to the Investors pursuant to this Agreement shall be exempt from the
registration requirements of the 1933 Act, requirements of the Utah Securities
Law and the registration and/or qualification requirements of all other
applicable securities laws.
5.7 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to each Investor and to the Investors' special counsel, and they shall
each have received all such counterpart originals and certified or other copies
of such documents as they may reasonably request.
5.8 Ownership of Technology. Each Investor shall have received
from the Company and MCI all documents and
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other materials requested by it for the purpose of examining and determining the
Company's and MCI's rights in and to any technology, the Products, and
Proprietary Assets now used, proposed to be used in, or necessary to, the
Company's or MCI's business as now conducted and as proposed to be conducted as
described in the Business Plan; and the status of the Company's and MCI's
ownership rights in and to all such technology, the Products and Proprietary
Assets shall be satisfactory to each Investor and to special counsel to the
Investors.
5.9 Bylaws. The Bylaws of the Company shall have been duly
amended in the form attached hereto as Exhibit J by the Company by all necessary
corporate action of its Board of Directors and shareholders.
5.10 Board of Directors. Effective at the Closing, the
directors of the Company shall be Messrs. Jacobsen, Ober, Kellman, Wardle and
Weersing.
5.11 Certified Charter Documents. There shall have been
delivered to special counsel to the Investors a copy of the Revised Articles and
the Bylaws of the Company (as amended through the date of the Closing) and of
the Articles of Incorporation and Bylaws of MCI, certified by the Secretary of
the Company or MCI as applicable, as true and correct copies thereof as of the
time immediately prior to the Closing.
5.12 No Material Change. There shall have been no material
adverse change since the Balance Sheet Date in the business, properties,
financial condition or results of operations of the Company or MCI.
5.13 Opinion of Company Counsel. Each Investor shall have
received from Hansen and Andersen, counsel for the Company and MCI, an opinion,
dated as of the date of the Closing, in the form attached as Exhibit I.
5.14 Acquisition of MCI. Pursuant to and in accordance with
the terms and conditions of this Agreement and the Subscription Agreements, the
Company shall acquire, contemporaneously with the Closing, at least 95% of the
issued and outstanding capital stock of MCI and all outstanding options,
warrants, other securities, or rights to purchase or otherwise obtain any
capital stock of MCI (except for options and warrants to purchase a total of
25,400 shares of MCI Common Stock).
5.15 Release of Guaranty. Cordis shall have been released from
any obligation under the Guarantee, and the Company and/or MCI shall have
provided evidence of such release to Cordis.
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5.16 Working Capital Loan. Cordis shall have been repaid the Working
Capital Loan and neither the Company nor MCI shall owe any amounts to Cordis.
5.17 MCI Compliance Certificate. MCI shall have delivered to the
Investors at the Closing a certificate signed on its behalf by the President of
MCI certifying that the conditions specified in Subsections 5.1, 5.2, 5.7, 5.8,
5.11, 5.12, 5.13, 5.14, 5.15, and 5.16 have been fulfilled and stating that
there shall have been no material adverse change in the business, affairs,
prospects, operations, properties, assets, or condition of MCI not previously
disclosed to the Investors in writing.
5.18 Cordis Transaction. Cordis shall have transferred all of its
shares in MCI, and assigned the Loans, to the Company, as set forth in Sections
1.2 and 2.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to each Investor under this Agreement are subject
to the fulfillment on or before the Closing of each of the following
conditions by such Investor:
6.1 Representations and Warranties. The representations and warranties
of the Investors contained in Section 4 shall be true and correct on the date of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing.
6.2 Payment of Purchase Price. The Investors shall have delivered the
purchase price specified for each such Investor in Section 2 and Exhibit A.
6.3 Certificate Effective. The Revised Articles shall have been duly
adopted by the Company by all necessary corporate action of its Board of
Directors and shareholders, and shall have been duly filed with the Division of
Corporations and Commercial Code of the State of Utah.
6.4 Securities Exemptions. The offer and sale of the Purchased Shares
to the Investors pursuant to this Agreement shall be exempt from the
registration requirements of the 1933 Act, the qualification requirements of the
Law and the registration and/or qualification requirements of all other
applicable securities laws.
6.5 Bylaws. The Bylaws of the Company shall have been duly amended in
the form attached hereto as Exhibit J by the Company by all necessary corporate
action of its Board of Directors and shareholders.
7. REGISTRATION RIGHTS. The Company covenants and agrees with each
Investor as follows:
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7.1 Definitions. For purposes of this Section 7:
(a) The terms "register", "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the 1933 Act, and the
declaration or ordering of effectiveness of such registration statement or
document;
(b) The term "Registrable Securities" means (i) the Common
Stock issued or issuable upon conversion of any of the Purchased Shares and (ii)
any Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of,
the Purchased Shares and/or the other securities described above in this
paragraph (b), excluding in all cases, however, any Registrable Securities
acquired in a transaction or series of transactions in which the rights under
this Section 7 were not assigned or were not assignable;
(c) The term "Registrable Securities then outstanding" means
the shares of Common Stock which are Registrable Securities and (i) are then
issued and outstanding or (ii) are then issuable pursuant to then exercisable or
convertible securities;
(d) The term "Holder" means any person owning of record
Registrable Securities that have not been sold to the public pursuant to an
effective registration statement under the 1933 Act or exemption therefrom;
provided that a holder of Purchased Shares or other securities convertible into,
or exercisable or exchangeable for, Registrable Securities shall be considered
to be a Holder of the Registrable Securities into which such securities can be
converted into, or exercised or exchanged for, provided, however, that in no
event shall the Company be required to register any securities except the
Registrable Securities; and
(e) The term "Form S-3" means such form under the 1933 Act as
in effect on the date hereof or any successor registration form under the 1933
Act subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
7.2 Demand Registration.
(a) Request for Registration. If the Company shall receive at
any time after the earlier of (i) July 15, 1990, or (ii) six (6) months after
the effective date of the first registration statement filed under the 1933 Act
for a public offering of securities of the Company (other
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than a registration statement relating solely to a merger, recapitalization or
reorganization), a written request from the Holders of at least fifty percent
(50%) of the Registrable Securities then outstanding that the Company file a
registration statement under the 1933 Act covering the registration of all or a
portion of the Registrable Securities then outstanding held by such Holders, and
the aggregate gross sales price of all Registrable Securities expected to be
registered is reasonably expected to be greater than $1,000,000, then the
Company shall, within ten (10) days of the receipt thereof, give written notice
of such request to all Holders and shall, subject to the limitations of
subsection 7.2(b), effect, as soon as practicable, the registration under the
1933 Act of all Registrable Securities which the Holders request to be
registered within twenty (20) days of the mailing of such notice by the Company
in accordance with Section 9.6.
(b) Underwriting Requirements. If the Holders initiating the
registration (the "Initiation Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 7.2,
and the Company shall include such information in the written notice referred to
in subsection 7.2(a). In such event, the right of any Holder to include such
Holder's Registrable Securities in a registration effected pursuant to this
Section 7.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company as
provided in subsection 7.5(e)) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Initiating Holders and approved by the Company, which approval shall not be
unreasonably withheld. Notwithstanding any other provision of this Section 7.2,
if the underwriter advises the Initiating Holders in writing that marketing
factors require a limitation of the number of Registrable Securities to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof in proportion (as
nearly as practicable) to the amount of Registrable Securities then outstanding
owned by each Holder.
(c) Number of Demand Registrations. The Company is
obligated to effect only two (2) such registrations pursuant to this Section
7.2.
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(d) Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions incurred in connection with registrations
pursuant to this Section 7.2, and related filings and qualifications, including
(without limitation) all registration, filing and qualification fees, printer's
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements (up to $10,000) of one counsel for the selling
Holders shall be borne by the Company; provided, however, that the Company shall
not be required to pay for any expenses of any registration proceeding begun
pursuant to this Section 7.2 if the registration request is subsequently
withdrawn at the request of the Holders of at least 60% of the Registrable
Securities to be registered (in which case the Holders requesting the withdrawal
shall bear such expenses, pro rata, based on the number of Registrable
Securities each was to include in the registration), unless the Holders of at
least sixty percent (60%) of the Registrable Securities then outstanding agree
to forfeit their right to one demand registration pursuant to this Section 7.2;
provided further, however, that if at the time of such withdrawal, the Holders
have learned of a material adverse change in the condition, business, or
prospects of the Company from that known to the Holders at the time of their
registration request, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to this Section 7.2.
7.3 Incidental (Piggyback) Registration.
(a) Request for Registration. If the Company proposes to
register any of its stock or other securities under the 1933 Act in connection
with the public offering of such securities (including for this purpose a
registration effected by the Company for shareholders other than the Holders but
excluding a registration relating solely either to the sale of securities to
employees of the Company pursuant to a stock purchase, stock option or similar
plan, or to a merger, recapitalization, or reorganization), the Company shall,
at such time, promptly give each Holder written notice of such registration.
Upon the written request of each Holder given within twenty (20) days after
mailing of such notice by the Company in accordance with Section 9.6, the
Company shall, subject to the provisions of Section 7.3(b), cause to be
registered under the 1933 Act all of the Registrable Securities that each such
Holder has requested to be registered.
(b) Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under this Section 7.3 to include any of a Holder's
Registrable Securities in such underwriting unless such Holder accepts the terms
of the underwriting as agreed upon between the Company and
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terms and conditions set forth herein the underwriters selected by it. If the
total amount of securities, including Registrable Securities, requested by
security holders of the Company to be included in such offering exceeds the
amount of securities sold other than by the Company that the underwriters
reasonably believe is compatible with the success of the offering, then the
Company shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters believe
will not jeopardize the success of the offering. If any securities held by
security holders of the Company are to be included in the offering, Registrable
Securities held by any of the Holders shall be included prior to securities held
by any other security holders (the securities to be included to be apportioned
pro rata first among the Holders of Registrable Securities in proportion, as
nearly as practical, to the amount of Registrable Securities then outstanding
owned by each Holder, and then, if additional securities may be included, among
the other selling security holders according to the total amount of securities
entitled to be included therein owned by each such selling security holder; or
in such other proportions as shall mutually be agreed to by such other selling
security holders).
For purposes of the preceding parentheticals concerning apportionment, for any
selling security holder which is a Holder of Registrable Securities and which is
a terms and conditions set forth herein partnership or corporation, the
partners, retired partners and shareholders of such holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
security holder", and any pro rata reduction with respect to such selling
security holder shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
selling security holder, as defined in this sentence.
(c) Expenses of Incidental (Piggyback) Registration. The
Company shall bear and pay all expenses incurred in connection with any
registration, filing or qualification of Registrable Securities with respect to
registrations pursuant to Section 7.3 for each Holder, including without
limitation all registration, filing, and qualification fees, printers' and
accounting fees relating or apportionable thereto and the reasonable fees and
disbursements (up to $10,000) of one counsel for the selling Holders (as a
group) selected BY them, but excluding underwriting discounts and commissions
relating to Registrable Securities. The Company shall have the right to select
the states in which the registration shall be qualified, provided, however, that
if the Holders request qualification in additional states the Company shall use
best efforts to qualify the registration in such states, provided that the
Holders pay any costs directly associated with such additional qualifications.
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(d) Company withdrawal of Registration. The Company shall have
no liability to any Holder for the Company's withdrawal of any registration
(other than a registration made pursuant to Section 7.2) as to which a Holder
has registration rights under this Section 7.3, provided such withdrawal is made
in good faith by the Company and not for the purpose of impairing any Holder's
rights under this Section 7.3.
7.4 Form S-3 Registration. In case the Company shall receive from
any Holder or Holders of Registrable Securities a written request or requests
that the Company effect a registration on Form S-3 and any related qualification
or compliance with respect to all or a part of the Registrable Securities owned
by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 7.4: (1) if
Form S-3 is not available for such offering by the Holders; (2) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public of less than
$250,000; (3) if the Company has successfully effected one or more registrations
on Form S-3 pursuant to this Section 7.4 within the six (6) month period
immediately preceding the date on which the Company receives from a Holder or
Holders a written request to effect a registration pursuant to this Section 4;
(4) if the Company would be required to undertake an audit in addition to its
normal year-end audit, unless the Holders requesting the registration agree to
pay for such audit, or unless the additional audit is necessitated by the
Company's decision to delay the registration as permitted by the following
sentence. Additionally, the Company may postpone a requested S-3 registration
for a period of time not to exceed four months, if the Board of Directors
determines in good faith, and so notifies the Holders requesting registration,
that an S-3 registration at the requested time would materially adversely affect
the public market for the Company's securities, provided that this right may not
be used more than once in a given 12-month period.
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(c) Subject to the foregoing, the Company shall file a Form
S-3 registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Holders. All expenses incurred in connection with
the registrations requested pursuant to this Section 7.4, including (without
limitation) all registration, filing, qualification, printer's and accounting
fees and the reasonable fees and disbursements (up to $5,000) of one counsel for
the selling Holder or Holders (as a group) and counsel for the Company, shall be
borne by the Company. Registrations effected pursuant to this Section 7.4 shall
not be counted as registrations effected pursuant to Sections 7.2 or 7.3.
(d) The Company is obligated to effect only three (3) such
registrations pursuant to this Section 7.4.
7.5 Obligations of the Company. Whenever required under this
Section 7 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) consecutive days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by them and covered by a registration statement filed under this Section 7.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions, and provided further,
that, in
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connection with a registration pursuant to Sections 7.2 or 7.4 hereof,
the Company shall not be required to qualify securities in more than 10 states
unless the Holders pay the costs directly associated with such additional
qualifications.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriters of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement as promptly as possible, at any time when a
prospectus relating thereto is required to be delivered under the 1933 Act, of
the happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 7, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 7, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated as of such date, of
the counsel representing the Company for the purposes of such registration, in
form and substance as is customarily given to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities and (ii) a letter dated as of
such date, from the independent certified public accountants of the Company, in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities; provided that the Company need only use its best efforts to furnish
the letter from the Company's accountants described in the immediately preceding
clause (ii).
7.6 Obligations of Holders. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 7
that the selling Holders shall furnish to the Company, at their expense, such
information regarding themselves, the Registrable Securities held by them, and
the intended method of disposition of such securities as
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shall be required to effect the registration of their Registrable Securities.
7.7 Delay of Registration. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 7.
7.8 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 7:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, agents, officers and directors of
each Holder, any underwriter, (as defined in the 1933 Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning
of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934
Act") , against any losses, claims, damages, or liabilities (joint or several)
to which they may become subject under the 1933 Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained
in such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any state securities law or any rule or regulation promulgated under
the 1933 Act, the 1934 Act or any state securities law in connection with the
offering covered by such registration statement; and the Company will reimburse
each such Holder, partner, agent, officer or director, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided however, that the indemnity agreement contained
in this Section 7.8(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder, partner, officer, director, underwriter or
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controlling person of such Holder. Notwithstanding anything to the contrary
contained in this Section 7.8, this indemnity shall not apply to a person
indemnified in this Section 7.8(a) insofar as it relates to any untrue
statement, alleged untrue statement, omission or alleged omission made in a
prospectus used by such person after the Company has advised such person in
writing that the prospectus is out of date or no longer accurate and the Company
has stated that the use of the prospectus should be discontinued.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each of the Company's
agents, each person, if any, who controls the Company within the meaning of the
1933 Act, any underwriter and any other Holder selling securities under such
registration statement or any of such other Holder's partners, directors or
officers or any person who controls such Holder, against any losses, claims,
damages, or liabilities (joint or several) to which the Company or any such
director, officer, agent, controlling person, underwriter, or other such Holder,
partner or director, officer or controlling person of such other Holder may
become subject under the 1933 Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will reimburse
any legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or other Holder, partner,
officer, agent, director, or controlling person of such other Holder in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 7.8(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder, (which consent shall not be unreasonably withheld);
and provided further, that in no event shall any indemnity under this Section
7.8(b) exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 7.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 7.8, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires,
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<PAGE> 29
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the reasonable fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, shall not relieve such indemnifying party of any liability to
the indemnified party under this Section 7.8, unless and to the extent that the
indemnifying party is materially prejudiced thereby, and the omission so to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 7.8.
(d) The foregoing indemnity agreements of the Company and
Holders are subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the registration
statement in question becomes effective or the amended prospectus filed with the
SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such indemnity
agreement shall not inure to the benefit of any person if a copy of the Final
Prospectus was furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the 1933 Act.
(e) The obligations of the Company and Holders under this
Section 7.8 shall survive the conversion, if any, of the Purchased Shares, the
completion of any offering of Registrable Securities in a registration statement
under this Section 7, and otherwise.
7.9 Rule 144 Information; Reports Under 1934 Act. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
1933 Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
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<PAGE> 30
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act; and
(d) furnish to any Holder of Registrable Securities, forthwith
upon request (i) a written statement by the Company that it has complied with
the reporting requirements of SEC Rule 144 (at any time after ninety (90) days
after the effective date of the first registration statement filed by the
Company), the 1933 Act and the 1934 Act (at any time after it has become subject
to such reporting requirements), or that it qualified as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the SEC which permits the selling of any such
securities without registration or pursuant to such form.
7.10 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 7 may be
assigned by a Holder to a transferee or assignee of at least 150,000 of the
Purchased Shares, or an equivalent amount of Registrable Securities, or any
combination thereof. The Company shall be furnished, within a reasonable time
after such transfer, with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned. Notwithstanding the foregoing, rights to
cause the Company to register securities may be assigned to any partner, partner
of a partner, retired partner, shareholder or affiliate of the Company or of a
Holder, or to the spouse, children, grandchildren, parents or siblings of an
Investor, or trust for the benefit of an Investor or any such persons,
regardless of the number of shares transferred.
7.11 Limitations on Subsequent Registration Rights. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of sixty percent (60%) of the Registrable Securities then
outstanding, enter into any agreement with any holder or
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<PAGE> 31
prospective holder of any securities of the Company which would allow such
holder or prospective holder (a) to include such securities in any registration
filed under Section 7.2, 7.3 or 7.4 hereof, unless under the terms of such
agreement, such holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of such securities will
not reduce the amount of Registrable Securities of the Holders that are
included, or (b) to make a demand registration which could result in such
registration statement being declared effective prior to one hundred twenty
(120) days after the earlier of either of the dates set forth in the first
sentence of subsection 7.2(a), or within one hundred twenty (120) days of the
effective date of any registration effected pursuant to Section 7.2, or (c) to
have incidental (piggyback) registration rights that conflict with or are prior
or superior to the rights granted to the Holders in Section 7.3.
7.12 Suspension of Registration Rights. Provided that (i) the Company has
previously closed a firm commitment public offering of the Common Stock of the
Company pursuant to a registration statement on Form S-1, filed with, and
declared effective by, the SEC pursuant to the 1933 Act and (ii) there then
exists an active public trading market for the Company's Common Stock, the
registration rights contained in this Section 7 shall be suspended as to any
Holder who: (a) (i) is legally able to sell all such Holder's Registrable
Securities to the public without registration in two (2) consecutive three (3)
month periods pursuant to the provisions of Rule 144 promulgated under the 1933
Act and (ii) owns less than (2%) of the Company's outstanding Common Stock,
calculated as provided in this Section 7.12. In calculating the amount of Common
Stock held by such Holder and the total amount of Common Stock outstanding for
purposes of this Section 7.12, there shall be deemed outstanding all shares of
the Company's Common Stock issuable on conversion, exchange or exercise of any
outstanding securities of the Company.
7.13 Amendment of Registration Rights. Any provision of this Section 7 may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of sixty percent (60%) of the
Registrable Securities then outstanding; provided, however, that no such
amendment or waiver that materially and adversely affects Cordis in a manner
substantially different than the New Investors shall be binding on Cordis
without Cordis' approval. Any amendment or waiver effected in accordance with
this Section shall be binding upon each Holder and the Company and shall treat
each Holder on an equal and ratable basis, unless otherwise agreed to in writing
by the adversely treated Holder(s). By acceptance of any benefits under this
Section 7, holders of Registrable Securities hereby agree to be bound by the
provisions hereunder.
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<PAGE> 32
7.14 Standoff Agreement. Each Holder hereby agrees that, in
connection with the first registration of the Company's Common Stock (or other
securities) covering an underwritten offering of such stock or securities to the
general public, such Holder shall not, to the extent requested by the Company or
the underwriter of such offering, sell or otherwise transfer or dispose (other
than to donees who agree to be similarly bound) of any Registrable Securities
(other than those Registrable Securities which are included, in such
registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed ninety
(90) days) from the effective date of the registration statement for such
registration as the Company or such underwriters may specify in writing;
provided, however, that:
(a) such agreement shall be applicable only to the first
registration statement of the Company which covers shares of Common Stock (or
other securities) to be sold on the Company's behalf to the general public in an
underwritten offering; and
(b) all executive officers and directors of the Company and
all other persons with registration rights (whether or not granted pursuant to
this Agreement) enter into similar agreements.
8. COVENANTS OF THE COMPANY.
8.1 Delivery of Financial Statements.
(a) The Company shall deliver to each Investor, for so long as
such Investor is a holder of Purchased Shares or Conversion Shares, (1) as soon
as available, and in any event within ninety (90) days after the close of each
fiscal year, consolidated balance sheets of the Company and its subsidiaries, if
any, including MCI, as at the end of such year, and consolidated statements of
income, shareholders' equity and changes in financial position of the Company
for such year setting forth in comparative form the figures for such year and
for the preceding year, all in reasonable detail, and duly audited by a firm of
independent certified public accountants of nationally recognized standing.
(b) The Company shall deliver to each Investor, for so long as
such Investor is a holder of at least 100,000 Purchased Shares, or the
equivalent number of Conversion Shares, or any combination of the two equivalent
to 100,000 Purchased Shares:
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<PAGE> 33
(i) as soon as available, but in any event within
forty-five (45) days prior to the end of each fiscal year, an annual plan for
the Company's next fiscal year, prepared on a monthly basis, including
projected balance sheets, profit and loss statements and sources and
applications of funds and cash flow statements for such months and, as soon as
prepared in final form, any other budgets or revised budgets prepared by the
Company;
(ii) as soon as available, but in any event within
twenty (20) days after the end of each month (except the last month of the
fiscal year), consolidated balance sheets of the Company and its subsidiaries,
if any, including MCI, as at the end of such month, backlog report, and
consolidated statements of income, shareholders' equity and changes in financial
position, and sources and applications of funds and cash flow statements of the
Company and its subsidiaries, if any, including MCI, for such month, and a
report in comparative form showing the figures for such month, the figures for
the corresponding month of the preceding year, and the budgeted figures for the
current month, accompanied by management's analysis of the results of the month
and a statement explaining any differences between budgeted and actual results;
and
(iii) such other information relating to the
financial condition, business, prospects or corporate affairs of the Company as
the Investor or any assignee of the Investor may from time to time reasonably
request.
(c) All financial statements required to be delivered
pursuant to Section 8.1(a) above shall be prepared in accordance with generally
accepted accounting principles consistently applied (except that monthly
financial statements need not comply with footnote requirements and may be
subject to standard year-end audit adjustments, provided that the omission of
such information is not material to an understanding of the Company's financial
situation), shall present fairly the financial condition of the Company and its
subsidiaries, if any, including MCI, and its results of operations for the
period specified, and shall be accompanied by an instrument executed for the
Company by the chief financial officer or chief executive officer of the Company
certifying that such statements comply with the requirements of this Section
8.1(b).
8.2 Inspection Rights. The Company shall permit each Investor, at
such Investor's expense, to visit and inspect the Company's properties, to
examine its books of account and records and to discuss the Company's affairs,
finances and accounts with its officers, all at such reasonable times as may be
requested by the Investor. At the Company's request, an Investor will sign a
non-disclosure agreement in the form of Exhibit E-3.
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<PAGE> 34
8.3 Termination of Covenants. The covenants set forth in Section 8.1
shall terminate as to Investors and be of no further force or effect upon the
first sale of the Company's Common Stock pursuant to a registration statement
filed by the Company under the 1933 Act in connection with a firm commitment
underwritten offering of such Common Stock to the general public.
8.4 Insurance. The Company shall maintain in full force and effect
insurance policies issued by insurers of recognized responsibility insuring the
Company and its properties and business against such losses and risks and in
such amounts as are deemed adequate for the business of the Company by its Board
of Directors. The Company shall use its best efforts to obtain and maintain
product liability insurance in such amounts as the Board of Directors deems
appropriate.
8.5 Key Man Insurance. Within 60 days of the Closing the Company
will have procured a term life insurance policy on the life of Stephen H. Ober
or his successor in the amount of at least $1,000,000 with the proceeds payable
to the Company. The Company shall keep such policy in effect until the
termination of Mr. Ober's employment, and shall provide the Investors with
evidence that such policy is in effect, upon request.
8.6 FIRPTA. The Company acknowledges that certain Investors may have
foreign persons and entities as partners and that the Company may be required,
and hereby agrees, to file in the future with the IRS all statements with its
United States income tax returns which are required under Section 1.897-2(h) of
the Regulations; provided that each Investor provides the Company, upon request,
with such information as the Company needs to prepare and file such returns. The
Company will use its reasonable efforts consistent with sound business practice
to avoid becoming a "United States real property holding corporation" within the
meaning of Section 897(c)(2) of the Code. However, in the event the Company in
the future becomes a "United States real property holding corporation" within
the meaning of Section 897(c)(2) of the Code, the Company shall promptly notify
each Investor in writing of such fact. Within thirty (30) days after receipt of
a request from an Investor, the Company shall prepare and deliver to such
Investor the statement required under Regulation Section 1.8972(h)(iv) and
either or both of the following documents: (i) an affidavit in conformance with
the requirements of Section 1445 (b)(3) of the Code or (ii) a notarized
statement, executed by an officer having actual knowledge of the facts, that the
shares of Company stock held by such Investor are of a class that is regularly
traded on an established securities market, within the meaning of Section
1445(b)(6) of the Code. If the Company is unable to provide either of the
documents described in (i) or (ii) above, if requested, it shall promptly notify
such Investor in writing of the reasons for such inability. Finally, upon the
request of
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<PAGE> 35
an Investor and without regard to whether either document described in (i) or
(ii) above has been requested, the Company shall cooperate fully with the
efforts of such Investor to obtain a "qualifying statement," within the meaning
of Section 1445(b)(4) of the Code or such other documents as would excuse a
transferee of a foreign investor's interest from withholding of income tax
imposed pursuant to Sections 897(a) and 1445 of the Code.
8.7 Board of Directors. The Company shall use its best efforts to
cause two nominees of the Investors to be members of the Company's Board of
Directors at all times. All travel and related expenses incurred in connection
with attending meetings of the Company's Board of Directors by such directors,
and any other director, shall be promptly reimbursed by the Company upon receipt
of reasonable documentation of such expense.
8.8 Employee Invention and Trade Secret Agreement. The Company and
MCI shall require all employees and officers of the Company and MCI, and all
consultants of the Company and MCI, to enter into an Invention and Trade Secret
Agreement in the forms attached hereto as Exhibit E-1 and E-2, respectively (or
in such other form as the Company's Board of Directors may approve), as of the
date of commencement of their employment, term of office, or consultancy, as the
case may be, with the Company, provided, however, that non-officer employees and
consultants not involved in the creation or development of inventions,
improvements, works of authorship, formulas, processes, computer programs,
databases or trade secrets need only sign a Non-Disclosure Agreement in the form
attached hereto as Exhibit E-3.
