As filed with the Securities and Exchange Commission on November 7, 1997
Registration No. 333-37159
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-1/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
IOMED, Inc.
(Name of issuer in its charter)
---------------
Utah 2834 87-0441272
(State of incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
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:
J. Gordon Hansen, Esq. Rodd M. Schreiber, Esq.
Robert C. Delahunty, Esq. Skadden, Arps, Slate, Meagher
Scott R. Carpenter, Esq. & Flom (Illinois)
Parsons Behle & Latimer 333 West Wacker Drive
201 South Main Street, Suite 1800 Chicago, Illinois 60606
Salt Lake City, Utah 84111 (312) 407-0700
(801) 532-1234
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. [ ]
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CALCULATION OF REGISTRATION FEE
====================================================================================================================
Proposed Proposed
Maximum Maximum Amount of
Title of Each Class Amount to be Offering Price Aggregate Registration
of Securities to be Registered Registered(1) Per Share (2) Offering Price (2) Fee
========================================= ================ =================== ==================== ================
Common Shares, $ par value shares $ $28,750,000 $8,712
========================================= ================ =================== ==================== ================
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(1) Includes _____ shares that the Underwriters have the option to purchase from
the Company to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933.
----------------
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>
[Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.]
SUBJECT TO COMPLETION, DATED OCTOBER 3, 1997
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.
Securities and Exchange Commission
Registration Fee $
NASD Filing Fee
National Market Listing Fee
Printing and Engraving and Expenses
Legal Fees and Expenses
Accounting Fees and Expenses
Blue Sky Qualification Fees and Expenses
Transfer Agent and Registrar Fees and Expenses
Miscellaneous ----------------
Total $
================
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.
Item 15. Recent Sales of Unregistered Securities
The Company has entered into four 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
S.C.A. ("L.F.") _____ Common Shares in conversion and satisfaction of a
non-interest bearing $3,000,000 promissory note sold to L.F. in 1993. On
November 29, 1996, the Company issued _____ Common Shares to Child Health
Investment Corporation, 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, as subsidiary of CHCA, a warrant to acquire up to _____
Common Shares at an exercise price of $____ 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 _____ Common
Shares in connection with the purchase of certain technology from Elan. The
$10.0 million note (together with accrued interest) will be exchanged for _____
Common Shares concurrently with the closing of the Offering.
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 ss. 4(2) of the Securities
Act, and the rules and regulations promulgated thereunder.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
Exhibit Number Description
1.1* Form of Underwriting Agreement
3.1 Articles of Incorporation of the Company
3.2 Articles of Amendment, filed February 18, 1986
3.3 Articles of Amendment, filed August 4, 1987
3.4 Articles of Merger, filed December 3, 1987
3.5 Articles of Amendment, filed December 18, 1987
3.6 Articles of Amendment, filed November 16, 1989
3.7 Articles of Amendment, filed March 3, 1995
3.8 Bylaws of the Company
4.1 Reference is made to Exhibits 3.1 through 3.7
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
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 1988 Stock Option Plan, as amended
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
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
* To be filed by amendment
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission.
<PAGE>
(b) Financial Statement Schedules
All required financial statement schedules are included as part of
the Consolidated Financial Statements.
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.
<PAGE>
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 3rd day of October, 1997.
IOMED, Inc.
By: /s/ 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 post-effective 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.
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Signature Title Date
President, Chief Executive Officer and Director November 7, 1997
/s/ Ned M. Weinshenker, Ph.D. (Principal Executive Officer)
Vice President and Chief Financial Officer November 7, 1997
/s/ Robert J. Lollini (Principal Financial and Accounting Officer)
/s/ James R. Weersing Chairman of the Board of Directors November 7, 1997
/s/ John W. Fara, Ph.D Director November 7, 1997
.
/s/ Peter J. Wardle Director November 7, 1997
/s/ Steven P. Sidwell Director November 7, 1997
/s/ Warren Wood Director November 7, 1997
Michael T. Sember Director November , 1997
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EXHIBIT INDEX
Exhibit Number Description
1.1* Form of Underwriting Agreement
3.1 Articles of Incorporation of the Company
3.2 Articles of Amendment, filed February 18, 1986
3.3 Articles of Amendment, filed August 4, 1987
3.4 Articles of Merger, filed December 3, 1987
3.5 Articles of Amendment, filed December 18, 1987
3.6 Articles of Amendment, filed November 16, 1989
3.7 Articles of Amendment, filed March 3, 1995
3.8 Bylaws of the Company
4.1 Reference is made to Exhibits 3.1 through 3.7
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
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 1988 Stock Option Plan, as amended
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
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
* To be filed by amendment
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission.