8.9 Activities of MCI. MCI shall not undertake any activities not in
the normal course of business. Without limiting the foregoing, MCI shall not
amend it articles of incorporation or bylaws, effect any sale, conveyance,
encumbrance or otherwise dispose of all or substantially all of the assets of
that corporation, merge or consolidate with any other corporation, effect a
reclassification or recapitalization, issue any shares of stock, or any bonds,
notes, or other obligations convertible into or exchangeable for, or having
option rights to purchase, any shares of MCI stock, declare or pay any dividends
or effect any stock split or combination, or redeem or purchase any shares of
its stock.
8.10 Fees of Special Counsel. At the Closing, the Company will pay
all reasonable legal fees and expenses of Fenwick, Davis & West, incurred by the
Investors, or any of them, in connection with the transactions contemplated by
this Agreement.
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<PAGE> 36
9. MISCELLANEOUS.
9.1 Survival of Warranties. The warranties, representations and
covenants of the Company contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing for a
period of 3 years after the Closing, and shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the
Investors.
9.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.
9.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Utah, except as pertains to conflict
of laws.
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instruments.
9.5 Headings. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which are incorporated herein by this reference.
9.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the Schedule of Investors or, in the case of the
Company and MCI, 1290 West 2320 South, Suite A, Salt Lake City, Utah 84119, or
at such other address as such party may designate by ten (10) days advance
written notice to all other parties.
9.7 Finder's Fees. Each party represents that it neither is nor will
be obligated for any finder's or broker's fee or commission in connection with
this transaction, except that it is acknowledged by all parties that the right
of Joel D. Kellman and W. Edward Massey to purchase certain shares of the
Company's Common Stock are, or may be, conditioned upon the closing of a
financing. Each Investor agrees to indemnify and
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<PAGE> 37
to hold harmless the Company from any liability for any commission or
compensation in the nature of a finders' or broker's fee (and the costs and
expenses of defending against such liability or asserted liability) for which
the Investor or any of its officers, partners, employees, or representatives is
responsible. The Company agrees to indemnify and hold harmless each Investor
from any liability for any commission or compensation in the nature of a
finder's or broker's fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.
9.8 Attorneys' Fees. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement or the Revised Articles, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
9.9 Amendments and Waivers. Except as specified in subsection 7.13,
any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the holders of Purchased Shares and/or Conversion Shares representing at
least sixty percent (60%) of the aggregate number of shares of Common Stock
into which the Purchased Shares then are convertible or have been converted
(excluding any of such shares that have been sold to the public); provided,
however, that no such amendment or waiver that materially and adversely affects
Cordis in a manner substantially different than the New Investors shall be
binding on Cordis without Cordis' approval. Any amendment or waiver effected in
accordance with this section shall be binding upon each holder of any securities
purchased under this Agreement at the time outstanding (including securities
into which such securities are convertible), each future holder of such
securities, and the Company; provided, however, that no condition set forth in
Section 5 may be waived with respect to any Investor who does not consent
thereto.
9.11 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
9.12 Entire Agreement. This Agreement, together with all exhibits
and schedules hereto (including without limitation the Revised Articles)
constitutes the entire
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<PAGE> 38
understanding and agreement of the parties with respect to the transactions
contemplated herein and supersede all prior understandings and agreements with
respect to such transactions. Without limiting the foregoing, it is hereby
agreed that this Agreement supercedes the Cordis Agreement completely, and that
the Cordis Agreement is null and void and of no further effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
THE "COMPANY" INVESTORS:
JMW ACQUISITION CO. NEWTEK VENTURES,
a California limited partnership
By: By: /s/ Peter J. Wardle
-------------------------------- -------------------------------------
Print Name: Print Name: Peter J. Wardle
------------------------- -----------------------------
Title: President Title: General Partner
------------------------- ----------------------------------
"MCI" MBW VENTURE PARTNERS LIMITED
PARTNERSHIP
MOTION CONTROL, INC. By: MBW MANAGEMENT, INC.
By: By:/s/ Robert J. Harrington
-------------------------------- -------------------------------------
Print Name: Print Name: Robert J. Harrington
------------------------- -----------------------------
Title: Title: Vice President
----------------------------- ----------------------------------
MICHIGAN INVESTMENT FUND L.P.
By: MBW MANAGEMENT, INC.
By:/s/ Robert J. Harrington
-------------------------------------
Print Name: Robert J. Harrington
-----------------------------
Title: Vice President
----------------------------------
UTAH TECHNOLOGY VENTURE FUND I
By: Impetus, Inc.
By:
-------------------------------------
Print Name:
------------------------------
Title: President
-----------------------------------
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<PAGE> 39
CORDIS CORPORATION
By: /s/ Robert C. Strauss
-------------------------------------
Print Name: Robert C. Strauss
------------------------------
Title: President
-----------------------------------
/s/ Ian R.N. Bund
-----------------------------------------
Ian R.N. Bund
/s/ James R. Weersing
-----------------------------------------
James R. Weersing
/s/ Robert J. Harrington
-----------------------------------------
Robert J. Harrington
/s/ Ned M. Weinshenker
-----------------------------------------
Ned M. Weinshenker, Trustee of
Ned M. Weinshenker Profit
Sharing Plan
-39-
<PAGE> 40
LIST OF EXHIBITS
Exhibit A - Schedule of Investors
Exhibit B - Revised Articles of Incorporation
Exhibit C - Schedule of Exceptions (including list of Proprietary
Assets)
Exhibit D - Outstanding Security Holders of the Company and MCI
Exhibit E - Invention and Trade Secret Agreements
Exhibit F - Material Agreements of the Company
Exhibit G - Financial Statements
Exhibit H - Shareholder Agreement
Exhibit I - Opinion of Hansen and Anderson
Exhibit J - Bylaws
- 40 -
<PAGE> 41
EXHIBIT A
Schedule of Investors
<TABLE>
<CAPTION>
Series and Number of
Shares of Preferred Purchase
Investor Stock Purchased Price
- ---------- -------------------- --------
<S> <C> <C>
Newtek Ventures 1,789,028 $675,000.26
500 Washington Street, Series B Stock
Suite 720
San Francisco, CA 94111
Attn: Peter Wardle
MBW Venture Partners 1,352,042 $510,125.44
Limited Partnership Series B Stock
c/o MBW Management, Inc.
350 Second Street, Suite 7
Los Altos, CA 94022
Attn: James R. Weersing
Michigan Investment 403,857 $152,375.24
Fund L.P. Series B Stock
c/o MBW Management, Inc.
350 Second Street, Suite 7
Los Altos, CA 94022
Attn: James R. Weersing
Utah Technology Venture Fund 397,562 $150,000.14
419 Wakara Way Series B Stock
Salt Lake City, UT 84108
Attn: James C. Dreyfous
Cordis Corporation 67,200 As set forth
10555 W. Flagler Street Series A Stock in section 1.2 of
Miami, FL 33174 172,800 the Agreement
Attn: Reid C. Becker Series C Stock
Ian R.N. Bund 13,252 $4,999.98
c/o MBW Management, Inc. Series B Stock
350 Second Street, Suite 7
Los Altos, CA 94022
James R. Weersing 13,252 $4,999.98
c/o MBW Management, Inc. Series B Stock
350 Second Street, Suite 7
Los Altos, CA 94022
Robert J. Harrington 2,650 $999.85
c/o MBW Management, Inc. Series B Stock
350 Second Street, Suite 7
Los Altos, CA 94022
</TABLE>
<PAGE> 42
<TABLE>
<CAPTION>
Series and Number of
Shares of Preferred Purchase
Investor Stock Purchased Price
- -------- -------------------- ---------
<S> <C> <C>
Ned M. Weinshenker, Trustee 3,975 $1,499.77
of Ned M. Weinshenker Series B Stock
Profit Sharing Plan
c/o MBW Management, Inc.
350 Second Street, Suite 7
Los Altos, CA 94022
---------
Total 4,215,618
</TABLE>
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<PAGE> 43
LIST OF EXHIBITS
Exhibit A - Schedule of Investors
Exhibit B - Revised Articles of Incorporation
Exhibit C - Schedule of Exceptions (including list of
Proprietary Assets)
Exhibit D - Outstanding Security Holders of the Company and MCI
Exhibit E - Invention and Trade Secret Agreements
Exhibit F - Material Agreements of the Company
Exhibit G - Financial Statements
Exhibit H - Shareholder Agreement
Exhibit I - Opinion of Hansen and Anderson
Exhibit J - Bylaws
<PAGE> 44
EXHIBIT "B"
REVISED
ARTICLES OF INCORPORATION
OF
JMW ACQUISITION CO.
Pursuant to the applicable provisions of Utah law, as contained in
Section 16-10-60 of the Utah Business Corporation Act, we, the undersigned
natural persons, revise the following Articles of Incorporation. These revised
Articles of Incorporation shall supersede the original Articles of
Incorporation and all amendments to them to date.
ARTICLE I
The name of the corporation is JMW ACQUISITION CO.
ARTICLE II
The period of the corporation's duration is perpetual.
ARTICLE III
The purpose of purposes for which the corporation is organized are:
1. To engage in the business of the research, development,
manufacture and sale of medical devices, products and/or drugs, and to acquire
other businesses or companies related thereto or to the science of medicine or
other biological sciences.
2. To lease, buy, and hold, to sell, mortgage, exchange, assign, and
otherwise dispose of, to improve, manage, contain, conserve and operate and
generally to trade and deal in and with as principal or agent, and otherwise
acquire, invest in or hold, improved and unimproved real and personal property
in the United States and any foreign country; and to do all things related
thereto, including, but not limited to, becoming a limited general partner or
venturer in undertakings of all types.
3. In addition to the foregoing purposes, the Corporation may engage
in any and all other lawful acts that, presently or in the future, may legally
be performed by a corporation organized under the laws of the State of Utah,
including, without limitation, becoming a limited or general partner or
venturer in undertakings of all types.
<PAGE> 45
ARTICLE IV
The corporation is authorized to issue two classes of shares, one
designated "Common Stock" and the other designated "Preferred Stock". Both
classes of shares shall have a par value of $0.001 per share. The number of
shares of Common Stock that this corporation is authorized to issue is
15,000,000. The number of shares of Preferred Stock that this corporation is
authorized to issue is 4,215,618, of which 67,200 shall be designated Series A
Preferred Stock, 3,975,618 shall be designated Series B Preferred Stock, and
172,800 shall be designated Series C Preferred Stock.
The relative rights, preferences, privileges and restrictions granted
to or imposed upon the Series A Preferred Stock, the Series B Preferred Stock
and the Series C Preferred Stock, or the holders thereof, are as follows:
1. Definitions. For purposes of this Article IV the following terms
shall have the following definitions:
(A) Series A Stock shall mean Series A Preferred Stock.
(B) Series B Stock shall mean Series B Preferred Stock.
(C) Series C Stock shall mean Series C Preferred Stock.
(D) Preferred Stock shall mean the Series A Stock, Series B Stock
and Series C Stock, collectively.
(E) Common Stock shall mean this corporation's Common Stock.
(F) Liquidation Preference for Series A Stock shall mean $5.2083
per share plus any declared but unpaid dividends on such shares: for Series B
Stock shall mean $0.3773 per share plus any declared but unpaid dividends on
such shares; and for Series C Stock shall mean $5.2083 per share plus any
declared but unpaid dividends on such shares; all appropriately adjusted for
any stock combinations, stock splits, stock dividends or stock distributions (a
"Stock Combination or Division") with respect to such shares.
(G) Redemption Price for Series A Stock shall mean $5.2083 per
share plus any declared but unpaid dividends on such shares; for Series B Stock
shall mean $0.3773 per share plus any declared but unpaid dividends on such
shares; and for Series C Stock shall mean $5.2083 per share plus any declared
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but unpaid dividends on such shares; all as appropriately adjusted for any
Stock Combinations or Divisions with respect to such shares.
(H) Original Issue Date shall mean August 4, 1987.
2. Dividends. Dividends shall be paid on the Common and Preferred
Stock at such times and in such amounts as the Board of Directors deems
advisable. Notwithstanding the foregoing, no dividend (other than a dividend
payable solely in Common Stock) shall be declared or paid on any share of
Common Stock unless an equal or greater dividend per share has first been
declared and paid on each share of Preferred Stock, as appropriately adjusted
for any Stock Combinations or Divisions. Each share of Preferred Stock,
regardless of series, shall be paid the same dividend per share.
3. Liquidation Rights. In the event of any liquidation, dissolution,
or winding up of this corporation, either voluntary or involuntary,
distributions to the shareholders of this corporation shall be made in the
following manner.
Section 3.1 Series A Stock And Series B Stock Liquidation Rights.
The holders of Series A Stock and Series B Stock shall be entitled to receive,
prior and in preference to any distribution of any of the assets or surplus
funds of this corporation to the holders of Series C Stock or Common Stock by
reason of their ownership of such stock, an amount equal to their Liquidation
Preference for each share of Series A Stock and Series B Stock then held by
them. If such assets and funds are insufficient to permit the payment to the
holders of Series A Stock and Series B Stock of the full aforesaid preferential
amount, then the entire assets and funds of this corporation legally available
for distribution shall be distributed pro-rata among the holders of the Series A
Stock and Series B Stock in the proportion that the amount that a given holder
would receive as a liquidation preference on such holder's shares of Series A
Stock and Series B Stock, if such preference was paid in full, bears to the
total liquidation preference that would be received on all the outstanding
Series A Stock and Series B Stock, if such preference was paid in full.
Section 3.2 Series C Stock Liquidation Rights. After payment to the
holders of Series A Stock and Series B Stock of the amounts set forth in Section
3.1 above, the holders of the Series C Stock shall be entitled to receive, prior
and in preference to any distribution of any of the assets or surplus funds of
this corporation to the holders of Common Stock by reason of their ownership of
such stock, an amount equal to their Liquidation Preference for each share of
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Series C Stock then held by them. If such assets and funds shall be
insufficient to permit the payment to the holders of Series C Stock of the full
aforesaid preferential amount, then the entire assets and funds of this
corporation legally available for distribution and remaining after the payments
required by Section 3.1 have been made shall be distributed pro-rata among the
holders of the Series C Stock based on the number of shares of Series C Stock
held by each of them.
Section 3.3 Remaining Liquidation Rights. After payment to the
holders of Preferred Stock of the amounts set forth in Sections 3.1 and 3.2
above, the entire remaining assets and funds of this corporation legally
available for distribution, if any, shall be distributed among the holders of
common Stock and Preferred Stock pro-rata, based on the number of shares of
Common Stock held by each such holder (to be calculated for this purpose as if
all outstanding shares of Preferred Stock have been converted into Common Stock
pursuant to the terms hereof).
Section 3.4 Consolidation, Merger, Sale of Assets. A consolidation
or merger of the corporation with or into any other corporation or corporations,
or a sale of all or substantially all of the assets of the corporation, shall
not be deemed to be a liquidation, dissolution or winding-up within the meaning
of this Section 3.
4. Voting Rights.
Section 4.1 Preferred Stock Rights. Except as otherwise expressly
provided herein or as required by law, the holder of each share of Preferred
Stock shall be entitled to one vote for each share of Common Stock into which
such shares of Preferred Stock could then be converted (with any fractional
share determined on an aggregate conversion basis being rounded up or down to
the nearest whole share), shall have voting rights and powers equal to the
voting rights and powers equal to the voting rights and powers of a holder of
Common Stock, shall vote with the holders of Common Stock and not as a separate
class, and shall be entitled to notice of any shareholders meeting in accordance
with the Bylaws of the corporation. If these Revised Articles of Incorporation
or the law provides for the holders of Preferred Stock to vote separately from
the holders of Common Stock on a matter, then all series of Preferred Stock
shall vote together as one class. Under no circumstance shall any series of
Preferred Stock be entitled to vote separately on a matter.
Section 4.2 Cumulative Voting. Holders of the corporation's stock
entitled to vote at any election of directors of this corporation may cumulate
their votes and give one candidate a number of votes equal to the number of
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directors to be elected multiplied by the number of votes to which such
holder's shares are normally entitled, or distribute the such holder's votes on
the same principal amongst as many candidates as such holder thinks fit. No
holder, however, may cumulate such holder's vote for one or more candidates
unless such candidate's or candidates' names have been placed in nomination
prior to the voting and the shareholder has given notice at the meeting, prior
to voting, of such shareholder's intention to cumulate such shareholder's
votes. If any one holder has given such notice, all holders may cumulate their
votes for candidates in nomination.
5. Redemption.
Section 5.1 Mandatory Redemption of Series A Stock and Series B
Stock. The corporation shall redeem, on July 15, 1992, and on each of the next
four anniversaries of such date, 13,440 shares of Series A Stock and 795,099
shares of Series B Stock (or, as to a given series, all outstanding shares of
such series, if such amount is less than the amount of shares of such series
scheduled to be redeemed) at the then current Redemption Price for such shares,
from any source of funds legally available therefore. the shares of each series
to be redeemed shall be redeemed pro-rata from each holder of stock of such
series, based on the number of shares of stock of such series held by such
holder. If insufficient funds are legally available to redeem all the shares of
Series A Stock and Series B Stock to be redeemed on a given redemption date,
then the corporation shall redeem shares of Series A Stock and Series B Stock
from the holders thereof to the maximum extent permitted by law. in such event
the available funds shall be apportioned between the holders of Series A Stock
and Series B Stock based on the aggregate Redemption Price of the shares of each
such series scheduled to be redeemed. The funds available for redemption of
shares of each series shall be used to redeem shares from each holder of shares
of such series pro-rata, based on the number of shares of such series held by
such holder. Any shares scheduled for redemption that are not redeemed shall be
carried forward and redeemed (together with the other shares of Series A Stock
and Series B Stock that are then due to be redeemed) on the next redemption date
(or after July 15, 1996, as soon as legally possible) to the full extent of the
legally available funds of the corporation at such time. Shares of Series A
Stock and Series B Stock that are scheduled for redemption but are not redeemed,
shall continue to be entitled to all of the rights, preferences, privileges, and
restrictions accorded to such shares until they have been redeemed.
Section 5.2 Mandatory Redemption of Series C Stock. The corporation
shall redeem, on the later of July 15,
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1997, or the first anniversary of such date after the Series A Stock and Series
B Stock have been fully redeemed pursuant to the provisions of Section 5.1
hereof (the "First Series C Redemption Date"), and on each of the next four
anniversaries of the First Series C Redemption Date, 34,560 shares of Series C
Stock (or all outstanding shares of such series, if less), at the then current
Redemption Price for such series, from any source of funds legally available
therefore. The shares to be redeemed shall be redeemed pro-rata from each
holder of Series C Stock, based on the number of shares of Series C Stock held
by such holder. If insufficient funds are legally available to redeem all of
the shares of Series C Stock to be redeemed on a given redemption date, then
the corporation shall redeem the maximum number of shares of Series C Stock
permitted by law, and such redemption shall be made pro-rata from holders of
Series C Stock based on the number of shares of Series C Stock held by such
holder. Any shares scheduled for redemption that are not redeemed shall be
carried forward and redeemed (together with the other shares of Series C Stock
that are then due to be redeemed) on the next redemption date (or, after July
15, 2001, as soon as legally possible), to the full extent of the legally
available funds of the corporation at such time. Shares of Series C Stock that
are scheduled for redemption but are not redeemed shall continue to be entitled
to all of the rights, preferences, privileges and restrictions of such shares
until they have been redeemed.
Section 5.3 Notice of Redemption. At least forty five days (but not more
than ninety days) prior to the date fixed for any redemption pursuant to the
provisions of Section 5.1 or Section 5.2 (the "Redemption Date"), the
corporation shall give notice of such redemption (the "Redemption Notice") to
all holders of Series A Stock and Series B Stock (in the case of a redemption
pursuant to Section 5.1), and to all holders of Series C Stock (in the case of
a redemption pursuant to Section 5.2), (1)that the corporation is required to
redeem shares and the number of shares of such holder to be redeemed; (2) the
Redemption Date; (3) the Redemption Price; (4) the place at which such holders
may obtain payment of the Redemption Price upon surrender of their share
certificates; and (5) the date on which any right to convert the shares to be
redeemed to Common Stock terminates. Shares called for redemption in a
Redemption Notice and subsequently converted by the holder thereof prior to the
Redemption Date shall reduce the number of shares required to be redeemed by
the corporation on such Redemption Date pursuant to Section 5.1 or 5.2.
Section 5.4 Deposit of Redemption Funds. On or prior to the Redemption
Date this corporation shall deposit the Redemption Price of all shares to be
redeemed with a bank or
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trust company having aggregate capital and surplus in excess of $20,000,000, as
a trust fund, with irrevocable instructions and authority to the bank or trust
company to pay, on and after such Redemption Date, the Redemption Price of the
shares to their respective holders upon the surrender of their share
certificates. Any funds deposited by this corporation pursuant to this section
for the redemption of shares thereafter converted into Common Stock shall be
returned to this corporation promptly upon such conversion. The balance of any
funds deposited by this corporation pursuant to this section remaining
unclaimed at the expiration of one year following such Redemption Date shall be
returned to this corporation promptly upon its written request.
Section 5.5 Surrender of Shares. On or after each Redemption Date, each
holder of shares to be redeemed shall surrender such holder's certificates
representing such Redemption Notice, and thereupon the Redemption Price of such
shares shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof. Upon redemption of only a
portion of the number of shares covered by a given certificate surrendered for
redemption, the corporation shall issue and deliver a new certificate covering
the unredeemed portion of the original certificate. From and after such
Redemption Date, unless payment of the Redemption Price is not made by the
corporation, all rights of the holders of the shares of stock to be redeemed as
holders of such stock (except the right to receive the Redemption Price without
interest upon surrender of their certificates), shall cease and terminate with
respect to such shares.
Section 5.6 Funds Available for Stock Redemption or Repurchase. Subject
to the other provisions of these Revised Articles of Incorporation, the
corporation shall have the right to redeem or repurchase its shares to the
extent of its unreserved and unrestricted earned surplus, and also to the extent
of its unreserved and unrestricted capital surplus.
Section 5.7 Return to Unissued Status. Shares of any series of Preferred
Stock that have been redeemed or reacquired in any manner by this corporation,
or which, if convertible, have been converted into shares of stock of another
class or classes, shall be retired, shall not be reissued and shall be cancelled
in accordance with the procedure required by the Utah Business Corporation Act.
6. Conversion. The holders of the Preferred Stock shall have conversion
rights as follows (the "Conversion Rights"):
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Section 6.1 Right to Convert/Automatic
Conversion.
(A) Each share of Preferred Stock shall be convertible, at the
option of the holder thereof, at any time after the Original Issue Date, at the
office of this corporation or any transfer agent for the Preferred Stock, into
such number of fully paid an non-assessable shares of Common Stock as is
determined by dividing $0.3773 (the "Original Issue Price") by the Conversion
Price for shares of Preferred Stock at the time in effect. The initial
Conversion Price for shares of Preferred Stock shall be the Original Issue
Price; provided, however, that the Conversion Price for the Preferred Stock
shall be subject to adjustment as set forth in this Section 6.
(B) In the event of redemption of any shares of Preferred Stock
pursuant to Section 5 hereof, the Conversion Rights shall terminate as to the
shares designated for redemption at the close of business on the day prior to
the Redemption Date, unless payment of the Redemption Price is not made by the
corporation.
(C) Each share of Preferred Stock shall automatically be
converted into shares of Common Stock at the then effective Conversion Price
immediately upon the closing of the corporation's sale of its Common Stock to
the public in a bona fide, underwritten public offering pursuant to a
registration statement under the Securities Act of 1933, as amended, the public
offering price of which is not less than $1.1319 per share (as appropriately
adjusted for any Stock Combinations or Divisions), and resulting in the receipt
by the corporation of at least $5,000,000 in gross proceeds.
Section 6.2 Mechanics of Conversion
(A) To convert Preferred Stock, the holder thereof shall
surrender the certificate or certificates representing such Preferred Stock,
duly endorsed, with signature guaranteed, at the principal corporate office of
this corporation or of any transfer agent for the Preferred Stock, and shall
give written notice to this corporation at its principal corporate office, of
the election to convert the same and shall state therein the name or names in
which the certificate or certificates for shares of Common Stock are to be
issued. This corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Preferred Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as aforesaid, and a check
payable to the holder in the amount of any cash amount payable to the holder in
lieu of fractional
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shares of Common Stock, as provided in Section 6.8. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the certificate representing the shares of Preferred Stock
to be converted, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock as of such date. If
the conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, the conversion may, at the
option of any holder tendering Preferred Stock for conversion, be conditioned
upon the closing of the sale of securities pursuant to such offering, in which
event the person(s) entitled to receive the Common Stock issuable upon such
conversion of the Preferred Stock shall not be deemed to have converted such
Preferred Stock until immediately prior to the closing of such sale of
securities.
(B) Notwithstanding the foregoing, in the event of an automatic
conversion pursuant to Section 6.1(C) the Preferred Stock shall not be deemed
to be converted until immediately prior to the closing of such sale of
securities. Upon the closing of such an offering the outstanding shares of
Preferred Stock shall be converted automatically without further action by the
holders of said shares and whether or not the certificates representing said
shares are surrendered to this corporation or its transfer agent; provided,
however, this corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon conversion of any shares of
Preferred Stock unless certificates evidencing such shares of Preferred Stock
are either delivered to this corporation or any transfer agent, or the holder
notifies the corporation that said certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to this corporation to
indemnify this corporation against any loss incurred by it in connection
therewith. Upon the occurrence of the automatic conversion of the Preferred
Stock, the holders of the Preferred Stock shall surrender the certificates
representing said shares at the office of this corporation or of any transfer
agent for the Preferred Stock. Thereupon, there shall be issued and delivered
to such holder, promptly at such office and in such holder's name as shown on
such surrendered certificate or certificates (or such other name as such holder
may designate), a certificate or certificates for the number of shares of
Common Stock into which the shares of Preferred Stock surrendered were
convertible on the date on which the event effecting the automatic conversion
occurred.
Section 6.3 Conversion Price Adjustment of Preferred Stock.
The Conversion Prices of the Preferred Stock shall be subject to adjustment
from time to time as follows:
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(A) (i) If the corporation shall issue any Additional Stock
(as defined in Section 6.3(B) below) for a consideration per share less than
the Conversion price of the Preferred Stock in effect immediately prior to the
issuance of such Additional Stock, then the applicable Conversion Price for the
Preferred Stock in effect immediately prior to each such issuance shall
forthwith be adjusted to a price determined by multiplying such Conversion
Price by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issuance plus the number of
shares of Common Stock which the aggregate consideration received by the
corporation for all such Additional Stock so issued would purchase at the
Conversion Price in effect immediately prior to the issuance, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of shares of Additional
Stock; provided that, for the purpose of this Section 6.3(A)(i), all shares of
Common Stock (except as otherwise provided in this Section 6.3(A)) issuable
upon conversion of all outstanding shares of Preferred Stock shall be deemed to
be outstanding, and immediately after any shares of Additional Stock are deemed
to be issued pursuant to Section 6.3(A)(v) such shares of Additional Stock
shall be deemed to be outstanding.
(ii) No adjustment of the applicable Conversion Price shall
be made in an amount less than one cent ($0.01) per share, provided that any
adjustments which are not required to be made by reason of this sentence shall
be carried forward and shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts to an adjustment of
one cent ($0.01) per share or more in the Conversion Price. Except to the
limited extent provided for in Sections 6.3(A)(v)(c) and 6.3(A)(v)(d), no
adjustment of such Conversion Price pursuant to this Section 6.3(A) shall have
the effect of increasing such Conversion Price above the Conversion Price in
effect immediately prior to such adjustment.
(iii) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor
before deducting any discounts, commissions or other expenses allowed, paid or
incurred by this corporation for any underwriting or otherwise in connection
with the issuance and sale thereof.
(iv) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined by the Board of
Directors irrespective of any accounting treatment.
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(v) In the case of the issuance of options to purchase or
rights to subscribe for Common Stock, securities by their terms convertible
into or exchangeable for Common Stock, or options to purchase or rights to
subscribe for such convertible or exchangeable securities (that are not
expressly excluded form the definition of Additional Stock), the following
provisions shall apply:
(a) The aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options to purchase or rights to subscribe
for Common Stock shall be deemed to have been issued at the time such options
or rights were issued and for a consideration equal to the consideration
(determined in the manner provided in Sections 6.3(A)(iii) and 6.3(A)(iv)),
if any, received by the corporation upon the issuance of such options or rights
plus the minimum purchase price provided in such options or rights for the
Common Stock covered thereby.
(b) The aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible or
exchangeable securities, or upon the exercise of options to purchase or rights
to subscribe for such convertible or exchangeable securities and subsequent
conversion of or exchange thereof, shall be deemed to have been issued at the
time such securities were issued or such options or rights were issued and for
a consideration, if any, received by the corporation for any such securities,
or for any such options or rights, plus the minimum additional consideration,
if any, to be received by the corporation upon the conversion or exchange of
such securities or the exercise of any options or rights and conversion or
exchange of related securities, for such Common Stock (the consideration in
each case to be determined in the manner provided in Sections 6.3(A)(iii) and
6.3(A)(iv)).
(c) In the event of any change in the number of shares of
Common Stock deliverable or any increase in the consideration payable to
this corporation upon exercise of such options or rights or upon conversion of
or in exchange for such convertible or exchangeable securities, including, but
not limited to, a change resulting from the antidilution provisions thereof,
the Conversion Price of the Preferred Stock obtained with respect to the
adjustment which was made upon the issuance of such options, rights or
securities, and any subsequent adjustments based thereon, shall be recomputed
to reflect such change, but no further adjustment shall be made for the actual
issuance of Common Stock or any payment of such consideration upon the exercise
of any such options or rights or the conversion or exchange of such related
securities.
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(d) Upon the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
the Conversion Price of the Preferred Stock obtained with respect to the
adjustment which was made upon the issuance of such options, rights or
securities or options or rights related to such securities, and any subsequent
adjustments based thereon, shall be recomputed to reflect the issuance of only
the number of shares of Common Stock actually issued upon the exercise of such
options or rights, upon the conversion or exchange of such securities or upon
the exercise of the options or rights and conversion or exchange of such
related securities.
(B) "Additional Stock" shall mean any shares of Common Stock issued
(or deemed to have been issued pursuant to Section 6.3(A)(v)) by this
corporation after the Original Issue Date other than:
(i) Common Stock issued pursuant to a transaction described in
subsection 6.3(C) hereof;
(ii) Shares of Common Stock issuable or issued to employees,
officers, directors, or consultants of this corporation directly or pursuant to
a stock option plan or agreement or restricted stock plan or agreement approved
by the directors of this corporation, at any time when the total number of
shares of Common Stock so issuable or issued does not exceed 800,000
(appropriately adjusted to reflect subsequent Stock Combinations or Divisions,
and net of any such shares repurchased by the corporation at cost upon
termination of employment or services, and net of any such options which may
expire unexercised);
(iii) Common Stock issued or issuable upon conversion of the
Preferred Stock; or
(iv) Common Stock issued pursuant to subscription agreements
entered into by the corporation prior to the Original Issue Date.
(C) In the event the corporation should at any time or from time to
time after the Original Issue Date fix a record date for the effectuation of a
split of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by
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such holder for the additional shares of Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or the date of such split, dividend or
distribution if no record date is fixed), the Conversion Price of the
Preferred Stock shall be appropriately decreased so that the number of shares
of Common Stock issuable on conversion of each share of Preferred Stock shall
be increased in proportion to such increase of outstanding shares (and/or
shares deemed to be outstanding as determined in accordance with Section
6.3(A)(v)).
(D) If the number of shares of Common Stock outstanding at any time
after the Original Issue Date is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the
Conversion Price for the Preferred Stock shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of each share
of Preferred Stock shall be decreased in proportion to such decrease in
outstanding shares of Common Stock.
Section 6.4 Other Distributions. In the event this corporation shall
declare a distribution payable in securities of other persons, evidence of
indebtedness issued by this corporation or other persons, assets (excluding
cash dividends) or securities or rights not referred to in Section 6.3(C),
then, in each such case the holders of the Preferred Stock shall be entitled to
a proportionate share of any such distribution as though they were the holders
of the number of shares of Common Stock of the corporation into which their
shares of Preferred Stock are convertible as of the record date fixed for the
determination of the holders of Common Stock of the corporation entitled to
receive such distribution, or, if there is no such record date, on the date
such distribution is made.
Section 6.5 Adjustment for Reclassification, Exchange and Substitution.
If at any time or from time to time after the Original Issue Date, the Common
Stock issuable upon the conversion of the Preferred Stock is changed into the
same or a different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than a Stock
Combination or Division provided for elsewhere in this Section 6), in any such
event each holder of the Preferred Stock shall have the right thereafter to
convert such stock into the kind and amount of stock and other securities and
property receivable upon such recapitalization, reclassification or other
change by holders of the maximum number of shares of Common Stock into which
such shares of Preferred Stock could have been converted immediately prior to
such recapitalization, reclassification or change. In any such
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case, appropriate adjustment shall be made in the application of the provisions
of this Section 6 with respect to the rights of holders of Preferred Stock
after such recapitalization, reclassification or the like to the end that the
provisions of this Section 6 (including adjustment of the Conversion Price then
in effect and the number of shares receivable upon conversion of the Preferred
Stock) shall be applicable after that event and be as nearly equivalent as
possible.
Section 6.6 Reorganizations, Mergers, Sale of Assets. If at any time
or from time to time after the Original Issue Date the corporation effects a
merger, sale or conveyance of all or substantially all of the assets of the
corporation, or similar reorganization (other than a reclassification, exchange
or substitution provided for in Section 6.5), then, as a part of the merger,
sale or conveyance of assets, or other reorganization provision shall be made
so that the holders of Preferred Stock shall thereafter be entitled to receive
upon conversion of the Preferred Stock the number of shares of stock or other
securities or property of the corporation to which a holder of the number of
shares of Common Stock deliverable upon conversion of such Preferred Stock
would have been entitled upon such merger, sale or conveyance of assets or
other reorganization, subject to adjustment in respect of such stock or
securities by the terms thereof. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 6 with
respect to the rights of the holders of Preferred Stock after the merger, sale
or conveyance of assets or other reorganization to the end that the provisions
of this Section 6 (including adjustment of the Conversion Price then in effect
and the number of shares purchasable upon conversion of the Preferred Stock)
shall be applicable after that event and be nearly equivalent as practicable.
Section 6.7 No Impairment. This corporation will not, by amendment of
its Articles of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by this corporation, but will at all times in good faith assist in
the carrying out of all the provisions of this Section 6 and in the taking of
all such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Preferred Stock against impairment.
Section 6.8 No Fractional Shares. No fractional shares shall be
issued upon conversion of any of the Preferred Stock, and the number of shares
of Common Stock to be issued
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shall be rounded down to the nearest whole share. In lieu of any fractional
shares to which the holder would otherwise be entitled, the corporation shall
pay the holder cash equal to the fraction multiplied by the fair market value of
a share of such stock immediately prior to the conversion, as determined by the
Board of Directors in good faith. Whether or not fractional shares are issuable
upon such conversion shall be determined on the basis of the total number of
shares of Preferred Stock the holder is at the time converting into Common Stock
and the number of shares of Common Stock issuable upon such aggregate
conversion.
7. Notices
Section 7.1 Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, or right to
purchase or otherwise acquire any securities or property of the corporation, or
any other right (other than the right to vote shares), the corporation shall
mail to each holder of the Preferred Stock at least twenty (20) days prior to
the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or rights,
and the amount and character of such dividend, distribution or right.
Section 7.2 Manner of Notice. Any notice required or permitted to be
given by the provisions of these Revised Articles of Incorporation to the
holders of shares of Preferred Stock (or any series thereof) shall be given in
writing and shall be deemed to have been duly given if delivered personally or
when mailed by registered or certified mail, postage prepaid, to each such
holder of record of Preferred Stock (or applicable series) at such holder's
address appearing on the books of this corporation.
8. Protective Provisions for Preferred Stock. As long as at least an
aggregate of 500,000 shares of the Preferred Stock (as appropriately adjusted
for Stock Combinations or Divisions) shall be outstanding, this corporation
shall not, without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of more than 60% of the total number of shares
of Preferred Stock then outstanding, voting together as one class:
(A) Certain Changes in Authorization of Capital Stock. Increase or
decrease the total number of authorized shares of Common or Preferred Stock;
-15-
<PAGE> 59
(B) Merger, Sales of Assets. Effect any sale, conveyance,
encumbrance or otherwise dispose of all or substantially all of the assets of
this corporation, or merger of consolidation with any other corporation (other
a subsidiary in which the corporation owns at least 80% of the voting stock,
and if the corporation is the surviving corporation of the merger) or any
reclassification or recapitalization involving a change in the rights,
preferences, privileges or restrictions provided for the benefit of the then
outstanding Preferred Stock;
(C) Certain Reclassifications. Reclassify any outstanding shares
into shares having any preference or priority as to dividends, assets or other
rights superior to or on a parity with any such preference or priority of any
series of Preferred Stock;
(D) Certain Preferred Stock Changes. Amend or repeal any provision
of, or add any provision to, the corporation's articles of incorporation, if
such action would alter or change the rights, preferences, privileges, or
restrictions of the Preferred Stock;
(E) Certain Senior or Parity Securities. Issue shares of any series
or class of stock, other than Common Stock, or issue any bonds, debentures,
notes or other obligations convertible into or exchangeable for, or having
option rights to purchase, any shares of stock of this corporation other than
Common Stock;
(F) Dividends, Distributions, Splits and Combinations. Declare or
pay any dividends or other distribution on account of Common Stock, or effect
any split or combination of the Common Stock or Preferred Stock, except that
nothing herein shall limit the corporation's right to repurchase Common Stock
pursuant to Section 8(G) below; or
(G) Redemption. Purchase or redeem any capital stock of this
corporation except a purchase or redemption of Common Stock from an officer,
employee, director or consultant of this corporation pursuant to the terms of a
stock purchase or stock option plan or agreement or a redemption, pursuant to
these Articles, of Preferred Stock.
ARTICLE V
Directors of the corporation shall not have personal liability to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty except in the following circumstances:
-16-
<PAGE> 60
(A) for any breach of the director's duty of loyalty to the
corporation or its shareholders;
(B) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
(C) for actions specified under Section 16-10-44 of the Utah
Business Corporation Act; or
(D) for any transaction from which the director derived an improper
personal benefit.
If the Utah Business Corporation Act is hereafter amended to authorize the
further elimination or limitation of the liability of a director, then the
liability of a director of the corporation shall be eliminated or limited to
the fullest extent permitted by the Utah Business Corporation Act, as so
amended. Any repeal or modification of the foregoing provisions of this Article
V will be prospective only, and shall not adversely affect any limitation on
the personal liability of a director of the corporation existing at the time of
such repeal or modification.
ARTICLE VI
1. Indemnification of Officers, Directors and Employees. Each person who
was or is made a party to, or is threatened to be made a party to, or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding"), by reason of the fact that he
or she or a person of whom he or she is the legal representative, is or was a
director, officer or employee of the corporation (including any constituent
corporation absorbed in a merger) or is or was serving at the request of the
corporation (including any such constituent corporation) as a director, officer
or employee of another corporation, or of a partnership, joint venture, trust
or other enterprise, including service with respect to employee benefit plans,
shall be indemnified and held harmless by the Corporation to the fullest extent
permitted by the Utah Business Corporation Act, against all expenses, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes and
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and such indemnification shall
continue as to a person who has ceased to be a director, officer or employee
and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that the corporation shall indemnify any
such person seeking indemnity in connection with a proceeding (or part thereof)
initiated by such person only if such
-17-
<PAGE> 61
proceeding (or part thereof) was authorized by the Board of Directors of the
corporation.
2. Advance of Expenses. The corporation shall pay all expenses
incurred by such a director, officer or employee in defending any such
proceeding as they are incurred in advance of its final disposition; provided,
however, that if the Utah Business Corporation Act then so requires, the
payment of such expenses incurred by a director, officer or employee in advance
of the final disposition of such proceeding shall be made only upon delivery to
the corporation of an undertaking, by or on behalf of such director, officer or
employee to repay all amounts so advanced if it should be determined ultimately
that such director, officer or employee is not entitled to be indemnified under
this Article VI or otherwise; and provided further that the corporation shall
not be required to advance any expenses to a person against whom the corporation
brings a claim, in a proceeding, alleging that such person has breached his or
her duty of loyalty to the corporation, committed an act or omission not in
good faith or that involves intentional misconduct or a knowing violation of
law, or derived an improper personal benefit from a transaction.
3. Non-Exclusivity of Rights. The rights conferred on any person in
this Article VI shall not be exclusive of any other right that such person
may have or hereafter acquire under any statute, provision of the Articles of
Incorporation, Bylaw, agreement, vote or consent of stockholders or
disinterested directors or otherwise. Additionally, nothing in this Article VI
shall limit the ability of the corporation to indemnify persons not covered by
this Article VI, including, without limitation, agents of the corporation, to
the full extent permitted by the Utah Business Corporation Act.
4. Indemnification Contracts. The Board of Directors is authorized
to cause the corporation to enter into a contract with any director, officer or
employee of the corporation, or any person serving at the request of the
corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, including employee
benefit plans, providing for indemnification rights equivalent to or, if the
Board of Directors so determines, greater than, those provided for in this
Article VI.
5. Insurance. The corporation shall maintain insurance, at its
expense, to the extent it determines such to be reasonably available, to
protect itself, its directors and officers, and any other persons the Board of
Directors may select, against any such expense, liability or loss, whether or
not the corporation would have the power to indemnify such
-18-
<PAGE> 62
person against such expense, liability or loss under the Utah Business
Corporation Act.
6. Effect of Amendment. Any amendment, repeal or modification of any
provision of this Article VI shall be prospective only, and shall not adversely
affect any right or protection conferred on a person pursuant to this Article
VI and existing at the time of such amendment, repeal or modification.
ARTICLE VII
1. Committees. The board of directors of the corporation may designate
one or more committees of the board to exercise such authority as the board of
the directors shall delegate in the resolution establishing such committee(s),
to the extent permitted by law.
2. Preemptive Rights. Stock holders of the corporation shall not have
preemptive rights to acquire additional securities of the corporation.
3. Purchase of Shares. Subject to any limitations contained herein
relating to the repurchase or redemption of shares by the corporation, the
corporation shall have the right to purchase its own shares to the extent of
its unreserved and unrestricted earned surplus, and also to the extent of its
unreserved and unrestricted capital surplus.
ARTICLE VIII
The registered agent of the corporation is Stephen H. Ober, and the
address of the registered office of the corporation is 1290 West, 2320 South,
Suite A, Salt Lake City, Utah 84119.
In witness whereof, the undersigned has executed these Revised Articles of
Incorporation this ______ day of August, 1987.
___________________
President
___________________
Secretary
<PAGE> 63
EXHIBIT "C"
Schedule of Exceptions to Representation and Warranties
The Company and MCI, jointly and severally, hereby specify and set forth
the following exceptions to those representations and warranties given pursuant
to Section 3 of the JMW Acquisition Co. Preferred Stock Purchase Agreement.
Section 3.2(b)(iii). Exhibit D 1.1 and Exhibit D 1.2 set forth all
outstanding options and warrants to purchase common shares of MCI.
Section 3.5(b). The Subscription Agreements, and the offer and sale of
the securities that are contemplated thereby, have not been registered under
any federal or state securities laws. To the extent that an exemption from such
registration is not available with respect to such agreements, or to the
issuance of securities as contemplated thereby, the holders thereof may have
rights of rescission against the Company. The Company does not believe that any
such liability would be material and estimates the maximum aggregate monetary
exposure to the Company to be less than $5,000.
Section 3.6. The Company anticipates that the following filings under
federal or state securities laws will be made within 30 days of the Closing:
With fifteen (15) days of the Closing, the Company intends to file the
statement required by Section 25102(f) of the California Corporation Securities
Laws of 1968.
Section 3.8. Some of the Invention and Trade Secret Agreements with
consultants will not be executed until approximately 30 days after Closing,
because the individual consultants are not available at the date hereof.
<PAGE> 64
Additionally, Stephen C. Jacobsen is party to an Employment and Consultation
Agreement dated June 1, 1986 which contains provisions relating to
confidentiality and technology transfer comparable to those included in Exhibit
E-1. It is therefore not contemplated that Mr. Jacobsen will execute a separate
Exhibit E-1 Agreement.
Section 3.9. A substantial portion of the technology utilized by MCI is
not owned by MCI but is licensed from the University of Utah, or the University
of Utah Research foundation, pursuant to those agreements specified on Exhibit
F. Copies of all such license agreements have been delivered to the Investors,
which copies are true, correct and accurately describe the status of such
agreements on the date hereof.
The proprietary assets of MCI and the Company (excluding those that are
not material) are described on Exhibit F(b).
Stephen C. Jacobsen and others are employees of the Center for Engineering
Design at the University of Utah, as well as employees of MCI and/or the
Company. Such persons may be deemed to have conflicts of interest as a result
of such relationships. Neither MCI nor the Company believe any of such
conflicts will be material, and no such conflicts have arisen in the past.
During the month of May 1987 MCI discontinued substantial efforts to
complete the development of and the marketing of the S.P.A.D. and has provided
an obsolescence reserve account for the inventory on hand.
Section 3.13. The following exceptions are made to the Iomed Systems,
Inc. Five-Year Business Plan, 1987-1992, copies of which have been furnished to
each of the Investors and to Investors' counsel, Fenwick, Davis and West:
2
<PAGE> 65
Exceptions:
- -----------
Page 7,13,15 W. Edward Massey (effective August 3, 1987) resigned his
position as a member of the Board of Directors of the Company.
Page 7,13,16 Tomasz Petelenz now expects to complete his Ph.D. in late 1987.
Page 11 This agreement and arrangements with Cordis have been modified
by this Agreement.
Page 12 The Company provided an obsolescence account reserve for all
S.P.A.D. inventory on hand. There is no assurance that the
Company will be capable of obtaining any return on its original
investment in this device.
Page 13,31 Cino Rossi's Representative Agreement has been terminated. We no
longer have sales representation in Europe.
Page 7,13,15 Joel D. Kellman of Fenwick, Davis & West has been appointed as
director of JMW Acquisition Co.
Page 25,41 It is unlikely that the Company will introduce a P.C.A. system
under limited marketing/distribution (I.D.E.) during fiscal 1988.
Page 29 New applications of iontophoresis may require F.D.A. regulatory
approval in the following forms: Pre-market Approval (PMA), New
Drug Approval (NDA) and/or Abbreviated New Drug Approval (AND A).
Although our present product has a 510(k) approval, the F.D.A.
could, at its option, retroactively require a PMA for the
existing product.
Page 36 The new Phoresor unit (Phoresor II) is now targeted for market
introduction on or about October 15, 1987.
Section 3.16. Neither MCI nor the Company can make any representation as
to the absence of liens on leased property incurred by the owners of such
property. MCI believes that the premises upon which it operates its business
are subject to a deed of trust executed by the owner thereof in favor of a
third party lender.
3
<PAGE> 66
Section 1.18(f). MCI has recently conducted a salary review and, as a
result of this review has increased salaries of many of its employees. Such
increases average approximately 7% for hourly and production employees and
approximately 5% for management employees.
Section 3.20. In recent years MCI has not filed its own federal tax
returns, as such returns have been filed by Cordis, on a consolidated basis,
pursuant to a tax sharing agreement between MCI and Cordis. Neither the Company
nor MCI has or will have any liability for failure to file federal or state tax
returns.
Exception to Recital "A" The amount which MCI owes to Cordis for
loans made by Cordis to MCI is approximately $1,989,968.27, $79,733,27 of which
represents principal and accrued but unpaid interest under the Working Capital
Loan.
4
<PAGE> 67
EXHIBIT D
OUTSTANDING SHARES, OPTIONS & WARRANTS
OF
MOTION CONTROL, INC. (MCI)
AND
JMW ACQUISITION COMPANY (JMW)
<PAGE> 68
EXHIBIT D.1.1 Page 1 of 3
SHAREHOLDERS OF MOTION CONTROL, INC.
<TABLE>
<CAPTION>
Shareholders Certificate Shares Warrants
- --------------------------------- ----------- ----------- --------
<S> <C> <C> <C>
BAUM, Andrew Mark 128 250 125
BAUM, David Benjamin 129 250 125
BAUM, Joel Richard 130 250 125
BAUM, Sanford & Hanni 140 4,000 2,125
BODFISH, Ralph 36 10,000 5,000
CORDIS CORPORATION 93 150,000
100 73,000
104 1,000
105 5,000
106 1,000
111 1,000
112 150,000
114 20,000
115 7,000
116 170,000
124 50,000
135 12,000
137 2,200,000
139 73,750
---------
2,913,750
CRIDDLE, B. Deon 86 1,000 500
DANE, Henry J. 85 10,000 5,000
DANE, Maxwell 63 10,000 5,000
FALLALEH, Nancy 35 10,000 5,000
GAMBLE, Donald De & Evelyn A. 38 5,000 2,500
GOLDSTEIN, Jerome 132 13,500 6,750
GOLDSTEIN, Richard 68 10,000 5,000
GRIFFIN, Robert 89 500 250
HANOVER, Barry Keith 133 1,500
134 500
136 500
---------
2,500 1,250
HANSEN, Peter 23 1,100 550
</TABLE>
<PAGE> 69
EXHIBIT D.1.1 Page 2 of 3
SHAREHOLDERS OF MOTION CONTROL, INC.
<TABLE>
<CAPTION>
Shareholders Certificate Shares Warrants
- --------------------------------- ----------- ----------- --------
<S> <C> <C> <C>
HINKLE Trust 59 10,000 5,000
HUFFERD, Marie E. 113 5,625 2,813
HUNT, G. R. & Jane J. 153 10,000 5,000
JACOBSEN, Genevieve 80 5,000 2,500
JACOBSEN, Peter 81 5,000 2,500
JACOBSEN, Stephen C. 78 174,000 87,000
JERARD, Robert 7 3,000
31 2,300
---------
5,300 2,650
JOHNSON, Mary A. 6 1,000 500
JOHNSON, R. Todd 26 4,300 2,150
KANN, David J. 72 2,500 1,250
KANN, James 74 2,500 1,250
KANN, Peter J. 73 2,500 1,250
KANN, Thomas J. 75 2,500 1,250
KEMPIN, Ronald A. 149 5,000 2,500
KNUTTI, David 8 2,000
27 2,000
---------
4,000 2,000
KOLFF, Cornelius & Helen Hall 102 5,000 2,500
KOLFF, THE JACOB C. FAMILY
LIVING TRUST 145 15,000 7,500
KOLFF, THE WILLEM J. FAMILY
LIVING TRUST 150 83,500 41,750
KUFLIK, Freida 141 250
LAVESON, Abe (Deceased) 54 5,000 2,500
LAVESON, Eleanor (Deceased) 55 5,000 2,500
LAVESON, Sandra 120 6,430
LAVESON, Stephen D. 157 6,430
LAVESON, Stephen D. (As Custodian
for Amanda Jo Laveson) 154 380 190
LAVESON, Stephen D. (As Custodian
for Stacy Allyn Laveson) 155 380 190
</TABLE>
<PAGE> 70
Page 3 of 3
EXHIBIT D.1.1
SHAREHOLDERS OF MOTION CONTROL, INC.