ARTICLES OF INCORPORATION
OF
JMW ACQUISITION CO.
We, the undersigned natural persons, over the age of twenty-one (21)
years, acting as incorporators of a corporation under the Utah Business
Corporation Act, adopt the following Articles of Incorporation for such
corporation.
ARTICLE I
The name of the corporation is JMW ACQUISITION CO.
ARTICLE II
The period of its duration is perpetual.
ARTICLE III
The purpose or purposes for which the Corporation is organized are:
A. To engage in the business of the research, development, manufacture
and sale of medical devices, products or drugs, and to engage in and acquire
other businesses or companies related thereto or to the science of medicine or
the other biological sciences.
B. 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 or general partner or
venturer in undertakings of all types;
C. 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.
ARTICLE IV
The aggregate number of shares which the Corporation shall have
authority to issue shall be 1,000,000 common shares, par value $.01 per share;
400,000 voting preferred shares, par value $.10 per share; and 100,000
non-voting preferred shares, par value $.10 per share, for a total
capitalization of $60,000. Each common share and voting preferred share shall
have equal voting rights. Fully paid shares of the Corporation shall not be
liable for any further call or assessment.
The preferred shares may be issued from time to time in one or more
series and with such serial designations as may be stated or expressed in the
resolution or resolutions providing for the issuance of such shares adopted from
time to time by the Board of Directors; and in such resolution or resolutions
providing for the issuance of shares of each particular series, the Board of
Directors is also expressly vested with authority to fix the number of shares
constituting such series and to fix and determine the relative rights and
preferences of the shares of any series so established to the full extent
permitted by ss. 16-10-15, Utah Code Annotated, or by any successor statute.
All preferred shares shall be identical and of equal rank except as to
voting rights as provided herein and as to terms which may be specified by the
Board of Directors pursuant to the provisions of the preceding paragraph. All
preferred shares of any one series shall be identical and of equal rank except
that shares of any one series issued at different times may differ as to dates
from which dividends thereon shall accrue and be cumulative.
The Board of Directors is also expressly vested with authority to amend
any of the provisions of any resolution or resolutions providing for the issue
of any series of preferred shares, subject to any class voting rights of the
holders of any series of preferred shares contained in the resolution or
resolutions providing for the issue of such series and subject to the
requirements of the laws of the State of Utah.
Subject to the preferences and other rights of the preferred shares as
fixed in these Articles of Incorporation or in the resolution or resolutions of
the Board of Directors providing for the issuance of such preferred shares,
dividends may be paid upon the common shares as and when declared by the Board
of Directors out of any funds legally available therefor. In the event of any
liquidation, dissolution or winding up of the affairs of the Corporation, after
payment to the holders of the preferred shares of the amount to which they are
entitled under these Articles of Incorporation or pursuant to the resolution or
resolutions of the Board of Directors providing for the issue of such preferred
shares, the holders of the common shares shall be entitled to share ratably in
all assets then remaining for distribution to the shareholders.
ARTICLE V
The Corporation will not commence business until consideration of the
value of at least $1,000 has been received from the issuance of shares.
ARTICLE VI
The Corporation shall have a minimum of three and a maximum of seven
directors as shall be set by the Bylaws of the Corporation. Until their
successors are duly elected and qualified, the original directors shall be the
following:
Stephen C. Jacobsen 274 South 1200 East
Salt Lake City, Utah 84102
W. Edward Massey 173 Spring Valley Road
Ridgefield, Connecticut 06877
Thomas A. Wiita 1005 South 300 West
Salt Lake City, Utah 84101
ARTICLE VII
A. 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.
B. The Board of Directors of the Corporation may designate such
committee or committees as it determines in accordance with law to exercise such
authority as the Board of Directors shall delegate in the resolution designating
such committee or committees.
C. The shareholders shall not have preemptive rights to acquire
additional securities of the Corporation; or cumulative voting rights at any
election of the directors of the Corporation.
ARTICLE VIII
The initial registered agent of the Corporation shall be Stephen C.