<TABLE>
<CAPTION>
Shareholders Certificate Shares Warrants
- --------------------------------- ----------- ----------- --------
<S> <C> <C> <C>
LAVESON, Stephen D. (As Custodian
for Suzanne Gale Laveson (Curry) 156 380 190
LUNTZ, Richard D. 70 2,000
9 1,000
28 2,600
57 4,000
---------
9,600 4,800
MILLER, John 92 500 250
MILLER, Margaret L. & Dr. James R. 109 5,000 2,500
MOOREHEAD, Harvey R. 44 5,000 2,500
MOYER, James E. 158 5,000 2,500
MURPHY, Beverly 11 10,000 5,000
MURPHY, William P. 12 10,000 5,000
PRINCE, YEATES & GELDZAHLER 39 2,700 1,350
RADFORD, Sharon L. 138 5,000 2,500
RICHARDS, Victor, M.D. 103 5,000 2,500
SEARE, William J., M.D. 43 1,000
69 5,000
---------
6,000 3,000
STEELE, Harold J. 32 10,000 5,000
STEPHEN, Lauraine M. 152 2,500
STEPHEN, Robert L. 151 2,500 2,500
STRAUSS, Peter 64 10,000 5,000
SWANSON, Nancy V. 125 5,000 2,500
UNIVERSITY OF UTAH RESEARCH
FOUNDATION 143 5,000 --
VAN RY, J. J. 60 10,000 5,000
WEDBUSH, NOBLE, COOKE, INC. 148 2,500 2,500
WIGGINS, Finnis 58 10,000 5,000
ZULCH, Alma LaVerne 62 5,000
146 2,500
---------
7,500 2,500
--------- -------
TOTAL OUTSTANDING SHARES 3,487,875 278,133
TREASURY STOCK, COMMON 100,000
</TABLE>
<PAGE> 71
EXHIBIT D.1.2
STOCK OPTION LIST
<TABLE>
<CAPTION>
ISO
PLAN NUMBER DATE OPTION
OPTIONEE SHARES OF SHARES OF OPTION PRICE/SHARE EXPIRES
- ---------------------------- ------ --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Robert L. Stephen No 15,000 Aug 10, 1977 $1.00 Aug 10, 1987
No 24,000 Dec 7, 1983 $0.60 Dec 6, 1993
---------
TOTAL 39,000
Colleen Stephenson No 500 Sep 26, 1978 $1.50 Sep 26, 1988
No 100 Jul 29, 1979 $1.50 Jul 29, 1989
No 3,000 Dec 7, 1983 $0.60 Dec 6, 1993
---------
TOTAL 3,600
Phil Harris No 1,000 Jan 12, 1979 $1.50 Jan 12, 1989
Mary Crowther No 300 Nov 12, 1979 $1.50 Jul 29, 1980
No 500 Jul 1, 1981 $1.50 Jul 1, 1991
Yes 3,000 Dec 7, 1983 $0.60 Dec 6, 1993
---------
TOTAL 3,800
Stephen C. Jacobsen No 75,000 Jun 7, 1977 $1.00 Rescinded
Feb 12, 1983
Yes 170,000 Jul 27, 1982 $0.50 Jul 27, 1992
Yes 29,000 Dec 7, 1983 $0.60 Dec 6, 1993
---------
TOTAL 199,000
Thomas A. Wiita Yes 160,000 Jul 27, 1982 $0.50 Jul 27, 1992
Yes 34,000 Dec 7, 1983 $0.60 Dec 6, 1993
---------
TOTAL 194,000
Richard D. Luntz Yes 90,000 Jul 27, 1982 $0.50 Jul 27, 1992
Harold H. Sears Yes 10,000 Jul 27, 1982 $0.50 Jul 27, 1992
Yes 10,000 Dec 7, 1983 $0.60 Dec 6, 1993
---------
TOTAL 20,000
J. Thomas Andrew Yes 9,000 Dec 7, 1983 $0.60 Dec 6, 1993
David Bush Yes 3,000 Dec 7, 1983 $0.60 Dec 6, 1993
Ross Riches Yes 3,000 Dec 7, 1983 $0.60 Dec 6, 1993
</TABLE>
<PAGE> 72
EXHIBIT D.1.2
Page 2 of 2
<TABLE>
<CAPTION>
STOCK OPTION LIST
ISO
PLAN NUMBER DATE OPTION
OPTIONEE SHARES OF SHARES OF OPTION PRICE/SHARE EXPIRES
- ----------------- ------ --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Carl Kablitz No 5,000 Dec 7, 1983 $0.60 Dec 6, 1993
Jeff Harrow No 4,000 Dec 7, 1983 $0.60 Dec 6, 1993
Tomasz Petelenz No 3,000 Dec 7, 1983 $0.60 Dec 6, 1993
Gary Maxwell No 5,000 Dec 7, 1983 $0.60 Dec 6, 1993
R. Todd Johnson No 11,000 Dec 7, 1983 $0.60 Dec 6, 1993
Barry K. Hanover No 12,000 Dec 7, 1983 $0.60 Dec 6, 1993
Dave Knutti No 7,000 Dec 7, 1983 $0.60 Dec 6, 1993
Ed Iversen No 4,000 Dec 7, 1983 $0.60 Dec 6, 1993
Sanford G. Meek No 2,000 Dec 7, 1983 $0.60 Dec 6, 1993
Cino A. Rossi Yes 45,000 Jan 15, 1985 $0.70 Jan 14, 1995
Stephen H. Ober Yes 24,000 Jan 29, 1985 $0.70 Jan 28, 1995
--------
TOTAL SHARES 687,400
TOTAL ISO SHARES 590,000
</TABLE>
<PAGE> 73
EXHIBIT D.2.1
<TABLE>
<CAPTION>
SHAREHOLDERS, WARRANT HOLDERS & OPTION HOLDERS OF
JMW ACQUISITION COMPANY
Certificate # Shares Warrants Options
------------- -------- -------- -------
<S> <C> <C> <C> <C>
JACOBSEN, Stephen C. 2 346,136 -0- -0-
MASSEY, W. Edward 3 153,864 -0- -0-
</TABLE>
<PAGE> 74
Page 1 of 4
EXHIBIT D.2.2
HOLDERS OF SUBSCRIPTION AGREEMENTS FOR SHARES IN
JMW ACQUISITION COMPANY
<TABLE>
<CAPTION>
Name No. of Shares Vesting Period
---- ------------- --------------
<S> <C> <C>
ANDREW, J. Thomas 35,000 3 Years
BAUM, Andrew M. 250 Fully Vested
BAUM, David B. 250 Fully Vested
BAUM, Joel R. 250 Fully Vested
BAUM, Sanford & Hanni 4,000 Fully Vested
BEZZANT, JOHN L. 6,000 3 years
BUSH, David 5,000 Fully Vested
CARROLL, Julie 5,000 Fully Vested
CRIDDLE, B. Deon 1,000 Fully Vested
CROWTHER, Mary A. 30,000 4 Years
DANE, Henry J. 10,000 Fully Vested
DANE, Maxwell 10,000 Fully Vested
FALLALEH, Nancy 10,000 Fully Vested
GAMBLE, Donald De & Evelyn A. 5,000 Fully Vested
GOLDSTEIN, Jerome 13,500 Fully Vested
GRIFFIN, Robert 500 Fully Vested
HANOVER, Barry K. 50,000 3 Years
HANSEN, J. Gordon 10,000 Fully Vested
HARROW, Jeff 5,000 3 Years
HONE, DOLORES J. 2,000 4 Years
HUFFERD, Marie E. 5,625 Fully Vested
HUNT, G. R. & Jane J. 10,000 Fully Vested
</TABLE>
<PAGE> 75
Page 2 of 4
EXHIBIT D.2.2
HOLDERS OF SUBSCRIPTION AGREEMENTS FOR SHARES IN
JMW ACQUISITION COMPANY
<TABLE>
<CAPTION>
Name No. of Shares Vesting Period
---- ------------- --------------
<S> <C> <C>
IVERSEN, Ed 15,000 Fully Vested
JACOBSEN, Genevieve 5,000 Fully Vested
JACOBSEN, Peter 5,000 Fully Vested
JACOBSON, Stephen C. 1,440,000
Less Stock Issued: (346,126)
---------
Total 1,093,864 Fully Vested
JANATA, (Jiri) 10,000 4 Years
JERARD, Robert 5,300 Fully Vested
JOHNSON, Mary 1,000 Fully Vested
JOHNSON, R. Todd 45,000 3 Years
KABLITZ, Carl 8,000 Fully Vested
KELLMAN, Joel D. 44,000 3 Years
31,000 Fully Vested
---------
Total 75,000
KEMPIN, Ronald A. 5,000 Fully Vested
KLEBINGOT, George C. 10,000 4 Years
KNUTTI, David 40,000 3 Years
KOLFF, Cornelius & Helen Hall 5,000 Fully Vested
KOLFF, The Jacob C. Family Living Trust 15,000 Fully Vested
KOLFF, The Willem J. Family Living Trust 84,000 Fully Vested
KUFLIK, Freida 250 Fully Vested
LAVESON, Abe (Estate of) 5,000 Fully Vested
LAVESON, Eleanor (Estate of) 5,000 Fully Vested
LAVESON, Stephen D. 6,430 Fully Vested
LAVESON, Stephen D. (As Custodian for 380 Fully Vested
Amanda Jo Laveson)
</TABLE>
<PAGE> 76
EXHIBIT D.2.2 Page 3 of 4
HOLDERS OF SUBSCRIPTION AGREEMENTS FOR SHARES IN
JMW ACQUISITION COMPANY
<TABLE>
<CAPTION>
Name No. of Shares Vesting Period
- --------------------------------------------------- ------------- --------------
<C> <C> <C>
LAVESON, Stephen D.
(As Custodian for Stacy Allyn Laveson) 380 Fully Vested
LAVESON, Stephen D.
(As Custodian for Suzanne Gale Laveson (Curry) 380 Fully Vested
LUNTZ, Richard 100,000 4 Years
MARTIN, Bocka Jo 5,000 4 Years
MASSEY, W. Edward 495,000
Less Stock Issued: (153,864)
--------
Total 341,136 Fully Vested
MEEK, Sanford G. 10,000 4 Years
MILLER, Margaret 5,000 Fully Vested
MOOREHEAD, Harvey 5,000 Fully Vested
MOYER, James E. 5,000 Fully Vested
MURPHY, Beverly 15,000 Fully Vested
MURPHY, William P. 15,000 Fully Vested
OBER, Stephen H. 720,000 4 Years
PETELENZ, Tomasz 75,000 4 Years
PRINCE, YEATES & GELDZAHLER 2,700 Fully Vested
QUARLES, Gary 5,000 4 Years
RADFORD, Sharon L. 5,000 Fully Vested
RICHARDS, Victor, M.D. 5,000 Fully Vested
RICHES, Ross 9,000 4 Years
ROSSI, Cino A. 20,000 Fully Vested
SEARE, William J., M.D. 8,000 2 Years
SEARS, Harold H. 60,000 4 Years
SIMON, Eric 10,000 4 Years
</TABLE>
<PAGE> 77
EXHIBIT D.2.2 Page 4 of 4
HOLDERS OF SUBSCRIPTION AGREEMENTS FOR SHARES IN
JMW ACQUISITION COMPANY
<TABLE>
<CAPTION>
Name No. of Shares Vesting Period
- --------------------------------------------------- ------------- --------------
<C> <C> <C>
STEELE, Harold J. 10,000 Fully Vested
STEPHEN, Lauraine 2,500 Fully Vested
STEPHEN, Robert L. 72,500 4 Years
STRAUSS, Peter 10,000 Fully Vested
SWANSON, Nancy V. 5,000 Fully Vested
UNIVERSITY OF UTAH RESEARCH FOUNDATION 5,000 Fully Vested
VAN RY, J. J. 10,000 Fully Vested
WEDBUSH, NOBLE, COOK INC. 2,500 Fully Vested
WIGGINS, Finnis 10,000 Fully Vested
WIITA, Thomas A. 96,000 Fully Vested
WILHELMSEN, Karl 4,000 2 Years
WILLIAMSON, Anna 2,000 4 Years
ZULCH, Alma Laverne 7,500 Fully Vested
---------
TOTAL NO. OF SHARES SUBSCRIBED 3,316,195
TOTAL NO. OFO SHARES ISSUED & OUTSTANDING 500,000
---------
TOTAL 3,816,195
</TABLE>
<PAGE> 78
EXHIBIT D.2.3.
SHARES, WARRANTS & OPTIONS OF
MOTION CONTROL OUTSTANDING
(Immediately Following Closing)
SHARES & WARRANTS:
- ------------------
<TABLE>
<CAPTION>
No. of No. of
Name Certificate # Shares Warrants
- -------------- ------------- ------- --------
<S> <C> <C> <C>
BODFISH, Ralph 36 10,000 5,000
GOLDSTEIN, Richard 68 10,000 5,000
HANSEN, Peter 23 1,100 550
HINKLE TRUST 59 10,000 5,000
KANN, David J. 72 2,500 1,250
KANN, James 74 2,500 1,250
KANN, Peter E. 73 2,500 1,250
KANN, Thomas J. 75 2,500 1,250
LAVESON, Sandra 120 6,430 -0-
MILLER, John 92 500 250
JMW ACQUISITION CO. (Certificates 3,439,845 -0-
Received -------
Pursuant to
Subscription
Agreements)
TOTAL OUTSTANDING 3,487,875 20,800
Shares Held In Treasury 100,000
</TABLE>
OUTSTANDING OPTIONS:
- --------------------
<TABLE>
<CAPTION>
No. of Price/ Date of Date
Name ISO Shares Share Option Expires
- ------- --- ------ ----- ------ -------
<S> <C> <C> <C> <C> <C>
STEPHENSON, Coleen No 500 $1.50 Sep 26, 1978 Sep 26, 1988
No 100 $1.50 Jul 29, 1979 Jul 29, 1989
No 3,000 $ .60 Dec 7, 1983 Dec 6, 1993
-----
3,600
HARRIS, Phil No 1,000 $1.50 Jan 12, 1979 Jan 12, 1989
-----
TOTAL OPTIONS OUTSTANDING 4,600
</TABLE>
<PAGE> 79
EXHIBIT D.2.4 Page 1 of 4
JMW COMMON SHAREHOLDERS
(Immediately Following Closing)
<TABLE>
<CAPTION>
Name No. of Shares Vesting Period
---- ------------- --------------
<S> <C> <C>
ANDREW, J. Thomas 35,000 3 Years
BAUM, Andrew M. 250 Fully Vested
BAUM, David B. 250 Fully Vested
BAUM, Joel R. 250 Fully Vested
BAUM, Sanford & Hanni 4,000 Fully Vested
BEZZANT, John L. 6,000 3 Years
BUSH, David 5,000 Fully Vested
CARROLL, Julie 5,000 Fully Vested
CRIDDLE, B. Deon 1,000 Fully Vested
CROWTHER, Mary A. 30,000 4 Years
DANE, Henry J. 10,000 Fully Vested
DANE, Maxwell 10,000 Fully Vested
FALLALEH, Nancy 10,000 Fully Vested
GAMBLE, Donald De & Evelyn A. 5,000 Fully Vested
GOLDSTEIN, Jerome 13,500 Fully Vested
GRIFFIN, Robert 500 Fully Vested
HANOVER, Barry K. 50,000 3 Years
HANSEN, J. Gordon 10,000 Fully Vested
HARROW, Jeff 5,000 3 Years
HONE, Dolores J. 2,000 4 Years
HUFFERD, Marie E. 5,625 Fully Vested
HUNT, G. R. & Jane J. 10,000 Fully Vested
</TABLE>
<PAGE> 80
Page 2 of 4
EXHIBIT D.2.4
JMW COMMON SHAREHOLDERS
(Immediately Following Closing)
<TABLE>
<CAPTION>
Name No. of Shares Vesting Period
- ----------------------------- ------------- --------------
<S> <C> <C>
IVERSEN, Ed 15,000 Fully Vested
JACOBSEN, Genevieve 5,000 Fully Vested
JACOBSEN, Peter 5,000 Fully Vested
JACOBSEN, Stephen C. 1,440,000 Fully Vested
Less Stock Issued: (346,136)
---------
Total 1,093,864
JANATA, (Jiri) 10,000 4 Years
JERARD, Robert 5,300 Fully Vested
JOHNSON, Mary 1,000 Fully Vested
JOHNSON, R. Todd 45,000 3 Years
KABLITZ, Carl 8,000 Fully Vested
KELLMAN, Joel D. 44,000 3 Years
31,000 Fully Vested
---------
Total 75,000
KEMMPIN, Ronald A. 5,000 Fully Vested
KLEBINGOT, George C. 10,000 4 Years
KNUTTE, David 40,000 3 Years
KILFF, Cornelius & Helen Hall 5,000 Fully Vested
KOLF, The Jacob C. Family Living Trust 15,000 Fully Vested
KOLFF, The William J. Family Living Trust 84,000 Fully Vested
KUFLIF, Freida 250 Fully Vested
LAVESON, Abe (Estate of) 5,000 Fully Vested
LAVESON, Eleanor (Estate of) 5,000 Fully Vested
LAVESON, Stephen D. 6,430 Fully Vested
LAVESON, Stephen D. (As Custodian
Amanda Jo Laveson) 380 Fully Vested
</TABLE>
<PAGE> 81
Page 3 of 4
EXHIBIT D.2.4
JMW COMMON SHAREHOLDERS
(Immediately Following Closing)
<TABLE>
<CAPTION>
Name No. of Shares Vesting Period
- ----------------------------- ------------- --------------
<S> <C> <C>
LAVESON, Stephen D. (As Custodian for 380 Fully Vested
Stacy Allyn Laveson)
LAVESON, Stephen D. (As Custodian for 380 Fully Vested
Suzanne Gale Laveson
(Curry)
LUNTZ, Richard D. 100,000 4 Years
MARTIN, Bocka Jo 5,000 4 Years
MASSEY, W. Edwawd 495,000
Less Stock Issued: (153,864)
---------
Total 341,136 Fully Vested
MEEK, Sanford G. 10,000 4 Years
MILLER, Margaret 5,000 Fully Vested
MOOREHEAD, Harvey 5,000 Fully Vested
MOYER, James E. 5,000 Fully Vested
MURPHY, Beverly 15,000 Fully Vested
MURPHY, William P. 15,000 Fully Vested
OBER, Stephen H. 720,000 4 Years
PETELENZ, Tomasz 75,000 4 Years
PRINCE, YEATES & GELDZAHLER 2,700 Fully Vested
QUARLES, Gary 5,000 4 Years
RADFORD, Sharon L. 5,000 Fully Vested
RICHARDS, Victor, M.D. 5,000 Fully Vested
RICHES, Ross 9,000 4 Years
ROSSI, Cino A. 20,000 Fully Vested
SEARE, William J., M.D. 8,000 2 Years
SEARS, Harold H. 60,000 4 Years
SIMON, Eric 10,000 4 Years
</TABLE>
<PAGE> 82
EXHIBIT D.2.4
Page 4 of 4
JMW COMMON SHAREHOLDERS
(Immediately Following Closing)
<TABLE>
<CAPTION>
Name No. of Shares Vesting Period
- -------------------------------------- ------------- ---------------
<S> <C> <C>
STEELE, Harold J. 10,000 Fully Vested
STEPHEN, Lauraine 2,500 Fully Vested
STEPHEN, Robert L. 72,500 4 Years
STRAUSS, Peter 10,000 Fully Vested
SWANSON, Nancy V. 5,000 Fully Vested
UNIVERSITY OF UTAH RESEARCH FOUNDATION 5,000 Fully Vested
VAN RY, J. J. 10,000 Fully Vested
WEDBUSH, NOBLE, COOK INC. 2,500 Fully Vested
WIGGINS, Finnis 10,000 Fully Vested
WIITA, Thomas A. 96,000 Fully Vested
WILHELMSEN, Karl 4,000 2 Years
WILLIAMSON, Anna 2,000 4 Years
ZULCH, Alma Laverne 7,500 Fully Vested
---------
TOTAL NO. OF SHARES SUBSCRIBED 3,316,195
TOTAL NO. OF SHARES OUTSTANDING 500,000
---------
TOTAL 3,816,195
</TABLE>
<PAGE> 83
EXHIBIT E 1
INVENTION AND TRADE SECRET
AGREEMENT
THIS AGREEMENT is executed effective ____________, 198__, by and between
the undersigned employee ("Employee"), and MOTION CONTROL, INC. ("MCT")/JMW
ACQUISITION CO. ("JMW").
MCT's/JMW's activities and business utilize trade secrets, confidential
information, including but not limited to business plans, projections and
financial information, and other intellectual property (the "Intellectual
Property"), to which the Employee will have access. In consideration of
Employee's continued or future employment, the Employee and MCI/JMW mutually
agree to the following:
1. Nondisclosure. During the term of employment, and at all times
thereafter, the Employee will not, except in promoting the business of MCI/JMW
and performing the duties of his employment, directly or indirectly, use or
disclose any of MCI'S/JMW's Intellectual Property without MCI's/JMW's written
consent. As used in this Agreement, Intellectual Property includes information
disclosed to or known by the Employee as a consequence of his employment by
MCI/JMW which is not generally known to the public or in the industry in which
MCI/JMW is, or may become engaged, concerning MCI's/JMW's products, processes,
formulas, designs, plans, projections, financial position and services,
including, but not limited to, information relating to research, development,
inventions, manufacturing, purchasing, engineering and marketing information.
Upon termination of employment, all documents, records, notebooks and
other repositories of Intellectual Property, including copies thereof, then in
the Employee's or a related party's possession, whether prepared by him or
others, will
<PAGE> 84
be returned to MCI/JMW. Related parties shall include family members or any
other person or entity associated with the Employee at the time employment is
terminated.
2. Inventions. The Employee hereby agrees to keep MCI/JMW informed of
any and all inventions, designs, formulas, works of authorship, compositions of
matter and discoveries (the "Inventions") made, conceived of or developed by the
Employee, alone or with others, which result from any work the Employee may do
for MCI/JMW, or which relates to MCI's/JMW's activities or to those of its
affiliated companies. The Inventions shall be and shall remain the property of
MCI/JMW or its nominees, whether patented, copyrighted or not, and the Employee
shall, without charge to MCI/JMW, assign (and does hereby assign) to MCI/JMW
all right, title and interest in and to the Inventions. Upon request, the
Employee will execute, acknowledge, and deliver any instruments confirming
MCI's/JMW's complete ownership of the Inventions.
The Employee will keep and maintain adequate and current written
records of all the Inventions, in the form of notes, sketches, drawings and
reports relating thereto, which records shall be and remain the property of, and
shall be made available at all times to MCI/JMW.
3. Agreement Not to Compete. During his employment with MCI/JMW, and for
twelve (12) months after the termination of employment, the Employee will not
participate directly or indirectly, as an owner, agent or employee of a
business engaged in activities that are in competition with the activities of
MCI/JMW. Upon the expiration of the twelve (12) month period, and at all times
thereafter, the Employee may associate with a competitive business and make use
of his general knowledge and experience, but the Employee shall not
2
<PAGE> 85
use any Intellectual Property nor approach current employees of MCI/JMW
concerning their rendition of services for a competitive business.
The parties hereto acknowledge that this Agreement not to compete
is reasonable and necessary to protect the Intellectual Property and goodwill
of MCI/JMW.
4. Representations and Warranties of the Employee. The Employee
hereby represents and warrants to MCI/JMW and specifically agrees that:
(a) Neither the execution of this Agreement by the Employee nor
the performance by the Employee of his duties of employment constitute a breach
of any covenant not to compete, confidentiality agreement or any other binding
contract to which the Employee may be subject.
(b) MCI/JMW shall have the right to disclose the obligations
imposed upon the Employee by this Agreement to future or prospective employees
and/or business associates of the Employee.
(c) The representations, warranties and agreements of the
Employee, as set forth herein, shall survive the termination of this Agreement.
5. Remedies. In the event of a breach or threatened breach of this
Agreement, MCI/JMW shall be entitled to an injunction restraining the Employee
from disclosing any Intellectual Property and/or from rendering any services to
a competitive business and/or from using any Invention in a way which is
inconsistent with MCI's/JMW's ownership thereof. MCI/JMW may pursue any other
remedies available for such breach or threatened breach, including the recovery
of damages from the Employee.
6. Binding Effect. This Agreement shall be binding upon the parties
hereto and upon their respective executors, administrators, legal
representatives,
3
<PAGE> 86
successors and assigns.
7. Applicable Law. This Agreement shall be governed by the laws of the
State of Utah, without giving effect to the choice of law rules thereof. If any
provision of this Agreement is declared void, the remaining provisions shall
remain in full force and effect.
8. Confidential Relationship. Both parties acknowledge that the
services which the Employee will render to MCI/JMW are unique and extraordinary
and the employment arrangement creates a confidential and fiduciary
relationship between the Employee and MCI/JMW.
9. Final Agreement. This Agreement supersedes all previous agreements,
written or oral, relating to the subject matter hereof and shall not be changed
orally. This Agreement will not be affected by any present or future policy
statement issued by MCI/JMW.
10. Attorney's Fees. If either party engages an attorney in connection
with a breach or threatened breach of this Agreement, or to enforce its terms,
the prevailing party in the controversy shall be entitled to recover his or its
reasonable attorney's fees.
IN WITNESS WHEREOF the parties have executed this Agreement effective on
the date set forth above.
MOTION CONTROL, INC./JMW ACQUISITION CO.
By
----------------------------------------
Its
----------------------------------------
EMPLOYEE
--------------------------------------------
4
<PAGE> 87
EXHIBIT E 2
INVENTION AND TRADE SECRET
AGREEMENT
THIS AGREEMENT is executed effective _____________, 198__, by and between
the undersigned consultant ("Consultant"), and MOTION CONTROL, INC. ("MCI")/JMW
ACQUISITION CO. ("JMW").
MCI's/JMW's activities and business utilize trade secrets, confidential
information, including but not limited to business plans, projections and
financial information, and other intellectual property (the "Intellectual
Property"), to which the Consultant will have access. In consideration of
Consultant's continued or future consulting relationship with MCI/JMW the
Consultant and MCI/JMW mutually agree to the following:
1. Nondisclosure. During the term of the consulting relationship, and at
all times thereafter, the Consultant will not, except in promoting the
business of MCI/JMW and performing his consulting duties, directly
or indirectly, use or disclose any of MCI's/JMW's Intellectual Property without
MCI's/JMW's written consent. As used in this Agreement, Intellectual Property
includes information disclosed to or known by the Consultant as a consequence
of his consulting relationship with by MCI/JMW which is not generally known to
the public or in the industry in which MCI/JMW is, or may become engaged,
concerning MCI's/JMW's products, processes, formulas, designs, plans,
projections, financial position and services, including, but not limited to,
information relating to research, development, inventions, manufacturing,
purchasing, engineering and marketing information.
<PAGE> 88
Upon termination of the consulting relationship, all documents, records,
notebooks and other repositories of Intellectual Property, including copies
thereof, then in the Consultant's or a related party's possession, whether
prepared by him or others, will be returned to MCI/JMW. Related parties shall
include family members or any other person or entity associated with the
Consultant at the time the consulting relationship is terminated.
2. Inventions. The Consultant hereby agrees to keep MCI/JMW informed of
any and all inventions, designs, formulas, works of authorship, compositions of
matter and discoveries (the "Inventions") made, conceived of or developed by the
Consultant, alone or with others, which result from any work the Consultant may
do for MCI/JMW, or which relates to MCI's/JMW's activities or to those of its
affiliated companies. The Inventions shall be and shall remain the property of
MCI/JMW or its nominees, whether patented, copyrighted or not, and the
Consultant shall, without charge to MCI/JMW, assign (and does hereby assign) to
MCI/JMW all right, title and interest in and to the Inventions. Upon request,
the Consultant will execute, acknowledge, and deliver any instruments confirming
MCI's/JMW's complete ownership of the Inventions.
The Consultant will keep and maintain adequate and current written records
of all the Inventions, in the form of notes, sketches, drawings and reports
relating thereto, which records shall be and remain the property of, and shall
be made available at all times to MCI/JMW.
3. Agreement Not to Compete. During the term of the Consultant's
consulting relationship with MCI/JMW, and for twelve (12) months after the
termination of such relationship, the Consultant will not participate directly
or
2
<PAGE> 89
indirectly, as an owner, agent or consultant of a business engaged in
activities that are in competition with the activities of MCI/JMW. Upon the
expiration of the twelve (12) month period, and at all times thereafter, the
Consultant may associate with a competitive business and make use of his
general knowledge and experience, but the Consultant shall not use any
Intellectual Property nor approach current consultants of MCI/JMW concerning
their rendition of services for a competitive business.
The parties hereto acknowledge that this Agreement not to compete is
reasonable and necessary to protect the Intellectual Property and goodwill of
MCI/JMW.
4. Representations and warranties of the Consultant. The Consultant
hereby represents and warrants to MCI/JMW and specifically agrees that:
(a) Neither the execution of this Agreement by the Consultant nor
the performance by the Consultant of his consulting duties constitute a breach
of any covenant not to compete, confidentiality agreement or any other binding
contract to which the Consultant may be subject.
(b) MCI/JMW shall have the right to disclose the obligations imposed
upon the Consultant by this Agreement to future or prospective employers and/or
business associates of the Consultant.
(c) The representations, warranties and agreements of the
Consultant, as set forth herein, shall survive the termination of this
Agreement.
5. Remedies. In the event of a breach or threatened breach of this
Agreement, MCI/JMW shall be entitled to an injunction restraining the
Consultant
3
<PAGE> 90
from disclosing any Intellectual Property and/or from rendering any services to
a competitive business and/or from using any Invention in a way which is
inconsistent with MCI's/JMW's ownership thereof. MCI/JMW may pursue any other
remedies available for such breach or threatened breach, including the recovery
of damages from the Consultant.
6. Binding Effect. This Agreement shall be binding upon the
parties hereto and upon their respective executors, administrators, legal
representatives, successors and assigns.
7. Applicable Law. This Agreement shall be governed by the laws of
the State of Utah, without giving effect to the choice of law rules thereof. If
any provision of this Agreement is declared void, the remaining provisions
shall remain in full force and effect.
8. Confidential Relationship. Both parties acknowledge that the
consulting services which the Consultant will render to MCI/JMW are unique and
extraordinary and the employment arrangement creates a confidential and
fiduciary relationship between the Consultant and MCI/JMW.
9. Final Agreement. This Agreement supersedes all previous
agreements, written or oral, relating to the subject matter hereof and shall
not be changed orally. This Agreement will not be affected by any present or
future policy statement issued by MCI/JMW.
10. Attorney's Fees. If either party engages an attorney in
connection with a breach or threatened breach of this Agreement, or to enforce
its terms, the prevailing party in the controversy shall be entitled to recover
his or its reasonable attorney's fees.
4
<PAGE> 91
IN WITNESS WHEREOF the parties have executed this Agreement effective
on the date set forth above.
MOTION CONTROL, INC./JMW ACQUISITION CO.
By______________________________________
Its_____________________________________
CONSULTANT
________________________________________
5
<PAGE> 92
EXHIBIT E 3
NON DISCLOSURE AGREEMENT
The undersigned, an employee of Motion Control, Inc. ("MCI")/JMW
Acquisition Co. ("JMW") hereby agrees with MCI/JMW, in consideration of the
undersigned's continued employment, that:
1. As a result of may activities as an employee of MCI/JMW, I may receive
information and materials concerning, and have access to certain aspects of,
MCI'S/JMW'S know-how, trade secrets, manufacturing processes and other
proprietary processes, including but not limited to matters subject to
protection by patent, copyright or otherwise, confidential business plans,
confidential financial data and confidential management information, ideas,
strategies and proposals (all of the foregoing together with all similar
information, are collectively referred to herein as the "Trade Secrets"). The
Trade Secrets are and shall at all times be and remain the exclusive, valuable,
unique and proprietary assets and property of MCI/JMW. I shall not, without the
prior written consent of MCI/JMW, either during or after the term of my
employment with MCI/JMW, disclose all or any portion of the Trade Secrets to any
person, firm, corporation, partnership or other entity (other than MCI/JMW) for
any reason or purpose whatsoever, nor shall I make use of any of the Trade
Secrets for my personal benefit or for the benefit of any person, firm,
corporation, partnership or entity other than MCI/JMW under any circumstances
during or after my employment with MCI/JMW. Upon the expiration of may
employment with MCI/JMW, I shall promptly return to MCI/JMW any and all
originals or copies of any of the Trade Secrets which may be in my possession.
<PAGE> 93
2. I shall not, either during or after the term of my employment with
MCI/JMW cause or permit to be published, for compensation or otherwise, any
material which involves the Trade Secrets, the actual or proposed business or
operations of MCI/JMW, the research conducted by MCI/JMW, or the products which
are, or may in the future be manufactured or sold by MCI/JMW, without first
obtaining the written consent of MCI/JMW to such publication.
3. I shall not, either during or after the term of my employment with
MCI/JMW, utilize the Trade Secrets or any other information concerning MCI/JMW
or its actual or proposed business or operations in any manner or for any
purpose which is directly or indirectly competitive with the business of
MCI/JMW.
4. This Agreement shall be governed by the laws of the State of Utah. If
I breach this Agreement, I shall pay all costs, expenses and attorneys' fees
incurred by MCI/JMW, as well as all damages which result from such breach.
IN WITNESS WHEREOF, the undersigned employee of MCI/JMW has executed this
Non Disclosure Agreement upon this _____ day of ________________, 198__.
_______________________________________
_______________________________________
_______________________________________
(Name and Address of Employee)
<PAGE> 94
Page 1 of 4
EXHIBIT F.(a)
CONTRACTS & AGREEMENTS
MOTION CONTROL, INC.
June 30, 1987
<TABLE>
<CAPTION>
Property & Equipment Type of Agreement Description Date of Agreement Date of Termination
- -------------------- ----------------- ----------- ----------------- -------------------
<S> <C> <C> <C> <C>
F. C Stanql Building Lease Present Facilities: $ 5,300 Per Month 12/4/86 12/90
254,400 Over Life
Zions Leasing Co. Office Equipment Lease Telephone Equipment: $257.89 Per Month 11/86 11/91
$15,473.40 Over Life
Secured by Deposit
Associated Leasing Office Equipment Lease Canon Copier: $357.02 Per Month 9/85 8/88
$17,136.96 Over Life
Consulting & Equipment
- ----------------------
Stephen C. Jacobsen Employment Agreement $1,250 Per Month/$15,000 Per Year 12/95 12/31/87
(or 90 Days Notice)
Carter Summers Consulting Agreement Accounting & Finance Consultant 6/87 6/88
$1,250 Per Month/$15,000 Per year (or 30 Days Notice)
DFG Associates Consulting Agreement F.D.A. Consulting 7/87 7/88
$1,500 Per Month/$18,000 Per Year (or 30 Days Notice)
Ctr. for Engineering No Written Agreement General Research & Development - -
Design University $13,500 Per Quarter/$54,000 per Year
of Utah
Ctr. for Engineering No Written Agreement Drug Delivery Fund - -
Design (Provides Compensation for
R. Stephen, MD) $9,000 Per Month/
$108,000 Per Year
Biomaterials License Exclusive license on P.E.G. coating used 9/25/84 Patent Duration
International in S.P.A.D. No royalty is applicable.
Already covered under S.P.A.D. Agreement
with University.
</TABLE>
<PAGE> 95
Page 2 of 4
EXHIBIT F.(a)
CONTRACTS & AGREEMENTS
MOTION CONTROL, INC.
June 30, 1987
<TABLE>
<CAPTION>
Property & Equipment Type of Agreement Description Date of Agreement Date of Termination
- -------------------- ----------------- ----------- ----------------- -------------------
<S> <C> <C> <C> <C>
University of Utah License Royalty on Phoresor/Electrode 8/12/76 Duration of Last
**** of Sales (Adjusted) Patent
University of Utah License Royalty on Utah Arm Sales 7/29/77 Duration of Last
**** of Sales (Adjusted) Patent
Multiple Parties Royalty Sharing Royalty on Phoresor Unit Sales 7/7/77 12/31/87 (Reverts to
S. C. Jacobsen **** (Flat Payment Per Month) 2.59% of Unit Sales)*
R. L. Stephen **** (Flat Payment Per Month) 8/10/77 8/10/87 (Reverts to
2.59% of Unit Sales)*
R. D. Luntz **** of Unit Sales (Adjusted) 8/12/76 *See Note
R. T. Johnson **** of Unit Sales (Adjusted) 8/12/76 *See Note
W. J. Kolff **** of Unit Sales (Adjusted) 8/12/76 *See Note
D. Knutti **** of Unit Sales (Adjusted) 8/17/76 *See Note
Note: All royalty payments are subject *Note: Royalties
to reduction when certain unit continue for
sales have been reached. duration of
last Patent
on unit.
University of Utah License Royalty on S.P.A.D. Sales 8/27/80 Duration of Last
**** of Sales (Adjusted) Patent
R. L. Stephen, M.D. Royalty Royalty on S.P.A.D. Sales 7/1/64 Duration of Patent
**** of Sales (Adjusted( or or 20 Years
**** of Any Amount from Sub-
License of S.P.A.D.
Sales Representation Agreements
- -------------------------------
Multiple Partners 16 Independent Mfr's. Territory representation establishes Variable, 30 Days With Cause
Representative territory, quotas and commission. 1-Year Terms 120 Days w/o Cause
Agreements Rates: **** to **** Phoresor and
Disposables
</TABLE>
<PAGE> 96
Page 3 of 4
EXHIBIT F.(a)
CONTRACTS & AGREEMENTS
MOTION CONTROL, INC.
June 30, 1987
****
<PAGE> 97
Page 4 of 4
EXHIBIT F.(a)
CONTRACTS & AGREEMENTS
MOTION CONTROL, INC.
June 30, 1987
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
III. Prosthetics &
Orthotics Extended Warranty Covers Utah Arm repairs. 3/14/87 3/14/88
Sabolich Prosthetics Extended Warranty Covers Utah Arm repairs. 3/1/87 3/1/88
Pacific Indemnity Extended Warranty Covers Utah Arm repairs. 10/2/86 10/2/89
****
</TABLE>
<PAGE> 98
MOTION CONTROL, INC.
BALANCE SHEETS
June 30, 1986 and 1985
<TABLE>
<CAPTION>
Unaudited
ASSETS 1986 1985
------ ---------- -----------
<S> <C> <C>
Current assets:
Cash $ 227,869 $ 38,395
Accounts receivable, less allowance
for doubtful accounts of $53,000
($42,000 in 1985) 409,005 496,500
Inventories (Note 2) 648,748 587,366
Prepaid expenses 14,095 --
---------- ----------
Total current assets 1,299,717 1,122,261
Equipment and furniture, at cost
(Note 2):
Office furniture and equipment 81,188 78,659
Manufacturing equipment 284,997 232,417
Leasehold improvements 39,074 28,176
---------- ----------
405,259 339,252
Less accumulated depreciation
and amortization 238,723 165,308
---------- ----------
Net equipment and furniture 166,536 173,944
Equity issuance costs
(Note 2) 140,654 --
Other assets 4,016 7,195
---------- ----------
$1,610,923 $1,303,400
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Unaudited
LIABILITIES AND STOCKHOLDERS' DEFICIT 1986 1985
- ------------------------------------- ---------- -----------
<S> <C> <C>
Current liabilities:
Notes payable (Note 7):
To a financial institution $ 750,000 $ 740,000
To Cordis Corporation -- 1,360,000
Accounts payable 238,049 196,973
Accrued liabilities 78,663 114,822
---------- -----------
1,066,712 2,411,795
Long-term debt payable to
Cordis Corporation (Note 8) 1,950,933 --
Commitments and contingencies
(Notes 2, 3, 4, and 5)
Stockholders' deficit (Note 1):
Preferred stock, $.50 par value;
100,000 shares authorized
and unissued
Common stock, $.01 par value;
10,000,000 shares authorized;
3,587,875 (3,582,875 in 1985)
shares issued and outstanding
(Note 4) 35,879 35,829
Additional paid-in capital 2,038,306 2,038,306
Accumulated deficit (3,479,907) (3,181,530)
---------- -----------
(1,405,722) (1,107,395
Treasury stock, 100,000 shares
of common stock, at cost (1,000) (1,000)
---------- -----------
Total stockholders' deficit (1,406,722) (1,108,395)
---------- -----------
$ 1,610,923 $ 1,303,400
========== ===========
</TABLE>
See accountant's review report and accompanying notes.
<PAGE> 99
EXHIBIT F.(b)
PATENT & TRADEMARK SUMMARY
<TABLE>
<CAPTION>
Registration No. Product Coverage & Status
- ---------------- ------- -----------------------------------------------------
<S> <C> <C>
1,147,111 Phoresor U. S. Trademark "Phoresor"
2/17/81
1,301,441 Phoresor U. S. Trademark "Phoresor" and Logo
10/23/84
* 4,141,359 Phoresor U. S. Patent issued approving 9 claims covering con-
2/27/79 cepts and circuitry of the iontophoresis device -
many embodied in current product line.
** 4,419,092 Phoresor U. S. Patent issued approving 12 claims covering
12/ 6/83 details of iontophoretic electrode structure - many
embodied in current product line.
** 4,416,274 Phoresor U. S. Patent issued approving 13 claims covering
11/22/83 iontophoretic electrode structure alternatives.
* 4,166,457 Phoresor U. S. Patent issued approving 16 claims covering
9/ 4/79 iontophoretic electrode structure alternatives.
** 4,250,878 Phoresor U. S. Patent issued approving 14 claims covering
2/17/81 iontophoretic electrode structure alternatives.
* 4,405,305 SPAD U. S. Patent issued approving 33 claims covering SPAD
9/20/83 structure and materials.
* 4,400,169 SPAD U. S. Patent issued approving 16 claims covering SPAD
8/23/83 structure materials and function - including "subcu-
taneously implantable conduit for injecting a drug
into a peritoneal cavity."
* 4,557,724 SPAD U. S. Patent applied for covering coatings used to
12/10/85 prevent tissue overgrowth on the flange of the SPAD.
* In Process SPAD European Patent Office filing including all claims in
all three SPAD patent applications listed above.
* 4,521,924 Utah Arm U. S. Patent approved covering 28 claims for features
6/11/85 of the design of the Utah Artificial Arm.
In Process Utah Arm Trademark registration applied for.
In Process SPAD Trademark registration application initiated.
* 4,613,331 Utah Arm U. S. Patent approved covering 32 claims for six
9/23/86 degree mobility prosthetic voluntary locking articu-
lated wrist.
* 4,559,033 SPAD U. S. Patent issued approving 56 claims covering
12/17/85 apparatus and methods for minimizing peritoneal
injection catheter obstruction.
In Process Phoresor U. S. Patent filed on 33 claims covering methods and
apparatus for long-term (hours) application of ionto-
phoresis at a controlled Ph (ion exchange process and
flow-through process).
In Process Phoresor U. S. Patent filed on 14 claims covering alternate
methods of controlling Ph during long-term ionto-
phoresis (resin process).
</TABLE>
* The use of these patents are covered under licensing Agreements with the
University of Utah [see Exhibit F,(a)].
** Assignee: Motion Control, Inc.
<PAGE> 100
EXHIBIT G
FINANCIAL STATEMENTS
for
MOTION CONTROL, INC.
and
JMW ACQUISITION COMPANY
<PAGE> 101
EXHIBIT G.1.2
MOTION CONTROL INC.
FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 1986
with
ACCOUNTANT'S REVIEW REPORT
(Unaudited)
and
YEAR ENDED JUNE 30, 1985
with
REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
<PAGE> 102
[ARTHUR YOUNG LETTERHEAD]
The Board of Directors and Stockholders
Motion Control, Inc.
We have reviewed the accompanying balance sheet of Motion Control, Inc. at June
30, 1986 and the related statements of operations, changes in stockholders'
deficit and changes in financial position for the year then ended, in
accordance with standards established by the American Institute of Certified
Public Accountants.
We have examined the balance sheet of Motion Control, Inc. at June 30, 1985 and
the related statements of operations, changes in stockholders' deficit and
changes in financial position for the year then ended. Our examination was made
in accordance with generally accepted auditing standards and, accordingly,
included such tests of the accounting records and such other auditing
procedures as we considered necessary in the circumstances.
All information included in the June 30, 1986 financial statements is the
representation of the management of Motion Control, Inc.
As explained in Note 1, Motion Control, Inc. incurred net losses of $298,377 and
$405,914 during the years ended June 30, 1986 and 1985, respectively, and, as
of June 30, 1986 had an accumulated deficit of $1,406,722. These factors, among
others, as discussed in Note 1, indicate that the Company may be unable to
continue as a going concern.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
examination in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
<PAGE> 103
The Board of Directors and Stockholders
Motion Control, Inc.
Page - 2 -
Based on our review, we are not aware of any material modifications that should
be made to the June 30, 1986 financial statements in order for them to be in
conformity with generally accepted accounting principles.
In our opinion, subject to the effects on the financial statements of the
ultimate resolution of the matters discussed in the fourth paragraph in this
letter, the financial statements as of June 30, 1985 and for the year then
ended present fairly the financial position Motion Control, Inc. at June 30,
1985 and the results of operations and changes in financial position for the
year then ended, in conformity with generally accepted accounting principles
applied on a basis consistent with that of the preceding year.
ARTHUR YOUNG & COMPANY
August 15, 1986 as to penultimate
August 1, 1985 as to the last paragraph
<PAGE> 104
<TABLE>
<CAPTION>
MOTION CONTROL, INC.
STATEMENTS OF OPERATIONS
Years ended June 30, 1986 and 1985
Unaudited
1986 1985
----------- ----------
<S> <C> <C>
Net sales $2,221,856 $1,674,380
Cost of goods sold (Note 3) 1,095,493 874,040
---------- ----------
1,126,363 800,340
Operating expenses:
Marketing 586,340 456,731
Research and development 173,344 87,911
General and administrative:
Administrative salaries and wages 196,804 195,876
Legal and accounting 59,517 66,821
Taxes 38,593 24,272
Utilities 40,672 42,114
Bad debts 38,509 47,944
Supplies 14,010 23,940
Contract services 24,050 15,951
Insurance 19,816 15,060
Other 55,327 36,376
---------- ----------
1,246,982 1,012,996
---------- ----------
Loss from operations 120,619 212,656
Interest expense - net 177,518 193,258
---------- ----------
Net loss $ 298,377 $ 405,914
========== ==========
See accountant's review report and accompanying notes.
</TABLE>
<PAGE> 105
MOTION CONTROL, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
Years ended June 30, 1986, and 1985
<TABLE>
<CAPTION>
Common stock Additional
----------------- paid-in Accumulated Treasury
Shares Amount capital deficit stock
--------- ------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance at
June 30, 1984 3,582,875 $35,829 $2,038,306 $(2,775,616) $(1,000)
Net loss -- -- -- (405,914) --
--------- ------- ---------- ----------- -------
Balance at
June 30, 1985 3,582,875 35,829 2,038,306 (3,181,530) (1,000)
Issuance of common
stock 5,000 50 -- -- --
Net loss -- -- -- (298,377) --
--------- ------- ---------- ----------- -------
Balance at
June 30, 1986 3,587,875 $35,879 $2,038,306 $(3,479,907) $(1,000)
========= ======= ========== =========== =======
</TABLE>
<PAGE> 106
MOTION CONTROL, INC.
STATEMENTS OF CHANGES IN FINANCIAL POSITION
Years ended June 30, 1986 and 1985
<TABLE>
<CAPTION>
1986
(Unaudited) 1985
----------- ---------
<S> <C> <C>
Financial resources were used by:
Operations:
Net loss $ 298,377 $ 405,914
Items not affecting working
capital during the period:
Depreciation and amortization (73,415) (49,664)
Issuance of common stock as
a donation (50) --
----------- ---------
Working capital used by
operations 224,912 356,250
Purchase of equipment and furniture 66,007 115,688
Net increase to equity issuance
costs and other assets 137,475 5,940
----------- ---------
428,394 477,878
----------- ---------
Financial resources were provided by:
Reclassification of advances from
Cordis to long-term debt pursuant
to reorganization agreement 1,680,933 --
Working capital advances from Cordis
obtained subsequent to the
reorganization agreement 200,000 --
Increase in line of credit due to Cordis 70,000 --
----------- ---------
1,950,933 --
----------- ---------
Increase (decrease) in working capital $ 1,522,539 $(477,878)
=========== =========
Changes in components of working capital:
Increase (decrease) in current assets:
Cash $ 189,474 $ (36,362)
Accounts receivable (87,495) 240,439
Inventories 61,382 64,465
Prepaid expenses 14,095 --
----------- ---------
177,456 268,542
Increase (decrease) in current liabilities:
Notes payable (1,350,000) 664,000
Accounts payable 41,076 35,673
Accrued liabilities (36,159) 46,747
----------- ---------
(1,345,083) 746,420
----------- ---------
Increase (decrease) in working capital $ 1,522,539 $(477,878)
=========== =========
</TABLE>
See accountant's review report and accompanying notes.
<PAGE> 107
MOTION CONTROL, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1986 (Unaudited) and 1985
1. Nature and organization of business
Motion Control, Inc. (the "Company") was organized as a Utah
corporation on June 18, 1974, to engage in the research, manufacture,
production and marketing of prosthetic, drug delivery, and other medical
devices. Cordis Corporation (Cordis) owns approximately 84% of the
outstanding common stock of the Company.
Effective February 1, 1986, the Company entered into an agreement with
an acquisition company and Cordis, whereby Cordis' 2,913,750 shares of
common stock will be exchanged for 5,000 shares of $.10 par value
convertible preferred (Class A) stock valued at $250 per share. Upon the
closing of this agreement, the Company and the acquisition company will
merge, leaving the present minority shareholders and the acquisition
company shareholders with 100 percent of the voting common stock before
considering the dilution associated with new investors. In consideration
for this conversion, Cordis will forgive advances totalling $1,680,933,
convert the $200,000 advanced as an operating subsidy at June 30, 1986 and
an additional operating subsidy of $30,000 that was provided in July, 1986
to paid in capital and provide a $70,000 line of credit (see Note 8).
The closing of the above-described transaction is contingent upon the
ability of the Company to raise a minimum of $750,000 from new investors
within 24 months of the date of the agreement.
On the following page is an unaudited pro forma balance sheet showing
the impact of this transaction upon closing, assuming the Company has
raised the required funds, which are presently anticipated to be $750,000
to $1,250,000 ($1,000,000 convertible preferred stock assumed for pro
forma).
See accountant's review report.
<PAGE> 108
<TABLE>
<CAPTION>
MOTION CONTROL, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1986 (Unaudited) and 1985
1. Nature and organization of business (continued)
June 30, Pro forma
1986 Pro forma post-closing
(unaudited) adjustments balances
----------- -------------- ------------
<S> <C> <C> <C>
Cash $ 227,869 $ 30,000 (1) $ 1,187,869
$ 1,000,000 (2) --
(70,000)(6) --
Accounts receivable 409,005 -- 409,005
Inventory 648,748 -- 648,748
Equipment and furniture 166,536 -- 166,536
Other assets 158,765 -- 158,765
----------- ---------- -----------
Total assets $ 1,610,923 $ 960,000 $ 2,570,923
=========== =========== ===========
Accounts payable/accrued
liabilities $ 316,712 -- 316,712
Note payable to bank(4) 750,000 -- 750,000
Note payable to Cordis 1,950,933 30,000 (1)
(1,680,933)(3)
(230,000)(5)
(70,000)(6)
----------- ----------- -----------
Total liabilities 3,017,645 (1,950,933) 1,066,712
Convertible preferred
stock (A)* -- 1,680,933 (3) 1,680,933
Convertible preferred
stock (B)* -- 1,000,000 (2) 1,000,000
Common stock* 2,073,185 230,000 (5) 2,303,185
Accumulated deficit (3,479,907) -- (3,479,907)
----------- ---------- -----------
Total liabilities and
equity $ 1,610,923 $ 960,000 $ 2,570,923
=========== ========== ===========
</TABLE>
--------------------
* Includes additional paid in capital.
(1) Obtain $30,000 in July 1986 for the final installment on the $230,000
operating subsidy.
(2) Obtain equity capital of $1,000,000 through issuance of Convertible
Preferred Stock (Class B).
(3) Obtain forgiveness of payable to Cordis in return for the issuance of
preferred stock.
(4) This note payable is guaranteed by Cordis and may, at the Company's
option, be paid off.
(5) Operating subsidy converted to paid capital.
(6) The $70,000 line of credit will be paid off upon the closing of the
transaction.
See accountant's review report.
<PAGE> 109
MOTION CONTROL, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1986 (Unaudited) and 1985
1. Nature and organization of business (continued)
The preceding table is before consideration of interim results of
operations except for the Cordis subsidy provided in July.
The 5,000 shares of convertible preferred stock which will be issued
to Cordis (referred to as "Class A" stock) are nonvoting with cumulative
annual dividends equal to $25 per share. Such preferred stock is redeemable
at the option of the Company for $250 per share plus accrued dividends,
until October 1, 1990. On that date, and on each anniversary thereof,
shares must be redeemed at the rate of 16.66% to 16.70% per year, of the
shares outstanding on October 1, 1990.
The preferred Class A shares are convertible (at the holder's option)
into common stock at rates ranging from 48 to 80 shares of common stock per
preferred share. The rate will increase in proportion to the time required
by the Company to release Cordis's guarantee of $750,000 line of credit
with a bank (up to five years from the closing date of the agreement).
Liquidation rights on the Class A shares are $250 per share.
As reflected in the accompanying financial statements, the Company
incurred net losses of $298,377 in 1986 and $405,914 in 1985. As of June
30, 1986, the balance sheet reflected an accumulated deficit of $3,479,907
($3,181,530 at June 30, 1985). Cordis has guaranteed notes payable to a
financial institution in the amount of $750,000 on behalf of the Company
and has provided advances totaling $1,950,933 as of
See accountant's review report.
<PAGE> 110
MOTION CONTROL, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1986 (Unaudited) and 1985
1. Nature and organization of business (continued)
June 30, 1986 (see Note 8). The continuation of the Company as a going
concern is dependent upon its ability to obtain a satisfactory level of
profitable operations or to obtain sufficient working capital to finance
operations.
2. Summary of significant accounting policies
Inventories -- Raw materials inventory is stated at the lower of cost
(first-in, first-out method) or market. Work-in-process and finished goods
are stated at the lower of standard cost, which approximates actual cost
(first-in, first-out method) or market. Components of inventories are as
follows:
1986 1985
-------- --------
Raw materials $377,268 $345,646
Work-in-process 100,201 132,975
Finished goods 171,279 108,745
-------- --------
$648,748 $587,366
========= ========
Equipment and furniture -- Equipment and furniture are depreciated or
amortized on the straight-line method over the following estimated useful
lives:
Years
-----
Office furniture and equipment 3-10
Manufacturing equipment 3- 7
Leasehold improvements 3-10
Equity issuance costs -- The Company incurred legal and consulting
fees (see Note 9) in formalizing the agreement
See accountant's review report.
<PAGE> 111
MOTION CONTROL, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1986 (Unaudited) and 1985
2. Summary of significant accounting policies (continued)
outlined in Note 1. These costs will be reclassified to contributed capital
when the reorganization is completed or expensed if the reorganization is
not executed.
Warranty reserve -- The Company recognizes the estimated cost of
warranty obligations at the time the related products are sold.
3. Royalty agreements
The Company is the licensee under several royalty agreements with
inventors, founders and the University of Utah (see Note 9). These
agreements provide for the payment of royalties to the licensors at various
percentages **** of net sales of the product under royalty. The term of the
royalty agreement for any product is equal to the life of the latest patent
to be issued which covers that product. Patents on the various products
covered by royalty agreements expire between 1996 and 2002.
During 1986 and 1985 the Company incurred **** and **** respectively of
royalty expense. This expense is included in the financial statements as
part of cost of goods sold.
Two of the agreements with stockholders provided for the payment of
minimum annual royalties regardless of sales through 1981 and also provide
that royalties payable to such individuals cannot exceed certain maximums
in any one year. Prior to
See accountant's review report.
<PAGE> 112
MOTION CONTROL, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1986 (Unaudited) and 1985
3. Royalty agreements (continued)
1981 the combined minimum annual commitments under these agreements ranged
from $2,100 to $48,000. Since 1981, the Company has paid the $48,000
annually. The maximum annual commitment under these two agreements is
$115,000.
Royalties in the amount of approximately $80,000 and $75,000 were
paid to officers and/or stockholders during 1986 and 1985, respectively.
4. Stock options and warrants outstanding
The Company has established an incentive stock option (ISO) plan as
defined in the Economic Recovery Tax Act of 1981. Under the plan, options
to acquire 593,000 shares have been granted to certain officers and
employees. In addition to the foregoing, the Company has granted options
not under the ISO to acquire 145,400 shares to certain stockholders,
employees and consultants.
Options outstanding were granted at the estimated fair market value as
determined by the Board of Directors ranging from $.50 to $1.50,
aggregating $434,600. Options for 707,400 shares were exercisable at June
30, 1986. Options generally expire 10 years from the date of grant.
All options granted under the ISO provide a "right of relinquishment,"
which permits the optionee, in lieu of purchasing the entire number of
shares under option to exchange all or any part of the unexercised portion
of the option for shares of common stock as determined by the plan.
See account's review report.
<PAGE> 113
MOTION CONTROL, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1986 (Unaudited) and 1985
4. Stock options and warrants outstanding (continued)
The Company has issued warrants to purchase a total of 278,133 shares
of common stock ratably to all stockholders of record on February 11, 1983
except Cordis Corporation. The warrants are exercisable on or after August
1, 1986 at prices of $1.00 per share until July 31, 1988, and $1.50 per
share thereafter and expire July 31, 1990. Had all options and warrants
been exercised as of June 30, 1986, the effect would have been to reduce
Cordis' percentage ownership in the Company from 84% to 65%.