Jacobsen, and the address of the initial registered office of the Corporation
shall be 274 South 1200 East, Salt Lake City, Utah 84102.
ARTICLE IX
The incorporators of the Corporation are the following:
J. Gordon Hansen 50 West Broadway, Suite 600
Salt Lake City, Utah 84101
Stephen C. Jacobsen 274 South 1200 East
Salt Lake City, Utah 84102
Helen L. Neer 50 West Broadway, Suite 600
Salt Lake City, Utah 84101
ARTICLE X
The Corporation shall indemnify its officers, directors, agents, and
other persons against liabilities incurred by them that result from their acts
that are performed in furtherance of the business of the Corporation to the full
extent now or hereafter permitted by the laws of the State of Utah.
IN WITNESS WHEREOF, the above-named incorporators have executed these
Articles of Incorporation this 29th day of July, 1985.
/s/ J. Gordon Hansen
J. Gordon Hansen, as Incorporator
/s/ Stephen C. Jacobsen
Stephen C. Jacobsen, as Incorporator
and Initial Registered Agent
/s/ Helen L. Neer
Helen L. Neer, as Incorporator
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
I, a Notary Public, hereby certify that on the 26th day of August,
1985, personally appeared before me J. Gordon Hansen, Stephen C. Jacobsen, and
Helen N. Neer, who being by me first duly sworn, severally declared that they
are the persons who signed the foregoing Articles of Incorporation as
incorporators and the statements therein contained are true.
/s/ Margie H. Stephens
Residing in Salt Lake County, Utah
My Commission Expires:
June 4, 1989
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
JMW ACQUISITION CO.
Pursuant to the provisions of the Utah Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation constituting a revision of its Articles of
Incorporation:
FIRST: The name of the corporation is JMW ACQUISITION CO.
SECOND: The following amendment to the Articles of Incorporation was
approved by the shareholders of the corporation on the 14th day of January, 1986
in the manner required by the Utah Business Corporation Act. The amendment
revises and restates, in their entirety, the Articles of Incorporation of the
corporation, with such revised Articles of Incorporation to read in their
entirety as set forth on Exhibit A which is attached hereto and incorporated
herein by this reference.
THIRD: The number of shares of the corporation outstanding at the time
of such adoption was 50,000; and the number of shares entitled to vote thereon
was 50,000.
FOURTH: No outstanding shares of any class were entitled to vote
thereon as a class.
FIFTH: The number of shares voted for such amendment was 50,000; and
the number of shares voted against such amendment was 0.
SIXTH: There was no class of outstanding shares entitled to vote as a
class on such amendment.
SEVENTH: The amendment creates a 10 for 1 forward split of the issued
and outstanding common shares of the corporation so that each common share
outstanding prior to the amendment shall be exchanged for 10 common shares to be
outstanding immediately subsequent to the amendment, with the par value of each
common share being reduced from $.01 to $.001.
EIGHTH: The amendment effects change in the amount of stated capital of
the corporation, by increasing the stated capital of the corporation to $75,500.
Such increase is effected by increasing the number of common shares which the
corporation is authorized to issue to 25,000,000 shares and by reducing the par
value of such common shares to $.001 per share.
NINTH: The foregoing Articles of Amendment to the Articles of
Incorporation of JMW Acquisition Co. supersede the original Articles of
Incorporation of such corporation and all prior amendments thereto.
DATED this 13th day of February, 1986.
JMW ACQUISITION COMPANY
By /s/ Thomas A. Wiita
Thomas A. Wiita, President
By /s/ Stephen C. Jacobsen
Stephen C. Jacobsen, Secretary
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
I, Helen L. Neer, a Notary Public, do hereby certify that on this 13th
day of February, 1986, personally appeared before me Thomas A. Wiita, who, being
by me first duly sworn, declared that he is the President of JMW Acquisition
Co., a Utah corporation, that he signed the foregoing document in his capacity
as President of such corporation, and the statements therein contained are true.
/s/ Helen L. Neer
Notary Public
Residing in Salt Lake County, Utah
My Commission Expires:
March 1, 1988
REVISED
ARTICLES OF INCORPORATION
OF
JMW ACQUISITION COMPANY
Pursuant to the applicable provisions of Utah law, as contained in ss.
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 its duration is perpetual.
ARTICLE I
The purpose or 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 or 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.