5. Lease agreement
The Company's facilities are leased under an agreement which expires
in January, 1988. Annual rent expense under this agreement is approximately
$12,000.
6. Income taxes
The Company files and will continue to file until the closing of the
recapitalization transaction discussed in footnote 1, consolidated federal
and state tax returns with Cordis Corporation and, therefore, does not have
any direct obligation for the payment of income taxes. However, the Company
has entered into a tax sharing agreement with Cordis where payments are
made to or received from Cordis in much the same way as if the Company
filed separate federal and state returns. Tax operating losses incurred by
the Company subsequent to June 30, 1982 (the date when consolidation for
taxes commenced) total approximately $1,232,000. These losses are available
to offset
See accountant's review report.
<PAGE> 114
MOTION CONTROL, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1986 (Unaudited) and 1985
6. Income taxes (continued)
future payments to Cordis under the terms of the tax sharing agreement and
expire between 1998 and 2001.
Prior to June 30, 1982, the Company filed separate federal and state
tax returns. Cumulative losses at June 30, 1982 were approximately
$1,952,000. These losses are available to offset future taxable income of
the Company, if any, and expire between 1991 and 1997. Tax credit
carryovers for periods prior to June 30, 1982 total $22,000 and expire
between 1991 and 1997.
7. Note payable
The demand note payable to a financial institution carries an interest
rate at 2% above prime, (10.5% at June 30, 1986 and 11.5% at June 30, 1985)
and is guaranteed by Cordis Corporation.
8. Long-term debt
Cordis Corporation has made advances to the Company for working
capital needs. The total outstanding at June 30, 1986 is comprised of the
following amounts:
<TABLE>
<CAPTION>
<S> <C>
Working capital advances made prior to the
reorganization agreement executed in
February, 1986. These advances were
formerly classified as current notes
payable, but have been reclassified
pursuant to the reorganization $1,680,933
</TABLE>
See accountant's review report.
<PAGE> 115
MOTION CONTROL, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1986 (Unaudited) and 1985
8. Long-term debt (continued)
Working capital advances paid to the
Company as required by the reorgan-
ization agreement over the period
from February, 1986 to June, 1986 200,000
Line of credit 70,000
----------
$1,950,933
==========
These advances bore interest at 2% above prime (10.5% at June 30, 1986
and 12.25% at June 30, 1985). Interest was paid monthly on the outstanding
balances through January, 1986. Beginning in February, 1986, as outlined in
the reorganization agreement, interest is only being changed on the $70,000
line of credit. All other amounts outstanding at that time and all
subsequent advances are non-interest bearing. Interest expense on advances
from Cordis was $103,940 in 1986 ($122,274 in 1985) and accrued interest on
these advances was $2,257 at June 30, 1986 ($14,801 at June 30, 1985).
9. Related party transactions
The Chairman of the Board of Directors, a stockholder and founder of
the Company, conducts certain research and development activities at the
University of Utah. These activities include work on devices which are
currently being produced and marketed by the Company as well as devices
which are included in future production and marketing plans. The Company
made donations of $54,000 in 1986 and 1985 to the University of Utah
designated for the Chairman's Laboratory.
See accountant's review report.
<PAGE> 116
MOTION CONTROL, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1986 (Unaudited) and 1985
9. Related party transactions (continued)
During 1986, payments for consulting services of approximately $67,000
were made by the Company to a firm owned by a member of the Company's Board
of Directors. Approximately $7,000 is payable to this firm at June 30,
1986.
See accountant's review report.
<PAGE> 117
EXHIBIT G.1.1
MOTION CONTROL, INC.
May 31, 1987
Financial Statements
(Unaudited Interim Statements)
<PAGE> 118
EXHIBIT ___
MOTION CONTROL
CONSOLIDATED BALANCE SHEET
FOR MONTH ENDED MAY 31, 1987
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
CURRENT ASSETS
CASH 393,917.17
ACCOUNTS RECEIVABLE 417,725.24
INVENTORY 582,427.87
PREPAIDS 29,527.69
PROPERTY & EQUIPMENT
OFFICE EQUIPMENT 48,655.02
LEASEHOLD IMPROVEMENTS 20,830.02
PRODUCTION EQUIPMENT 87,931.75
-------------
TOTAL PROPERTY & EQUIP 157,416.79
-------------
1,581,014.76
TOTAL CURRENT ASSETS
OTHER ASSETS
OTHER ASSETS 159,442.62
-------------
TOTAL OTHER ASSETS 159,442.62
-------------
TOTAL ASSETS $1,740,457.38
=============
LIABILITIES & EQUITY
CURRENT LIABILITIES
NOTES PAYABLE 2,730,932.64
ACCOUNTS PAYABLE 185,161.68
ACCRUALS 83,240.48
-------------
TOTAL CURRENT LIABILITIES 2,999,334.80
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY -1,406,722.38
CURRENT EARNINGS 147,844.96
-------------
TTL STOCKHOLDERS EQUITY -1,258,877.42
-------------
TTL LIABILITIES & EQUITY $1,740,457.38
=============
</TABLE>
UNAUDITED - REVISED 7/10/87
<PAGE> 119
Page 1
MOTION CONTROL
DETAIL BALANCE SHEET
FOR MONTH ENDED MAY 31, 1987
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
CURRENT ASSETS
CASH
CASH FIRST SECURITY 114,198.70
MONEY MASTER ACCOUNT 264.20
PETTY CASH 500.00
1st SECURITY SAVINGS ACCOUNT 264,849.30
1st SECURITY - IMPRESS ACC'T 3,104.97
ZIONS CORPORATION - ESCROW ACCT 11,000.00
-------------
TOTAL CASH 393,917.17
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE 436,647.54
NOTE RECEIVABLE - DENTELECT 20,000.00
OTHER RECEIVABLES 2,941.48
UNAPPLIED PAYMENTS -562.53
ALLOW FOR DOUBTFUL ACCTS -31,996.28
INTEREST INCOME ACCTS RECVBL -9,304.97
-------------
TOTAL ACCOUNTS RECEIVABLE 417,725.24
INVENTORY
ARM INVENTORY
RAW MATERIAL ARM 167,225.03
LABOR ARM 42,431.24
OVERHEAD ARM 62,622.12
DEMO'S & LOANERS ARM - MTL 34,971.64
DEMO'S & LOANERS ARM - LBR 20,794.93
DEMO'S & LOANERS ARM OVERHEAD 29,112.91
-------------
TOTAL ARM INVENTORY 357,157.87
PHORESOR INVENTORY
RAW MATERIAL - PHORESOR 82,371.60
LABOR - PHORESOR 2,527.59
OVERHEAD PHORESOR 478.64
DEMO'S & LOANERS PHORESOR MTL 13,241.54
DEMO'S & LOANERS PHORESOR LBR 3,272.18
DEMO'S & LOANERS PHORESOR OH 3,327.42
-------------
TOTAL PHORESOR INVENTORY 105,218.97
ELECTRODE INVENTORY
RAW MATERIAL ELECTRODE 45,618.56
LABOR - ELECTRODE 10,233.52
OVERHEAD - ELECTRODE 3,516.49
</TABLE>
UNAUDITED - REVISED 7/10/97
<PAGE> 120
MOTION CONTROL
DETAIL BALANCE SHEET Page 2
FOR MONTH ENDED MAY 31, 1987
<TABLE>
<CAPTION>
<S> <C> <C>
-------------
TOTAL ELECTRODE INVENTORY 59,368.57
SPAD INVENTORY
RAW MATERIAL - SPAD 25,005.75
LABOR - SPAD 7,199.49
OVERHEAD - SPAD 13,647.50
-------------
TOTAL SPAD INVENTORY 45,852.74
PREAMP INVENTORY
RAW MATERIAL - PREAMP 14,079.47
LABOR - PREAMP 264.53
OVERHEAD - PREAMP 303.12
-------------
TOTAL PREAMP INVENTORY 14,647.12
MYOLAB INVENTORY
RAW MATERIAL MYOLAB 52,344.18
LABOR MYOLAB 4,718.82
OVERHEAD MYOLAB 6,902.66
DEMO'S & LOANERS MYOLAB MTL 7,580.49
DEMO'S & LOANERS MYOLAB LBR 1,685.92
DEMO & LOANERS MYOLAB OVERHEAD 1,960.43
-------------
TOTAL MYOLAB INVENTORY 75,192.50
MED/D INVENTORY
RAW MATERIAL MED/D 20,702.23
-------------
TOTAL MED/D INVENTORY 20,702.23
INVENTORY RESERVE
IDENTIFIED OBSOLESCENCE 56,836.52
UNIDENTIFIED OBSOLESCENCE -152,548.65
-------------
TOTAL INVENTORY RESERVE -95,712.13
INVENTORY OVERHEAD
INVENTORY OVERHEAD -278,913.85
OVERHEAD ARM SUPPLIES 4,570.91
OVERHEAD PHORESOR SUPPLIES 7,873.03
OVERHEAD ELECTRODE SUPPLIES 5,185.06
OVERHEAD MYOLAB SUPPLIES 571.34
OVERHEAD PREAMP SUPPLIES 963.59
OVERHEAD SPAD SUPPLIES 3,492.08
OVERHEAD MACHINE SHOP SUPPLIES 20,327.95
OVERHEAD SHIP/RECEIVE SUPPLIES 13,741.53
OVERHEAD REPAIRS & MAIN. BLDG. 501.65
OVERHEAD REPAIRS & MAIN. EQUIP. 2,957.22
OVERHEAD DEPRECIATION 49,558.70
</TABLE>
UNAUDITED - REVISED 7/10/87
<PAGE> 121
Page 3
MOTION CONTROL
DETAIL BALANCE SHEET
FOR MONTH ENDED MAY 31, 1987
<TABLE>
<CAPTION>
<S> <C> <C>
OVERHEAD PAYROLL TAXES 22,453.25
OVERHEAD RENT 12,316.01
OVERHEAD SUPERVISORY LABOR 52,791.99
LEASED SHOP EQUIPMENT 10,363.57
PRODUCT LIABILITY INSURANCE 29,971.79
O H HEALTH, LIFE & DIS. INS. 21,498.42
OVERHEAD BONUS 1,516.75
OVERHEAD FREIGHT - INCOMING 1,235.79
OVERHEAD UTILITIES 10,143.14
HOLIDAY, SICK & VACATION PAY 3,811.51
OVERHEAD PROPERTY TAXES 3,068.57
--------------
TOTAL INVENTORY OVERHEAD 0.00
--------------
TOTAL INVENTORY 582,427.87
PREPAIDS
PREPAID INSURANCE 21,733.25
PREPAID ROYALTY 7,000.00
PREPAID WAGES 794.44
--------------
TOTAL PREPAIDS 29,527.69
--------------
TOTAL CURRENT ASSETS 1,423,597.97
PROPERTY, PLANT & EQUIP
OFFICE EQUIPMENT
OFFICE EQUIPMENT 103,892.13
ACC DEPR - OFFICE EQUIPMENT -55,237.11
--------------
TOTAL OFFICE EQUIPMENT 48,655.02
LEASEHOLD IMPROVEMENTS
LEASEHOLD IMPROVEMENTS 23,859.49
ACC DEPR LEASEHOLD IMPMTS -6,780.13
LEASEHOLD IMPROVEMENTS - MED/D 3,974.41
ACC DEPR LSHLD IMP - MED/D -223.75
--------------
TTL LEASEHOLD IMPROVEMENTS 20,830.02
SHOP EQUIPMENT
SHOP EQUIPMENT 37,479.91
ACC DEPR - SHOP EQUIPMENT -26,799.87
PROSTHETIC SHOP EQUIPMENT 1,269.22
ACC DEPR PROS SHOP EQUIPMENT -1,185.12
--------------
TOTAL SHOP EQUIPMENT 10,764.14
ASSY/PROD EQUIP-ARM
ASSEMBLY EQUIPMENT ARM 14,670.84
</TABLE>
UNAUDITED - REVISED 7/10/87
<PAGE> 122
MOTION CONTROL
DETAIL BALANCE SHEET Page 4
FOR MONTH ENDED MAY 31, 1987
<TABLE>
<S> <C> <C>
ACC DEPR, ASSY EQUIP ARM -10,648.82
PRODUCTION TOOLING ARM 74,964.38
ACC DEPR PROD TOOLING - ARM -61,961.85
----------
TTL ASSY/PROD EQUIP-ARM 17,024.55
ASSY/PROD EQUIP-PHORESOR
ASSEMBLY EQUIPMENT PHORESOR 17,568.08
ACC DEPR ASSY EQUIP PHORESOR -10,245.66
PRODUCTION TOOLING PHORESOR 52,229.38
ACC DEPR PROD TLG PHORESOR -44,267.39
----------
TTL ASSY/PROD EQUIP PHORESOR 15,284.41
ASSY/PROD EQUIP-ELECTRODE
ASSEMBLY EQUIPMENT ELECTRODE 23,672.95
ACC DEPR ASSY EQUIP ELECTRODE -11,011.27
PRODUCTION TOOLING ELECTRODE 27,942.99
ACC DEPR - PROD TLG ELECTRODE -22,291.40
----------
TTL ASSY/PROD EQUIP ELECTROD 18,313.27
ASSY/PROD EQUIP-SPAD
ASSEMBLY EQUIPMENT SPAD 29,485.19
ACC DEPR ASSY EQUIP SPAD -19,238.07
PRODUCTION TOOLING SPAD 9,516.58
ACC DEPR PROD TLG SPAD -4,907.14
----------
TTL SSY/PROD EQUIP-SPAD 14,856.56
ASSY/PROD EQUIP PREAMP
ASSEMBLY EQUIPMENT PREAMP 1,442.40
PRODUCTION TOOLING PREAMP 2,108.21
ACC DEPR PROD TLG PREAMP -670.05
----------
TTL ASSY/PROD EQUIP PREAMP 2,880.56
ASSY/PROD EQUIP MYOLAB
ASSEMBLY EQUIPMENT - MYOLAB 7,463.27
ACC DEPR ASSY EQUIP MYOLAB -3,995.63
PRODUCTION TOOLING MYOLAB 13,915.00
ACC DEPR PROD TLG MYOLAB -8,574.38
----------
TTL ASSY/PROD EQUIP MYOLAB 8,808.26
PROSTHETIC TOOLING
----------
TOTAL PROSTHETIC TOOLING 0.00
----------
TTL PROP, PLANT & EQUIP 157,416.79
OTHER ASSETS
</TABLE>
UNAUDITED - REVISED 7/10/87
<PAGE> 123
MOTION CONTROL
DETAIL BALANCE SHEET Page 5
FOR MONTH ENDED MAY 31, 1987
<TABLE>
<S> <C> <C>
ORGANIZATION COSTS 6,550.66
COST ASSCT'D W/REORGANIZATION 145,859.55
COMMERCIAL DEPOSITS 7,032.41
------------
TOTAL OTHER ASSETS 159,442.62
-------------
TOTAL ASSETS $1,740,457.38
=============
LIABILITIES AND EQUITY
CURRENT LIABILITIES
NOTES PAYABLE
NOTE PAYABLE CORDIS 1,980,932.54
NOTE PAYABLE CONTINENTAL BANK 750,000.10
------------
TOTAL NOTES PAYABLE 2,730,932.64
ACCOUNTS PAYABLE
ACCOUNTS PAYABLE 71,156.11
FEDERAL & FICA PAYABLE -118.72
STATE WITHHOLDING PAYABLE 6,378.72
FEDERAL U/C PAYABLE 1,138.18
STATE U/C PAYABLE 312.07
WORKERS COMP PAYABLE 2,431.99
BEEHIVE C/U PAYABLE -5.00
SALES TAX PAYABLE -9.97
USE TAX PAYABLE 1,218.82
INTEREST PAYABLE CORDIS 8,445.46
INTEREST PAYABLE CONTINENTAL 11,279.84
COMMISSION PAYABLE - CINO 204.38
T&E PAYABLE - CINO 19,691.95
INT'L COMM/BROKER ELECTRODES 6,519.79
R&D ARM PAYABLE 9,000.00
ROYALTIES PAYABLE 9,254.36
PAID WARRANTY 1,100.00
COMMISSION PAYABLE - MCI 6,154.93
COMMISSION PAYABLE - MED/D 3,565.70
COMMISSION PAYABLE - DISTRIB'S 27,443.07
------------
TOTAL ACCOUNTS PAYABLE 185,161.68
ACCRUALS
AUDIT ACCRUAL 17,500.00
INSURANCE ACCRUAL 4,797.68
PAYROLL ACCRUAL 14,547.15
WARRANTY ACCRUAL ARM 86 & B4 -9,533.47
WARRANTY ACCRUAL ARM 87 27,355.57
WARRANTY ACCRUAL MYOLAB 86 & B4 67.59
WARRANTY ACCRUAL MYOLAB 87 966.68
</TABLE>
UNAUDITED - REVISED 7/10/87
<PAGE> 124
MOTION CONTROL, INC.
DETAIL BALANCE SHEET Page 6
FOR MONTH ENDED MAY 31, 1987
WARRANTY ACCRUAL OTHER 86 & 84 2,713.93
WARRANTY ACCRUAL OTHER 87 747.46
WARRANTY ACCR'L PHORESOR 86&84 5,622.66
WARRANTY ACCRUAL PHORESOR 87 20,150.22
WARRANTY FREIGHT -1,694.99
------------
TOTAL ACCRUALS 83,240.00
-------------
TOTAL CURRENT LIABILITIES 2,999,334.80
STOCKHOLDERS EQUITY
COMMON STOCK 35,878.75
TREASURY STOCK -1,000.00
PAID IN CAPITAL EXCESS OF PAR 2,038,305.50
RETAINED EARNINGS -3,480,906.63
CURRENT EARNINGS 147,844.96
-------------
TTL STOCKHOLDERS EQUITY -1,258,877.42
-------------
TTL LIABILITIES & EQUITY $1,740,457.38
=============
UNAUDITED -- REVISED 7/10/87
<PAGE> 125
MOTION CONTROL
CONSOLIDATED INCOME STATEMENT Page 7
FOR MONTH ENDED MAY 31, 1987
<TABLE>
<CAPTION>
Current Period Year to Date
-------------- ------------
<S> <C> <C>
SALES REVENUE
SALES UTAH ARM 80,103.27 745,074.33
SALES PHORESOR/ELECTRODE 155,132.55 1,460,171.87
SALES MYOLAB 2,077.50 49,180.82
SALES OTHER 10,812.38 244,627.28
----------- -------------
TOTAL SALES REVENUE 248,125.70 2,499,054.30
COST OF GOODS SOLD
COST OF SALES UTAH ARM 26,214.81 324,121.88
COST OF SALES PHOR/ELECT 56,750.76 586,604.30
COST OF SALES MYOLAB 1,871.37 18,330.04
COST OF SALES SPAD 0.00 130.18
COST OF SALES OTHER 13,359.97 123,362.05
----------- -------------
TOTAL COST OF GOODS SOLD 98,196.91 1,052,548.45
----------- -------------
GROSS MARGIN $149,928.79 $1,446,505.85
=========== =============
OPERATING EXPENSES
GENERAL & ADMINISTRATIVE
SALARIES & WAGES 19,134.64 213,325.19
LEGAL & ACCOUNTING 4,691.62 69,647.17
DEPRECIATION 2,177.86 32,960.68
MISC. GENERAL & ADMIN 14,020.10 140,992,96
----------- -------------
TTL GENERAL & ADMINISTRATIVE 40,024.22 456,926.00
RESEARCH & DEVELOPMENT
RESEARCH & DEVELOPMENT 19,047.30 165,201.53
----------- -------------
19,047.30 165,201.53
SELLING
SALARIES & COMMISSIONS 40,290.11 394,938.88
TRAVEL & ENTERTAINMENT ARM 1,832.49 18,843.96
TRAVEL & ENTER. PHOR/ELEC 2,174.41 20,772.94
TRAVEL & ENTER. SPAD 0.00 0.00
TRAVEL & ENTER MYOLAB 0.00 0.00
TRAVEL/ENTERTAINMENT INT'L 1,097.42 22,901.95
TRAVEL/ENTERTAINMENT ADMIN 1,312.99 29,693.12
ADVERTISING/PROMOTION ARM -2,070.04 24,390.00
ADVER/PROM PHOR/ELEC 1,882.61 96,482.69
ADVER/PROM OTHER -398.14 10,062.14
----------- -------------
TOTAL SELLING 46,121.85 667,451.88
----------- -------------
</TABLE>
UNAUDITED
<PAGE> 126
MOTION CONTROL
CONSOLIDATED INCOME STATEMENT Page 8
FOR MONTH ENDED MAY 31, 1987
<TABLE>
<CAPTION>
Current Period Year to Date
-------------- ------------
<S> <C> <C>
TOTAL OPERATING EXPENSES $105,193.37 $1,249,579.41
----------- -------------
OPERATING INCOME 44,735.42 196,926.44
INTEREST
INTEREST 6,018.59 49,081.48
----------- -------------
TOTAL INTEREST 6,018.59 49,081.48
----------- -------------
NET PROFIT OR LOSS $ 38,716.83 $ 147,844.96
=========== =============
</TABLE>
UNAUDITED
<PAGE> 127
EXHIBIT G.2
JMW ACQUISITION COMPANY
BALANCE SHEET
FOR MONTH ENDED MAY 31, 1987
Balances Only: Yes
Department: All
Reporting Period: Year-do-Date
<PAGE> 128
<TABLE>
<CAPTION>
JMW ACQUISITION COMPANY
BALANCE SHEET
FOR MONTH ENDED MAY 31, 1987
Page 1
<S> <C> <C>
ASSETS
CURRENT ASSETS
CASH
CASH 818.59
CSB CASH - CELL CULTURE 6,841.95
CSB CASH - IONTOPHORESIS 0.00
PETTY CASH - CELL CULTURE 200.00
--------
TOTAL CASH 7,860.54
---------
TOTAL CURRENT ASSETS
PROPERTY, PLANT & EQUIPMENT
RESEARCH EQUIP - CELL CULTURE 0.00
ACC DEPR - CELL CULTURE 0.00
--------
TTL PROP, PLANT & EQUIPMENT 0.00
--------
OTHER ASSETS 0.00
TOTAL OTHER ASSETS 0.00
---------
TOTAL ASSETS $7,860.54
=========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
NOTES PAYABLE 0.00
--------
TOTAL NOTES PAYABLE 0.00
ACCOUNTS PAYABLE
TRADE PAYABLES - CELL CULTURE 0.00
TRADE PAYABLES - IONTOPHORESIS 0.00
--------
TOTAL ACCOUNTS PAYABLE 0.00
---------
TOTAL CURRENT LIABILITIES 0.00
STOCKHOLDERS EQUITY
COMMON STOCK 1,000.00
RETAINED EARNINGS -11.11
CURRENT EARNINGS 6,871.65
---------
TTL STOCKHOLDERS EQUITY 7,860.54
---------
UNAUDITED
</TABLE>
<PAGE> 129
<TABLE>
<CAPTION>
JMW ACQUISITION COMPANY
BALANCE SHEET
FOR MONTH ENDED MAY 31, 1987
Page 2
<S> <C> <C>
TTL LIABILITIES & EQUITY $7,860.54
---------
UNAUDITED
</TABLE>
<PAGE> 130
EXHIBIT G.2
JMW ACQUISITION COMPANY
INCOME STATEMENT
FOR MONTH ENDED MAY 31, 1987
Balances Only: Yes
Department: All
Reporting Period: Current
<PAGE> 131
Page 1
INCOME STATEMENT
FOR MONTH ENDED MAY 31, 1987
<TABLE>
<CAPTION>
Current Period Year to Date
-------------- ------------
<S> <C> <C>
REVENUE
RESEARCH GRANTS
RESEARCH GRANTS - CELL CULTURE 18,168.00 18,168.00
RESEARCH GRANTS - IONTOPHORESIS 0.00 0.00
---------- ----------
TOTAL RESEARCH GRANTS 18,168.00 18,168.00
---------- ----------
TOTAL REVENUE
COST OF GOODS
MTL & CONS SUPPLIES - CELL 140.00 140.00
MTL & CONS SUPPLIES - IONTOPH 0.00 0.00
---------- ----------
TOTAL COST OF GOODS 140.00 140.00
OPERATING EXPENSES
GENERAL & ADMINISTRATIVE
ACCOUNTING SERV - CELL CULTURE 500.00 500.00
DEPRECIATION - CELL CULTURE 0.00 0.00
CONTRACT SERV - CELL CULTURE 8,747.00 8,747.00
OFFICE SUPPLIES - CELL CULTURE 445.92 445.92
BANK CHARGES 170.30 170.30
BANK CHARGES - CELL CULTURE 0.00 0.00
OTHER TAXES & LICENSE 0.00 0.00
CONSULTING - CELL CULTURE 1,000.00 1,000.00
---------- ----------
TOTAL G & A 10,863.22 10,863.22
RESEARCH & DEVELOPMENT 0.00 0.00
---------- ----------
TOTAL RESEARCH & DEVELOPMENT 0.00 0.00
TRAVEL & ENTERTAINMENT
T & E - CELL CULTURE 293.13 293.13
---------- ----------
TTL TRAVEL & ENTERTAINMENT 293.13 293.13
INTEREST 0.00 0.00
---------- ----------
TOTAL INTEREST EXPENSE 0.00 0.00
---------- ----------
TOTAL OPERATING EXPENSES 11,156.35 11,156.35
---------- ----------
NET SBIR OUTSTANDING $ 6,871.65 $ 6,871.65
========== ==========
</TABLE>
UNAUDITED
<PAGE> 132
EXHIBIT H
SHAREHOLDER AGREEMENT
This Agreement is entered into as of August 4, 1987, by and among JMW
Acquisition Co. a Utah corporation (the "Company"), Stephen C. Jacobsen and
Stephen H. Ober (hereinafter collectively referred to as "Shareholders", or
sometimes individually referred to as a "Shareholder"), and the individuals and
entities who execute this Agreement as Investors (the "Investors").
R E C I T A L S
- - - - - - - -
A. Pursuant to that certain Preferred Stock Purchase Agreement to be
entered into by and among the Company, Motion Control, Inc. ("MCI") and the
Investors and dated of even date herewith (the "Purchase Agreement"), the
Investors are purchasing from the Company 67,200 shares of the Company's Series
A Preferred Stock, $0.01 par value per share ("Series A Stock"), 3,942,489
shares of the Company's Series B Preferred Stock, $0.01 par value per share
("Series B Stock") and 172,800 shares of the Company's Series C Preferred Stock,
$0.01 par value per share ("Series C Stock"), in the amounts and series set
forth on Exhibit A to the Agreement. The Series A Stock, Series B Stock and
Series C Stock are hereinafter referred to collectively as the "Preferred
Stock".
B. Upon the Closing (as defined in the Purchase Agreement) Stephen C.
Jacobsen will own 1,440,000 shares of the Company's Common Stock, and Stephen H.
Ober will own 720,000 shares of the Company's Common Stock.
C. To induce the Investors to purchase the Preferred Stock from the
Company, the Shareholders have agreed (i) to grant to the Investors a right of
first refusal with respect to the shares of the Company's Common Stock to be
owned by them as of the Closing, and any shares of the Company's capital stock
issued as a dividend or other distribution with respect to, or in exchange for
or in replacement of such shares (all such shares to be referred to collectively
as the "Shares"), (ii) to grant to the Investors a right of co-sale with respect
to the Shares and (iii) to grant the Investors certain voting rights with
respect to the Shares (the first refusal, co-sale, and voting rights to be
hereinafter referred to as the "Investors' Rights").
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. RIGHTS OF FIRST REFUSAL AND CO-SALE.
1.1 Investor Rights. Before any or all of the Shares hold by any
Shareholder may be sold or otherwise
<PAGE> 133
transferred (including a transfer by gift or operation of law), the Investors
shall have a right of first refusal to purchase all of such Shares, and a right
of co-sale with respect to such Shares, all on the terms and conditions set
forth in this Section 1.
1.2 Notice of Proposed Transfer. Before any Shareholder may sell or
otherwise transfer any of the Shares, such Shareholder (the "Selling
Shareholder") shall deliver to the Company and to each of the Investors a
written notice (the "Notice") stating (i) the Selling Shareholder's bona fide
intention to sell or otherwise transfer such Shares; (ii) the bona fide number,
class and series of the Shares proposed to be sold or otherwise transferred;
(iii) the name of each proposed purchaser or other transferee; and (iv) the bona
fide cash price or other consideration per share for which the Selling
Shareholder proposes to transfer such Shares (the "Offered Price"). The Shares
proposed to be sold or otherwise transferred shall hereinafter be referred to as
the "Offered Shares".
1.3 Right of First Refusal.
(a) Exercise of Right of First Refusal. The Investors shall have the
first right (the "Right of First Refusal") to purchase all, but not less than
all, of the Offered Shares, at the price determined in accordance with Section
1.3(b) below, according to the following procedure:
(i) Any Investor desiring to purchase any or all of the Offered
Shares shall, within the twenty (20) day period commencing on the date the
Notice is given by the Selling Shareholder (the "Refusal Period"), give notice
to the Selling Shareholder in writing of such Investor's election to purchase
and the number and type of Offered Shares that the Investor desires to purchase.
None of the Investors shall have a right to purchase any of the Offered Shares
unless the Investors, in the aggregate, elect to purchase all of the Offered
Shares.
(ii) If the total number of shares specified in the elections of
Investors exceeds the number of Offered Shares, then (unless the Investors agree
otherwise) each Investor electing to purchase shall have the right to purchase
that number of the Offered Shares that is obtained by multiplying the number of
Offered Shares by a fraction, the numerator of which shall be the sum of the
number of shares of the Company's common stock (the "Common Stock") then held by
such Investor plus the number of shares of Common Stock then issuable upon
conversion or exchange of all securities of the Company then held by such
Investor (including but not limited to Series A Stock, Series B Stock and Series
C Stock) that are
-2-
<PAGE> 134
convertible into, or exchangeable for, Common Stock without the payment of any
consideration ("Common Stock Equivalents"), and the denominator of which shall
be the sum of the total number of shares of Common Stock then held by all the
Investors electing to purchase Offered Shares plus the number of shares of
Common Stock then issuable upon conversion or exchange of all Common Stock
Equivalents then held by all the Investors electing to purchase Offered Shares.
(b) Purchase Price. The purchase price per share for the Offered
Shares to be purchased by Investors under this Agreement shall be the Offered
Price. If the Offered Price includes consideration other than cash, the cash
equivalent value of the non-cash consideration shall be conclusively determined
by the Board of Directors of the Company in good faith.
(c) Payment. Payment of the purchase price for the Offered Shares
shall be made within twenty (20) days after expiration of the Refusal Period (if
the Investors have elected to and do purchase all of the Offered Shares).
Payment of the purchase price shall be made, at the option of each Investor
participating in the purchase, (i) in cash (by check), (ii) by cancellation of
all or a portion of any outstanding indebtedness of the Selling Shareholder to
such Investor, or (iii) by any combination of the foregoing.
(d) Rights as a Shareholder. If the Investors exercise their Right
of First Refusal to purchase all of the Offered Shares, then, upon such
exercise, the Selling Shareholder shall have no further rights as a holder of
the Offered Shares except the right to receive payment for the Offered Shares
from the Investors in accordance with the terms of this Agreement, and the
Selling Shareholder shall forthwith cause all certificate(s) evidencing the
Offered Shares to be surrendered to the Company for cancellation and transfer to
the purchasing Investor(s).
1.4 Investors' Right Of Co-Sale.
(a) Exercise of Right of Co-Sale. In addition to the Right of First
Refu al set forth above, each Investor shall have the right to participate in
the Selling Shareholder's sale of the Offered Shares to the proposed purchaser
or other transferee (including sales to other Investors pursuant to Section 1.3)
pursuant to the specified terms and conditions of such sale as set forth in the
Notice and in accordance with the terms and conditions set forth in this Section
1.4 (the "Right of Co-Sale"). To the extent an Investor exercises such Right of
Co-Sale, the number of Offered Shares that the Selling Shareholder may sell
pursuant to the
- 3 -
<PAGE> 135
Notice shall be correspondingly reduced. The Right of Co-Sale of each Investor
shall be subject to the following terms and conditions.
(i) If the Offered Shares include shares of Common Stock, then
each Investor may sell all or any part of that number of shares of Common Stock
owned by such Investor (including shares of Common Stock issuable upon the
conversion of the Preferred Stock) that is not in excess of the number obtained
by multiplying (A) the aggregate number of shares of Common Stock included in
the Offered Shares by a fraction, the numerator (B) of which is the sum of the
number of shares of Common Stock then held by such Investor plus the number of
shares of Common Stock then issuable upon the conversion or exchange of all
Common Stock Equivalents then held by such Investor, and the denominator of
which is the sum of (C) the total number of shares of Common Stock, then held by
the Selling Shareholder and all Investors plus (D) the number of shares of
Common Stock then issuable upon the conversion or exchange of all Common Stock
Equivalents then held by the Selling Shareholder and all Investors.
(ii) If the Offered Shares include any shares of any series or
class of the Company's capital stock other than Common Stock, then each
Investor may sell all or any part of the number of shares of such series or
class owned by such Investor that is not in excess of the number obtained by
multiplying (A) the aggregate number of shares of such series or class included
in the Offered Shares by a fraction, the numerator (B) of which is the number
of shares of such series or class owned by such Investor, and the denominator
(C) of which is the total number of shares of such series or class then held by
the Selling Shareholder and all Investors. If the Offered Shares consist of
shares of more than one series or class, then an Investor may participate in
the sale of shares of any or all such series and/or classes, to the extent set
forth in the Section 1.4(a)(i) and this Section 1.4(a)(ii).
(iii) Each Investor may effect its participation in the sale
pursuant to this Section 1.4 by delivering to the Selling Shareholder within
twenty (20) days after receipt of the Notice, a written election to participate
in the sale of the Offered Shares setting forth the number and type of shares
that such Investor elects to include in the sale, accompanied by one or more
certificates, properly endorsed for transfer, representing such shares or
shares convertible or exchangeable for such shares.
(b) Delivery of Stock Certificates and Proceeds. The stock
certificate(s) to be delivered by the Investor pursuant to Section 1.4(a)(iii)
shall be transferred
-4-
<PAGE> 136
and delivered to the purchaser or transferee in consummation of the sale of the
Offered Shares pursuant to the terms and conditions specified in the Notice, and
there shall be promptly thereafter remitted to such Investor that portion of the
sale proceeds to which such Investor is entitled by reason of its participation
in such sale.
1.5 Offering Shareholder's Right To Transfer.
If the Investors have not elected to purchase all of the Offered Shares, then
the Selling Shareholder may sell or transfer that portion of the Offered Shares
permitted to be sold by the Selling Shareholder after application of the Right
of Co-Sale contained in Section 1.4 hereof, to any person named as a purchaser
or other transferee in the Notice at the Offered Price, provided that such sale
or other transfer (i) is consummated within 120 days after the date of the
Notice and (ii) is in accordance with all the terms of this Agreement. If the
Offered Shares are sold or transferred in accordance with the terms and
conditions of this Agreement, then the transferee or purchaser of the Offered
Shares shall thereafter hold such Offered Shares free of the Right of First
Refusal and the Right of Co-Sale imposed by this Agreement. If the Offered
Shares are not so sold or otherwise transferred during such 120 day period,
then the Selling shareholder shall not sell or otherwise transfer any of such
Offered Shares without complying again in full with the provisions of this
Agreement.
1.6 Exceptions.
(a) Certain Family Gifts. Notwithstanding any thing in this
Agreement to the contrary, transfers of Shares by a Shareholder by gift to such
Shareholder's immediate family members or to trusts for the exclusive benefit
of such family members, or transfers of Shares by a Shareholder by will or
intestate succession, shall be exempt from the Right of First Refusal and Right
of Co-Sale set forth in this Agreement, provided that each transferee or other
recipient agrees in writing to hold the Shares so transferred subject to all of
the provisions of this Agreement so that such transferee is bound by all
provisions of this Agreement and that there shall be no further transfer of
such Shares except in accordance with the terms of this Agreement. For purposes
of this Section 1.6 the term "immediate family" shall mean spouse, lineal
descendant or antecedent, father, mother, brother or sister of the Shareholder,
the adopted child or adopted grandchild of the Shareholder, or the spouse of any
child, adopted child, grandchild or adopted grandchild of the Shareholder.
(b) Certain Transfers. Notwithstanding anything in this Agreement to
the contrary, the Right of First Refusal
-5-
<PAGE> 137
and Right of Co-Sale shall not apply to any transfer of Shares by a Shareholder
made pursuant to: (i) a statutory merger or statutory consolidation of the
Company with or into another corporation or corporations; (ii) the winding up
and dissolution of the Company; or (iii) an underwritten sale of Common Stock
to the general public pursuant to a registration statement filed with, and
declared effective by, the Securities and Exchange Commission under the
Securities Act of 1933, as amended, where the Shares in question have been
registered under such registration statement. Additionally, 360,000 of the
shares held by Mr. Jacobsen, and 180,000 of the Shares held by Mr. Ober, as
appropriately adjusted for stock splits, dividends, combinations and the like,
shall be exempt from the provisions of Section 1 of this Agreement and may be
sold or otherwise transferred without complying with such provisions.
2. VOTING AGREEMENT
2.1 Investor's Right to Vote Shares in Certain Transactions.
The Shareholders shall vote the Shares as directed by a representative of the
Investors (the "Investors' Representative") in connection with any proposed
merger, consolidation, liquidation, dissolution, sale of all or substantially
all assets or similar transaction of or by the Company (a "Major Transaction"),
provided, however, that this Section 2.1 shall not apply to a proposed merger
unless all holders of the Company's common stock are entitled to receive
substantially the same consideration per share for their stock in such merger.
2.2 Notice to Shareholders. In the event that the Investors, or
any other person, proposes that the Company enter into a Major Transaction,
the Investors' Representative (who shall be selected by holders of a majority of
the shares of Preferred Stock and Common Stock issued on conversion of the
Preferred Stock) shall inform the Shareholders in writing at least 30 days
prior to the shareholder vote relating to such transaction of the basic terms
of the translation and of how the Shares shall be voted on such matter (the
"Investors' Voting Rights"), and the Shareholders shall so vote the Shares. The
Shareholders shall be required to vote the Shares as directed by the Investors'
Representative whether or not the Major Transaction has been proposed, approved
or considered by the Company's Board of Directors; provided, however, that in
the event the Major Transaction is not proposed by the Investors, then the
Investors shall only be required to provide the Shareholders with such notice
and information about the proposed Major Transaction as is reasonably possible
and available to them. In connection with any proposed Major Transaction, the
Shareholders shall take any and all actions requested by the Investors'
Representative to effect the intention of the Investors' Representative
relating to such transaction, including, without limitation, voting the Shares
for or against the election or removal of a given director or
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directors at the direction of the Investors' Representative to effect the
appropriate Board of Director action relating to such proposed Major
Transaction, or granting the Investors' Representative a proxy to vote the
Shares in connection with such proposed Major Transaction.
2.3 Shareholders' Right to Vote. Notwithstanding the foregoing,
the Shareholders may vote the Shares in connection with a given proposed Major
Transaction if, prior to the vote, the Shareholders have (i) offered, in
writing, to each Investor, to purchase all shares of the Company's capital
stock held by such Investor for an amount in cash equal to the fair market
value of the amount such Investor would receive for such shares in connection
with the proposed Major Transaction, which amount shall be determined by the
Investors' Representative in good faith (the "Fair Market Value Price") and
(ii) provided the Investors (to the reasonable satisfaction of the Investors
Representative) with evidence of the Shareholders' ability to promptly make
the offered payment to any Investor who accepts the Shareholders' offer. Under
no circumstance will the Shareholders be relieved of their obligation to vote
the Shares as directed by the Investors' Representative if they cannot
demonstrate, to the satisfaction of the Investors Representative, their
willingness and ability to purchase the Investors' Shares as set forth in this
Section 2.3.
2.4 Acceptance of Shareholders' Offer. Each Investor may accept
or reject the Shareholders' offer regardless of the decision of other Investors
regarding the offer. Any Investor who accepts such offer shall be paid the Fair
Market Value Price within 20 days of acceptance of the Shareholders' offer. Any
failure to pay the Fair Market Value Price within such period shall reinstate
the Investors' Voting Rights of all Investors relating to the Shares for the
proposed Major Transaction.
2.5 Equitable Relief. The parties hereto agree that the failure
of the Shareholders to vote their Shares as directed by the Investors
Representative in accordance with this Section 2 will cause irreparable harm to
the Investors. Accordingly, it is agreed, that the Investors shall be entitled
to equitable relief (including, without limitation, injunctive relief and/or
specific performance) to enforce the provisions of this Section 2.
3. Termination of Investors' Rights. The Investors' Rights shall
terminate upon the earlier to occur of:
(a) the closing of the first underwritten sale of the Company's
Common Stock to the general public pursuant to a registration statement filed
with, and declared
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effective by, the Securities and Exchange Commission under the Securities Act
of 1933, as amended; or
(b) the date on which this Agreement is terminated by a writing
executed by the Company and holders of 60% of the shares of the Preferred
Stock and Common Stock issued on conversion of the Preferred Stock. No such
action shall be taken that materially and adversely affects Cordis Corporation
in a manner substantially different than the New Investors (as that term is
defined in the Purchase Agreement) without Cordis' approval.
4. REFUSAL TO TRANSFER. Any attempt by any Shareholder to transfer any
of the Shares in violation of any provision of this Agreement shall be void.
The parties hereto agree that the Company shall not be required (i) to transfer
on its books any Shares that have been sold, gifted or otherwise transferred in
violation of any of the provisions set forth in this Agreement, (ii) to treat
as owner of such Shares or to accord the right to vote or pay dividends to any
purchaser, donee or other transferee to whom such Shares may have been so
transferred or (iii) to recognize the vote of any Shares voted in violation of
the provisions of this Agreement.
5. RESTRICTIVE LEGEND AND STOP-TRANSFER ORDERS.
5.1 Legend. Each Shareholder understands and agrees that the Company
shall cause the legend set forth below, or a legend substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the
Shares:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RIGHTS OF
FIRST REFUSAL AND CO-SALE, AND VOTING RESTRICTIONS, AS SET FORTH IN A
SHAREHOLDER AGREEMENT DATED AUGUST 4, 1987 ENTERED INTO BY THE ORIGINAL
HOLDER OF THESE SHARES, THE COMPANY, AND CERTAIN OTHER SHAREHOLDERS OF THE
COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY. SUCH RIGHTS OF FIRST REFUSAL AND CO-SALE, AND VOTING RESTRICTIONS,
ARE BINDING ON TRANSFEREES OF THESE SHARES.
5.2 Stop Transfer Instructions. Each Shareholder agrees, to insure
compliance with the restrictions referred to herein, that the Company may issue
appropriate "stop transfer" certificates or instructions and that, if the
Company transfers its own securities, it may make appropriate notations to the
same effect in its records.
6. MISCELLANEOUS PROVISIONS.
6.1 Notice. Any notice required or permitted to be given to a party
pursuant to the provisions of this Agreement shall be in writing and shall be
effective upon the
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earlier of (i) personal delivery or (ii) three (3) business days after deposit
in the U.S. mail by registered or certified mail, with postage prepaid and
properly addressed to the party to be notified at the address set forth below
such party's signature on this Agreement or at such other address as such party
may designate by ten (10) days advance written notice to the other parties
hereto.
6.2 Binding on Successors and Assigns. This Agreement, and the rights
and obligations of the parties hereunder, shall inure to the benefit of, and be
binding upon, their respective successors, assigns and legal representatives.
6.3 Severability. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
6.4 Amendment. Any amendment or modification of this Agreement shall
be effective only if evidenced by a written instrument executed by the Company,
holders of 60% of the shares of Preferred Stock and Common Stock issued on
conversion of the Preferred Stock, and the Shareholders; provided, however,
that any Investor may waive, reduce or release (in whole or in part) any of its
rights hereunder without the consent of any other party hereto. Notwithstanding
the foregoing, no such amendment or modification that materially and adversely
affects Cordis Corporation in a manner substantially different than the New
Investors (as that term is defined in the Purchase Agreement) shall be binding
on Cordis Corporation without their approval. Any waiver by a party of its
rights hereunder shall be effective only if evidenced by a written instrument
executed by a duly authorized representative of such party.
6.5 Exculpation Among Investors. Each Investor shall have the
absolute right to exercise or refrain from exercising any right or rights that
such Investor may have by reason of this Agreement, including without
limitation the right to purchase or participate in the sale of Offered Shares,
to waive any right of such Investor under this Agreement, or to agree to the
amendment of this Agreement, and such Investor shall not incur any liability to
any other Investor, or to any Shareholder or to the Company, with respect to
exercising or refraining from exercising any such right or rights.
6.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Utah, excluding that body of law
pertaining to conflict of laws.
6.7 Obligation of the Company. The Company agrees to use its best
efforts to enforce the terms of this Agreement,
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<PAGE> 141
to inform the Investors of any breach hereof and to assist the Investors in the
exercise of their rights and performance of their obligations hereunder.
6.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original; and all such counterparts together shall constitute one and the same
instrument.
6.9 Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and there is no other
agreement or understanding of the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
The Company
JMW Acquisition Co.
By:
--------------------------------
Title:
------------------------------
Address: 1290 West 2320 South, Suite A
Salt Lake City, Utah 84119
The Shareholders
- ------------------------------------
Stephen C. Jacobsen
Address: c/o JMW Acquisition Co.
1290 West 2320 South, Suite A
Salt Lake City, Utah 84119
- ------------------------------------
Stephen H. Ober
Address: c/o JMW Acquisition Co.
1290 West 2320 South, Suite A
Salt Lake City, Utah 84119
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<PAGE> 142
The Investors
Newtek Ventures,
a California limited partnership
By:
--------------------------------
Title:
------------------------------
Address:
500 Washington Street
Suite 720
San Francisco, CA 94111
MBW Venture Partners Limited Partnership
By: MBW Management, Inc.
By:
--------------------------------
Title:
------------------------------
Address:
350 Second Street
Suite 7
Los Altos, CA 94022
Michigan Investment Fund L.P.
By: MBW Management, Inc.
By:
--------------------------------
Title:
------------------------------
Address:
350 Second Street
Suite 7
Los Altos, CA 94022
Utah Technology Venture Fund
By:
--------------------------------
Title:
------------------------------
Address:
419 Wakara Way
Salt Lake City, UT 84108
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<PAGE> 143
Cordis Corporation
By:
--------------------------------
Title:
------------------------------
Address:
10555 W. Flagler Street
Miami, FL 33173
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<PAGE> 144
EXHIBIT "I"
[HANSEN & ANDERSON LETTERHEAD]
Attorneys at Law
August 5, 1987
To each of the purchasers ("Purchasers") set forth on Exhibit "A" hereto:
We have acted as counsel to the Company and MCI in connection with the
offer and sale of 67,200 shares of the Company's Series A Preferred Stock (the
"Series A Stock"), 3,975,618 shares of the Company's Series B Preferred Stock
(the "Series B Stock") and 172,800 shares of the Company's Series C Preferred
Stock (the "Series C Stock") (the Series A Stock, Series B Stock and Series C
Stock to be referred to collectively as the "Preferred Stock") pursuant to that
certain Preferred Stock Purchase Agreement by and among you, the other
Purchasers, JMW Acquisition Co. (the "Company") and Motion Control, Inc.
("MCI") dated August 4, 1987 (the "Agreement"). All capitalized terms used in
this opinion, unless specifically defined herein, shall have the meaning given
them in the Agreement.
In rendering the opinion contained herein, as required pursuant to
Paragraph 5.13 of Section 5 of the Agreement, we have reviewed and examined the
Articles of Incorporation and Bylaws of the Company and MCI, the Agreement, the
records of corporate action of the Company and MCI, and we have made such other
investigations of law and fact as we have deemed necessary or appropriate under
the circumstances. In our examination of the foregoing, we have assumed the
genuineness of all signatures on original documents, the authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof, the due execution and delivery of
all documents where due execution and delivery are a prerequisite of the
effectiveness thereof, the authority of each person signing any of such
documents on behalf the Purchasers, and the accuracy and completeness of the
factual representations made in all documents referred to herein. In addition,
we have specifically relied upon factual representations as to certain matters
contained in certificates (collectively, the "Officers Certificates") signed by
officers of the Company and MCI and have made no independent investigations
thereof. The Officers Certificates are attached hereto as Exhibits "B" and "C".
As used herein, the phrase "to the best of our knowledge" reflects the fact
that, while we have no reason to believe that the statement of such matter is
inaccurate (based on information we have as a result of representing the
Company and MCI in this and other matters), we have made no independent
investigation with respect to such statement or matter.
<PAGE> 145
Purchasers
August 5, 1987
Page 2
For the purposes of this opinion, we have further assumed that you have
all requisite power and authority, and have taken any and all necessary
corporate or partnership action, to execute and deliver the Agreement.
The opinions hereinafter expressed are subject to the following
qualifications, as to which we render no opinions: (a) the effect of applicable
bankruptcy, insolvency and other similar laws affecting the rights of creditors
generally; (b) the effect of rules of law governing specific performance,
injunctive relief, and other equitable remedies; (c) the enforceability of
provisions requiring indemnification or contribution in connection with the
offering, issuance or sale of securities; (d) the enforceability of any
self-help, choice of law, evidentiary standard, waiver of remedy or liquidated
damages provisions and (e) as to compliance with any law of the State of
Michigan.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company and MCI are each corporations duly organized and duly
existing under, and by virtue of, the laws of the State of Utah, and are in
good standing under such laws. The Company and MCI have all requisite corporate
power to carry on their respective businesses and to enter into and carry out
the provisions of the Agreement and the transactions contemplated thereby. The
Company and MCI have no subsidiaries or affiliated companies and do not
otherwise directly or indirectly control any other business entity, except
that, upon closing, MCI will be a 95% or greater owned subsidiary of the
Company. Neither the Company nor MCI owns or leases any property outside the
State of Utah and is not required to be qualified to do business in any other
state in which the failure to so qualify would have a material adverse effect
on the business or assets of either the Company or MCI. The Company and MCI
have furnished the Purchasers, or their counsel, with copies of their current
Articles of Incorporation, which copies are true, correct and complete and
contain all amendments through the date of the Agreement. Such Articles are not
in conflict with any provisions of the Utah Business Corporation Act and are
enforceable in accordance with their terms.
2. The authorized capital stock of the Company consists of 15,000,000
shares of Common Stock, $0.01 par value, of which 500,000 shares are issued and
outstanding, and 3,316,195 shares are subject to issuance pursuant to executed
subscription agreements that provide for the purchase of such shares at the
Closing, and 4,215,618 shares of Preferred Stock, $0.01 par value (67,200 of
which have been designated Series A Stock, 3,975,618 of which have been
designated Series B Stock, and 172,800 of which have been designated Series C
Stock), none of which Preferred Stock is issued or outstanding immediately
prior to the Closing. All such issued and outstanding shares have been duly
authorized and validly issued and are fully paid for and non-assessable, and
have been issued in compliance with all applicable federal and state securities
laws. To the best of our knowledge, and except as set forth in the Agreement,
there are no options,
<PAGE> 146
Purchasers
August 5, 1987
Page 3
warrants, conversion privileges or other rights or agreements, with respect to
the issuance thereof, presently outstanding to purchase an of the authorized
but unissued stock of the Company.
3. The authorized capital stock of MCI consists of 100,000 shares of
Preferred Stock, $0.50 par value, none of which is designated, issued or
outstanding, and 10,000,000 shares of Common Stock, $0.01 par value, 3,487,875
shares of which are issued and outstanding. All such issued and outstanding
shares have been duly authorized, validly issued and are fully paid for and
non-assessable. To the best of our knowledge, and except as set forth or
disclosed in the Agreement, there are no options, warrants, conversion
privileges or other rights, or agreements, with respect to the issuance
thereof, presently outstanding to purchase any of the authorized but unissued
stock of MCI.
4. All corporate action on the part of the Company and MCI, and their
respective officers, directors and shareholders, necessary for the sale and
issuance of the shares of Preferred Stock pursuant to the Agreement (and of the
shares of common stock issuable upon conversion of such shares of Preferred
Stock), and the performance of the Company's and MCI's obligations under the
Agreement, has been taken or will be taken prior to the Closing. When executed
and delivered by the Company and MCI, respectively, the Agreement will be a
valid and binding obligation of the Company and MCI, respectively, enforceable
in accordance with its terms. To the best of our knowledge, the shares of
Preferred Stock issued pursuant to the Agreement (and the shares of common
stock issuable upon conversion of such shares of Preferred Stock) are not
subject to any pre-emptive rights or rights of first refusal.
5. To the best of our knowledge, there are no actions, proceedings or
investigations pending, or to the best of our knowledge, any basis therefor or
threat thereof, against or affecting the Company or MCI, that, either in any
case or in the aggregate, might result (i) in any material adverse change in the
business, prospects, condition, affairs or operations of the Company or MCI or
in any of their respective properties of assets, (ii) in any material
impairment of the right or ability of the Company or MCI to carry on their
respective businesses as now conducted or as proposed to be conducted, or (iii)
in any change in the current equity ownership of the Company or MCI, and none
that questions the validity of the Agreement or any action taken or to be taken
in connection therewith.
6. The shares of Preferred Stock to be purchased and sold pursuant to the
Agreement (and the shares of common stock issuable upon conversion of such
shares of Preferred Stock), when issued, sold and delivered in accordance with
the terms and for the consideration expressed in the Agreement, will be duly
and validly issued, fully paid for and non-assessable, and, to the best or our
knowledge, will be free and clear of any liens or encumbrances caused or
created by the Company or MCI. The rights, preferences and privileges of the
Preferred Stock will be as set forth in the Company's Articles of
Incorporation. The Company has
<PAGE> 147
Purchasers
August 5, 1987
Page 4
reserved the requisite number of shares of its common stock for issuance upon
the conversion of the shares of Preferred Stock to be issued under the
Agreement.
7. All material consents, approvals, orders, authorizations or
registrations, qualifications, designations, declarations or filings with any
federal or state governmental authority on the part of the Company or MCI
required in connection with the consummation of the transactions contemplated
in the Agreement shall have been obtained prior to and be effective as of the
Closing or shall be obtained and be effective in a timely manner after the
Closing. Assuming the accuracy of the representation and warranties of the
Purchasers set forth in Sections 4.1 through 4.7, and sub paragraphs (1)
through (3) of Section 4.8, of the Agreement and the factual representations of
the officers of the Company contained in the Officers Certificate for the
Company, the offer, sale and issuance of the Preferred Stock to the Purchasers
in conformity with the terms of the Agreement is (i) exempt from the
registration and prospectus delivery requirements of the Securities Act of
1933, as amended and (ii) exempt from the qualifications and/or registration
requirements under any applicable state securities laws.
8. Except as set forth in the Schedule of Exceptions contained in the
Agreement, (i) neither the company nor MCI is in, nor to the best of our
knowledge will the conduct of their respective businesses as proposed to be
conducted result in, any violation of any term of their respective Articles of
Incorporation or bylaws, and (ii) to be the best of our knowledge, neither the
Company nor MCI is in nor will the conduct of their respective businesses as
proposed be conducted result in, any violation, breach or default, in any
material respect, of any term or provisions of any mortgage, indenture,
contract, agreement or instrument to which the Company or MCI is a party, any
material federal or state law, rule or regulation, or any material judgment,
decree, or order, applicable to or binding upon the company or MCI. The
execution, delivery and performance of the Agreement, and the issuance of the
shares of Preferred Stock pursuant thereto, will not result in any material
violation of the company's or MCI's Articles of Incorporation or Bylaws, or any
federal or state law, rule or regulation, and to the best of our knowledge will
not violate or constitute a default in any material respect under any mortgage,
indenture, contract, agreement or instrument to which the company or MCI is a
party, or any material judgment, decree or order by which either of them is
bound. To the best or our knowledge, no employee of the Company or MCI is in
violation, nor to the best of our knowledge is there any allegation of such
violation, of any material term of any employment contract, patent or other
proprietary information or nondisclosure agreement, or any other similar
contract or agreement, including, without limitation, any contract or agreement
relating to the right of any such employee to be employed by the Company or MCI
because of the nature of the business conducted or proposed to be conducted by
the company or MCI or for any other reason, and to the best of our knowledge
the continued employment by the Company and MCI of their present employees will
not result in any such violation.
<PAGE> 148
Purchasers
August 5, 1987
Page 5
9. To the best of our knowledge, and except as set forth in the Agreement
and in the employment and consultation Agreement between MCI and Stephen C.
Jacobson dated January 1, 1986, neither the Company nor MCI is presently under
any obligation, including any "piggyback" obligation, to register, as defined
in Section 7 of the Agreement, any of its presently outstanding securities or
any of its securities that may hereafter be issued.
This opinion is solely for your use and is not to be made available to or
relied upon by other persons or entities without our prior written consent.
Please note that we opine only as to the matters expressly set forth herein. No
opinion should be inferred as to any other matters.
Very truly yours,
Hansen & Anderson
----------------------------------
Hansen & Anderson
<PAGE> 149
EXHIBIT J
BYLAWS
OF
JMW ACQUISITION CO.
I. OFFICES
The principal office of the corporation in the State of Utah shall be
located in the City of Salt Lake, County of Salt Lake. The corporation may have
such other offices, either within or without the State of Utah, as the Board of
Directors may designate or as the business of the corporation may require from
time to time.
II. SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders shall
be held on the first Tuesday in the month of April in each year, beginning with
the year 1986, at the hour of 10:00 o'clock a.m., or at such other time on such
other day within such month as shall be fixed by the Board of Directors, for
the purpose of electing directors and for the transaction of such other
business as may come before the meeting.
Section 2. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the Chairman of the Board of Directors, the President or by the Board of
Directors, and shall be called by the President at the request of the holders
of not less than one-fifth (1/5) of all outstanding shares of the corporation
entitled to vote at the meeting.
Section 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Utah, as the place of meeting for
any annual meeting or for any special meeting called by the Board of Directors.
Section 4. Notice of Meeting. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purposes or purpose
for which the meeting is called, shall, unless otherwise prescribed by statute,
be delivered not less than ten (10) nor more than fifty (50) days before the
date of the meeting, either personally or by mail, by or at the direction of
the President, or the Secretary, or the officer or other persons calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the shareholder at his address as it appears on
the stock transfer books of the corporation, with postage thereon prepaid.
<PAGE> 150
Section 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period, not less than (10) days, but not to exceed, in any case, fifty
(50) days. In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than fifty (50) days and, in
the case of a meeting of shareholders, not less than ten (10) days prior to the
date on which the particular action, requiring such determination of
shareholders, is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of shareholders.
Section 5. Voting Record. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make a complete record
of the shareholders entitled to vote at each meeting of shareholders or any
adjournment thereof.
Section 7. Quorum. A majority of the outstanding shares of the
corporation entitled to vote represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of
the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further notice.
Section 8. Proxies. At all meetings of shareholders, a shareholder may
vote in person or by proxy executed in writing by the shareholder or by his
duly authorized attorney in fact.
Section 9. Voting of Shares. Each outstanding share entitled to vote
shall have the voting rights specified in the Articles of Incorporation of the
corporation.
Section 10. Informal Action by Shareholders. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof.
III. BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by its Board of Directors.
2
<PAGE> 151
Section 2. Number, Tenure and Qualifications. The number of directors of
the corporation shall be five (5). Each director shall hold office until the
next annual meeting of shareholders and until his successor shall have been
elected and qualified. Directors need not be residents of the State of Utah or
shareholders of the corporation.
Section 3. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after, and at
the same place as, the annual meeting of shareholders. The Board of Directors
may provide, by resolution, the time and place, either within or without the
State of Utah, for the holding of additional regular meetings without other
notice than such resolution.
Section 4. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board of Directors,
the President or any two directors. The person or persons authorized to call
special meetings of the Board of Directors may fix any place, either within or
without the State of Utah, as the place for holding any special meeting of
the Board of Directors called by them.
Section 5. Notice. Notice of any special meeting shall be given at least
two (2) days previously thereto by written notice delivered personally or mailed
to each director at his business address or at least one (1) day previously
thereto by actual telephonic notice to each director. Such notice shall be
deemed to be delivered when deposited in the United States mail, so addressed,
with postage thereon prepaid, if by mail, or at the time the call is completed,
if by telephone. Any director may waive notice of any meeting. The attendance of
a director at a meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened.
Section 5. Quorum. A majority of the number of directors fixed by
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
Section 7. Merger of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 8. Action Without a Meeting. Any action required or permitted to
be taken by the Board of Directors at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the directors.
3
<PAGE> 152
Section 9. Vacancies. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors. A director elected to fill
a vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors may be filled by election by the Board of Directors for a term of
office continuing only until the next election of directors by the
shareholders
Section 10. Compensation. By resolution of the Board of Directors, each
director may be paid his expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a stated salary as director or a fixed
sum for attendance at each meeting of the Board of Directors or both. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
IV. OFFICERS
Section 1. Number. The officers of the corporation shall be the Chairman
of the Board of Directors, a President, one or more Vice Presidents, a
Secretary and a Treasurer, each of whom shall be elected by the Board of
Directors. Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the Board of Directors. Any two or
more offices may be held by the same person, except the offices of President
and Secretary.
Section 2. Election and Term of Office. The officers of the corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor shall
have been duly elected and shall have qualified or until his death or until he
shall resign or shall have been removed in the manner hereinafter provided.
Section 3. Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an
officer or agent shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
Section 5. Chairman of the Board of Directors. The Chairman of the Board
of Directors shall preside at all meetings of the Board of Directors and,
subject to its direction, shall perform such acts on behalf of the corporation
as he or she determines are appropriate.
4
<PAGE> 153
Section 6. President. The President shall be the chief executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all meetings of
the shareholders and shall also preside at meetings of the Board of Directors
in the absence of the Chairman of the Board of Directors or at the request of
the Chairman. He may sign any deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be executed, except
in cases where the signing and execution thereof shall be expressly delegated
by the Board of Directors or by these Bylaws to some other officer or agent of
the corporation, or shall be required by law to be otherwise signed or
executed; and in general shall perform all duties incident to the office of
President and such other duties as may be prescribed by the Board of Directors
from time to time.
Section 7. Vice President. In the absence of the President or in
the event of his death, inability or refusal to act, the Vice President (or in
the event there be more than one Vice President, the Vice Presidents, in the
order designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. Any Vice President may perform such
other duties as from time to time may be assigned to him or her by the
President or by the Board of Directors.
Section 8. Secretary. The Secretary shall: (a) keep the minutes of
the proceedings of the shareholders and of the Board of Directors in one or
more books provided for that purpose; (b) see that all notices are duly given
in accordance with the provisions of these Bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation; (d) keep
a register of the address of each shareholder; (e) sign with the President, or
a Vice President, certificates for shares of the corporation, the issuance of
which shall have been authorized by resolution of the Board of Directors; (f)
have general charge of the stock transfer books of the corporation; and (g) in
general perform all of the duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him or her by the
President or by the Board of Directors.
Section 9. Treasurer. The Treasurer shall (a) have charge and
custody of and be responsible for all funds and securities of the corporation;
(b) receive and give receipts for moneys due and payable to the corporation from
any source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositories as shall be
determined by the Board of Directors; and (c) in general perform all of the
duties incident to the office of Treasurer and such other duties as from time to
time may be assigned to him or her by the President or by the Board of
Directors.
Section 10. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries and Assistant Treasurers, in general, shall perform such
5
<PAGE> 154
duties as shall be assigned to them by the Secretary or Treasurer or by the
President or the Board of Directors.
Section 11. Salaries. The salaries of the officers shall be fixed
from time to time by the Board of Directors and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a director of
the corporation.
Section 12. Signature of Checks. Payment for corporate debts made
by check or check vouchers may be signed by any of the officers of the
corporation, or otherwise as the Board of Directors may from time to time by
resolution direct.
V. CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing
shares of the corporation shall be in such form as shall be determined by the
Board of Directors. Such certificates shall be signed by the President or Vice
President and by the Secretary or an Assistant Secretary and sealed with the
corporate seal or facsimile thereof if such seal has been adopted by the Board
of Directors.
Section 2. Transfer of Shares. Transfer of shares of the
corporation shall be made only on the stock transfer books of the corporation
by the holder of record thereof or by his legal representative, who shall
furnish proper evidence of authority to transfer, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
VI. DIVIDENDS
The Board of Directors may, from time to time, declare and the
corporation may pay dividends on its outstanding shares in the manner, and upon
the terms and conditions provided by law and its Articles of Incorporation.
VII. CORPORATE SEAL
The Board of Directors may provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation
and the state of incorporation and the words, "Corporate Seal."
VIII. WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or
director of the corporation under the provisions of these Bylaws or under the
provisions of the Utah Business Corporation Act, a waiver thereof in writing
6
<PAGE> 155
signed by the person or persons entitled to such notice, whether before or
after the time stated therein, shall be deemed equivalent to the giving of such
notice.
IX. AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may
be adopted by the Board of Directors or by the shareholders at any regular or
special meeting.
X. INDEMNIFICATION
To the full extent permitted by its Articles of Incorporation and by
the Utah Business Corporation Act, the Corporation shall indemnify (and advance
expenses to) its directors, officers and employees in connection with any
action, suit, or proceeding, civil or criminal, to which such persons are made
party by reason of being or having been a director, officer or employee of the
Corporation. Additionally, the Corporation shall provide such indemnification
of, and advancement of expenses to, such of its agents as the Board of
Directors of the Corporation shall, from time to time, deem necessary, required
or appropriate.
--------------------------
Secretary
7
<PAGE> 1
Exhibit 10.31
SUPPLY AGREEMENT
This Agreement is made this 4 day of DEC, 1994 by and between Iomed, Inc.
("Iomed"), 1290 West 2320 South, Salt Lake City, Utah 84119 and Luitpold
Pharmaceuticals, Inc./American Regent Laboratories Inc., ("American Regent Inc.
or Luitpold") 1 Luitpold Drive, Shirley, NY 11967. Iomed and American Regent
Inc. or Luitpold, for the purposes of this Agreement, may be referred to jointly
as the "Parties".
Iomed desires to purchase its requirements of Dexamethasone 0.4% injection,
USP, from American Regent Inc. and American Regent Inc. agrees to sell to Iomed
its requirements of such Product. Iomed will market the Product for use in
conjunction with Iomed's Iontophoretic Delivery System.
Therefore, in consideration of the premises and the mutual promises and
agreements contained herein, Iomed and American Regent Inc. agree as follows:
1. Product.
For purposes of this Agreement, the term "Product" shall mean Dexamethasone
Sodium Phosphate 0.4% injection, USP, packaged on 30ml SVP fliptop containers
(ANDA#87-440) and labeled for iontophoretic administration with Iomed's
Iontophoretic Delivery System. A single 30ml SVP fliptop container of Product is
referred to as a "Unit" for the purposes of this Supply Agreement.
2. Custom Product Development.
Promptly after the execution of this Agreement, the Parties shall undertake
to develop a custom labeled packaged product suitable for marketing with Iomed's
Iontophoretic Delivery System and suitable for manufacturing on American Regent
Inc.'s standard packaging equipment for fliptop containers. The Parties shall
use their reasonable best efforts to successfully complete the product
development and to obtain U.S. Food and Drug Administration ("FDA") marketing
approval of the Product. It is understood and agreed that
<PAGE> 2
there is no guarantee that the product development will be successful and no
representation or warranty of any kind is given by either party that a
marketable Product will result from the development.
3. American Regent Inc.'s Responsibilities.
The objective of the product development shall be for American Regent Inc.
to assist Iomed as required in obtaining regulatory approval for sale of the
Product. The Product will then be manufactured by American Regent Inc. and sold
to Iomed for resale by Iomed. American Regent Inc. shall have the following
development responsibilities:
a. Manufacture at American Regent Inc.'s plant, ***** Units of Product (at
a price of *****/Unit to Iomed) for use in clinical studies to be carried out by
Iomed to support FDA filings for device and drug labeling approvals.
b. Provide authorization to Iomed to reference Luitpold's Abbreviated New
Drug Application (#87-440), as appropriate for Pre-market Approval submissions
by Iomed. Assist Iomed, as reasonably requested, in preparation of regulatory
submissions for the Product and provide such other assistance as Iomed may
reasonably require.
c. Using American Regent Inc.'s graphics studio, typeset final label and
carton copy from artwork provided by Iomed and generate proofs and negatives
suitable for printing.
4. Iomed's Regulatory Submissions.
Iomed agrees that American Regent Inc. shall have the right to copies of
Iomed's proposed Pre-market Approval submissions. Iomed further agrees that
American Regent Inc. shall participate with Iomed in responding to questions
from the FDA regarding regulatory submissions applicable to the Product. Iomed
shall respond to questions relating to its device and the clinical studies.
American Regent Inc. shall respond to questions relating to the Product.
<PAGE> 3
5. Manufacture and Supply of Product.
5.1 Purchase and Sale of Product - Iomed Requirements. During the term
of this Agreement and pursuant to the terms and conditions hereof, American
Regent Inc. agrees to manufacture, sell and deliver Product exclusively to
Iomed and Iomed agrees to purchase its total requirements of Product from
American Regent Inc.
5.2 Orders and Delivery Variances. Unless otherwise agreed to by the
Parties, an order quantity, if any, shall be in multiples of ***** Units
and in quantities not less than ****** Units. The maximum order quantity
shall be ******* Units per month. The maximum and minimum order sizes may
be adjusted from time to time by written agreement of the Parties. Delivery
of Product by American Regent Inc. may vary from quantities ordered by
Iomed by plus or minus *** percent *****. Such deliveries shall be in full
compliance with this Agreement.
5.3 Manufacture of Product.
5.3.1 Luitpold shall manufacture Product in accordance with the
Product Specifications for American Regent Inc., Product Number
4930-25. Such Product Number may be modified from time to time by
Luitpold. The Product shall be labeled by American Regent Inc. in
accordance with FDA approved label copy and as mutually approved by
the Parties.
5.3.2 Luitpold's quality control procedures and in-plant quality
control checks on the production of Product for Iomed shall be applied
in the same manner as those procedures and checks are applied to
products manufactured for sale directly by American Regent Inc. as
American Regent Inc. products. Luitpold shall provide a certificate of
analysis with each shipment of Product.
5.3.3 Iomed shall have a period of ************* days from the
date of receipt to inspect and reject any shipment of Product on the
grounds that it does not conform with the Product Specifications.
Iomed shall have the right to return any Product which does not
conform. All or part of any shipment may be held for Luitpold's
disposition if found to be not in conformance with the Product
Specifications, provided Luitpold confirms
<PAGE> 4
such nonconformance through generally accepted quality control
procedures. Luitpold shall have ********** days from the
effective date of rejection (written notice) by Iomed in which to
confirm nonconformance. Failure to confirm within such **********
day period shall constitute agreement with Iomed's rejection of
Product. Luitpold may, at its discretion, send Product to an
independent third party for analysis of conformance. After Luitpold
confirms nonconformance, Luitpold shall have a period of **********
days to replace such nonconforming Product. Replacement with
conforming Product shall be Iomed's sole and exclusive remedy for any
nonconforming Product delivered hereunder. Shipment of rejected
Product to American Regent Inc. and shipment of replacement Product to
Iomed shall be at American Regent Inc.'s expense and by the carrier
designated by American Regent Inc.
5.3.4 American Regent Inc. hereby approves placement of a
descriptive private label with Iomed's trademark and/or Iomed's
trademark on the Product. Any material changes to the descriptive
label must be approved by American Regent Inc. prior to implementing
such changes.
5.4 Price and Payment
5.4.1 Product shall be delivered by American Regent Inc. at
prices set forth in Exhibit A of this Agreement. The prices are based
on standard American Regent Inc. packaging components with custom
Iomed print copy as approved by American Regent Inc. for
manufacturability.
5.4.2 American Regent Inc. shall invoice Iomed upon delivery of
Product. *****
5.4.3 Any federal, state, county or municipal sales or use tax,
excise or similar charge, or any other tax assessment (other than that
assessed against income), license or other
<PAGE> 5
charge lawfully assessed and normally charged on the manufacture,
sale or transportation of Product sold pursuant to this Agreement
shall be paid by Iomed.
5.5 Delivery.
Product shall be delivered to Iomed, or an Iomed designee, F.O.B.
plant and title shall pass to Iomed at such point.
5.6 Orders and Forecasts.
5.6.1 American Regent Inc. and Iomed shall cooperate fully in
estimating and scheduling production for the first firm order to be
placed by Iomed. The first firm order shall cover a period of three
(3) consecutive calendar months, Thereafter, firm orders shall be
placed monthly and shall cover the next succeeding third month. At the
time Iomed places its firm monthly orders, Iomed shall provide to
American Regent Inc. Iomed's estimate of its monthly requirements for
the next succeeding nine (9) calendar month period. It is the intent
that at all times American Regent Inc. shall have in hand firm monthly
orders covering the current three (3) calendar month period and
Iomed's estimates of its monthly requirements for the next succeeding
nine (9) calendar month period.
5.6.2 Each Iomed purchase order for Product shall be governed by
the terms of this Agreement and none of the provisions of such
purchase order shall be applicable except those specifying quantity
ordered, delivery dates, shipping instructions and invoice
information.
5.7 Guarantees and Warranties.
5.7.1 Luitpold guarantees to Iomed that Product delivered to
Iomed pursuant to this Agreement shall, at the time of delivery, not
be adulterated or misbranded within the meaning of the Federal Food,
Drug, and Cosmetic Act, as amended, or within the meaning of any
applicable state or municipal law in which the definitions of
adulteration and misbranding are substantially the same as those
contained in the Federal Food, Drug, and Cosmetic Act, as such Act and
such laws are constituted and effective at the time of
<PAGE> 6
delivery and will not be an article which may not under the provisions
of Sections 404 and 505 of such Act be introduced into interstate
commerce.
5.7.2 Luitpold warrants that Product delivered to Iomed pursuant
to this Agreement shall conform with the Product Specifications and
shall have been manufactured pursuant to current Good Manufacturing
Practice, as prescribed by regulations promulgated by the FDA. ****
5.7.3 ****
<PAGE> 7
6. Term and Termination.
6.1 This Agreement shall commence on the date first above written and
the initial term shall expire on January 1, 2005. Thereafter, the term
shall continue automatically until terminated. This agreement may be
terminated on January 1, 2005 or at anytime thereafter upon not less than
one hundred eighty (180) day's prior written notice from one party to the
other. Iomed may terminate this Agreement at any time by giving American
Regent Inc. one hundred eighty (180) days prior written notice if Iomed
discontinues sale of its Iontophoretic Delivery System for the Product.
6.2 Either party may terminate this Agreement by giving to the other
sixty (60) days prior written notice as follows:
a. Upon the bankruptcy or the insolvency of the other party; or
b. Upon the breach of any warranty or any other material
provision of this Agreement by the other party if the breach is not
cured within sixty (60) days after written notice thereof to the party
in default.
6.3 Termination, expiration, cancellation or abandonment of this
Agreement through any means and for any reason shall not relieve the
Parties of any obligation accruing prior thereto and shall be without
prejudice to the rights and remedies of either party with respect to any
antecedent breach of any of the provisions of this Agreement.
7. Force Majeure.
Any delay in the performance of any of the duties or obligations of either
party hereto (except the payment of money) shall not be considered a breach of
this Agreement and the time required for performance shall be extended for a
period equal to the period of such delay, provided that such delay has been
caused by or is the result of any acts of God; acts of the public enemy;
insurrections; riots; embargoes; labor disputes, including strikes, lockouts,
job actions, or boycotts; fires; explosions; floods; shortages of material or
energy; or other
<PAGE> 8
unforeseeable causes beyond the control and without the fault or negligence of
the party so affected. The party so affected shall give prompt notice to the
other party of such cause, and shall take whatever reasonable steps are
necessary to relieve the effect of such cause as rapidly as possible.
8. Confidential Information.
8.1 It is recognized by the Parties that during the term of this
Agreement the Parties may exchange Confidential Information. Each party
agrees not to disclose to any third person Confidential Information
received from the other party and not to use Confidential Information
received from the other party, except as authorized by the disclosing
party. For purposes of this Agreement, Confidential Information shall
include all information disclosed hereunder in writing and identified as
being confidential or if disclosed orally is reduced to writing within
thirty (60) days of oral disclosure and identified as being confidential,
except any portion thereof which:;
a. is known to the recipient before receipt thereof under this
Agreement;
b. is disclosed in good faith to the recipient after acceptance
of this Agreement by a third person lawfully in possession of such
information and not under an obligation of nondisclosure;
c. is or becomes part of the public domain through no fault of
the recipient;
d. is developed by the recipient independently of and without
reference to Confidential Information; or
e. is required by law to be disclosed.
Notwithstanding the above, nothing contained in this Agreement
shall preclude Iomed or America Regent Inc. from utilizing
Confidential Information as may be necessary in prosecuting patent
rights of the Parties, or obtaining governmental marketing approvals,
or in manufacturing Product pursuant to this Agreement. The
obligations of the Parties relating to Confidential Information shall
expire three (3) years after the termination of this Agreement.
Page 8 of 13
<PAGE> 9
9. Independent Contractors.
The relationship of Iomed to American Regent Inc. established by this
Agreement is that of an independent contractor. Nothing contained in the
Agreement shall be construed to constitute Iomed as a partner, agent or joint
venturer with American Regent Inc. or as a participant in a joint or common
undertaking with American Regent Inc.
10. Notices
All notices hereunder shall be delivered personally or by registered or
certified mail, postage prepaid, to the following addresses of the respective
Parties:
American Regent Inc.
1 Luitpold Drive
Shirley, NY 11967
Attention: Mary Jane Helenek, VP Sales & Marketing
With copy to: Fred Pratt, VP of Manufacturing
Iomed, Inc.
1290 West 2320 South
Salt Lake City, Utah 84119
Attention: General Manager, Rehabilitative Medicine
With copy to: Vice President Operations
Notices shall be effective upon receipt if personally delivered, or on the
third business day following the date of mailing. A party may change its address
listed above by written notice to the other party.
<PAGE> 10
11. Applicable Law.
This Agreement shall be construed, interpreted and governed by the laws of
the State of New York, except for choice of law rules.
12. Assignment.
Neither party shall assign this Agreement or any part thereof without the
prior written consent of the other party; provided, however, American Regent
Inc. may assign this Agreement to a wholly-owned subsidiary and either party,
without such consent, may assign or sell the same in connection with the
transfer or sale of substantially its entire business to which this Agreement
pertains or in the event of its merger or consolidation with another company.
Any permitted assignee shall assume all obligations of its assignor under this
Agreement. No assignment shall relieve any party of responsibility for the
performance of any accrued obligation which such party then has hereunder.
13. Entire Agreement.
This Agreement constitutes the entire agreement between the Parties
concerning the subject matter hereof and supersedes all written or oral prior
agreements or understandings with respect thereto. No course of dealing or usage
of trade shall be used to modify the terms hereof.
14. Severability.
This Agreement is subject to the restrictions, limitations, terms and
conditions of all applicable laws, governmental regulations, approvals and
clearances. If any term or provision of this Agreement shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other term or provision, to
the extent the same shall have been held to be invalid, illegal or
unenforceable, had never been contained herein.
<PAGE> 11
15. Waiver - Modification of Agreement.
No waiver or modification of any of the terms of this Agreement shall be
valid unless in writing and signed by authorized representatives of both
Parties. Failure by either party to enforce any rights under this Agreement
shall not be construed as a waiver of such rights nor shall a waiver by either
party in one or more instances be construed as constituting a continuing waiver
or as a waiver in other instances.
16. Product Recalls.
If (a) any government authority issues a request, directive or order that
the Product be recalled, or (b) a court of competent jurisdiction orders such a
recall, or (c) Iomed or American Regent Inc. reasonably determine after
consultation with the other that the Product should be recalled, the Parties
shall take all appropriate corrective actions. If such recall results from any
course or event for which American Regent Inc. is responsible, American Regent
Inc. shall be responsible for the expenses of recall. In all other cases, Iomed
shall be responsible for the expenses of recall. For the purposes of this
Agreement, the expenses of recall shall include, without limitation, the
reasonable expenses of notification and destruction or return of the recalled
Product and the costs for the Product recalled which shall be equal to the
purchase price paid for such Product. The Parties intending to be bound by the
terms and conditions hereof have caused this Agreement to be signed by their
fully authorized representatives on the date first above written.
17. Product Liability.
Both Luitpold and Iomed will maintain product liability insurance for the
Product of not less than **********.
The parties intending to be bound by the terms and conditions hereof have
caused this Agreement to be signed by their fully authorized representatives on
the date first above written.
<PAGE> 12
IOMED. INC. LUITPOLD PHARMACEUTICALS, INC.
AMERICAN REGENT LABORATORIES INC.
By: /s/ Ned M. Weinshenker By: /s/ Ralph Lange
----------------------- ----------------
Dr. Ned M. Weinshenker Mr. Ralph Lange
President & CEO President & CEO
Date: November 22, 1994 Date: Dec 4 1994
----------------- ----------
<PAGE> 13
Exhibit A
PRICE
Price per Unit for the 30 mL fliptop container of Product is as follows:
<TABLE>
<CAPTION>
QUANTITY PER ORDER PRICE/UNIT
- -------------------- ----------
<S> <C>
10,000-74,999 Units ****
74,999-120,000 Units ****
</TABLE>
1) Prices are based on Product purchased for delivery for each order. Iomed
shall provide firm orders and forecasts as per paragraph 5.6.1.
2) Beginning January 1, 1996, and on each succeeding January 1 during the
term hereof, prices may be adjusted by American Regent Inc. Any such adjustment
shall be ****.
The Product will be bulk packaged.
Product Inserts will be provided by American Regent Inc., at our cost, to
Iomed, if requested by Iomed.
Page 13 of 13