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, 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
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 deem 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 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 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 circumstances 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 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 latter of July 15, 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 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 certificate; 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 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 shares, in the manner and at the place designated
in the 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 required 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 canceled 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"):
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 and 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 the 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 amounts payable to the holder in
lieu of fractional 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 Price of the Preferred Stock shall be subject to adjustment from
time to time as follows:
(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 such 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 therefore
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.
(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 from 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 payments of such consideration upon
the exercise of any such options or rights or the conversion or exchange of such
related securities.
(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 share of Common Stock (hereinafter referred to as "Common
Stock Equivalents") without payment of any consideration by 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 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 or similar reorganization (other than a
reclassification, exchange or substitution provided for in Section 6.5), then,
as a part of such 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 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;
(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 or 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:
(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) 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 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 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 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 this 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 3rd day of August, 1987.
President
Secretary
ACKNOWLEDGEMENT
I hereby acknowledge that I am aware that I am named as the Registered
Agent of JMW Acquisition Co., a Utah corporation, and agree to act as such in
accordance with law.
DATED this 3rd day of August, 1987.
/s/ Stephen H. Ober
Stephen H. Ober
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
On this 3rd day of August, 1987, personally appeared before me, Notary
Public in and for the State of Utah, STEPHEN H. OBER, who after first being duly
sworn, duly acknowledged to me that he executed the foregoing instrument.
/s/ Melissa J. Gage
Notary Public
Residing in Salt Lake County, Utah
ARTICLES OF MERGER
OF
MOTION CONTROL, INC.
WITH AND INTO
JMW ACQUISITION
Pursuant to the provisions of Section 16-10-70, Utah Code Anno., JMW
ACQUISITION CO., a Utah corporation (the "Parent Corporation"), hereby adopts
the following Articles of Merger for the purpose of merging MOTION CONTROL,
INC., a Utah corporation (the "Subsidiary Corporation") with and into the Parent
Corporation:
FIRST: On October 23, 1987, the Board of Directors of the Parent
Corporation, at a duly called and convened meeting of said Board of Directors,
unanimously adopted that certain Plan of Merger which is attached hereto as
Exhibit "A" and which, by this reference, is incorporated herein.
SECOND: The number of outstanding shares of each class of the
Subsidiary Corporation, and the number of shares of each such class owned by the
Parent Corporation are:
Number of Shares Owned by the Parent
Class Number of Shares Outstanding Corporation
Common 3,487,875 3,439,845
THIRD: A copy of the Plan of Merger, as attached to these Articles of
Merger as Exhibit "A", was mailed to each shareholder of record of the
Subsidiary Corporation, by United States mail, with postage prepaid and return
receipt requested, on November 2, 1987.
IN WITNESS WHEREOF, JMW ACQUISITION CO. has caused these Articles of
Merger to be executed by its duly authorized officers upon this 3rd day of
December, 1987.
JMW ACQUISITION CO.
/s/ Stephen H. Ober
Stephen H. Ober, President
/s/ Mary A. Crowther
Mary A. Crowther, Assistant Secretary
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
I, Melissa J. Gage, a Notary Public, do hereby certify that on this 3rd day
of December, 1987, personally appeared before me Stephen H. Ober, who, being by
me first duly sworn, declared that he is the President of JMW Acquisition Co., a
Utah corporation, that he signed the within and foregoing instrument in his
capacity as the President of JMW Acquisition Co. and that the statements
contained in the within and foregoing instrument are true and correct.
/s/ Melissa J. Gage
Notary Public
Residing in
My Commission Expires:
<PAGE>
Exhibit "A"
PLAN OF MERGER
THIS PLAN OF MERGER is adopted this 3rd day of September, 1987 by the
Board of Directors of JMW Acquisition Co., a Utah corporation ("JMW"), in order
to provide for the merger of Motion Control, Inc., a Utah corporation ("MCI")
with and into JMW in the manner authorized by the Utah Business Corporation Act.
JMW and MCI are hereinafter sometimes collectively referred to as the
"Constituent Corporations".
ARTICLE I
1.1 Ownership of MCI Common Shares. MCI has issued and outstanding a
total of three million four hundred eighty-seven thousand eight hundred
seventy-five (3,487,875 common shares, par value $.01 per share. Such common
shares are the only class of equity securities of MCI which are issued and
outstanding. JMW is the record and beneficial owner of a total of three million
four hundred thirty-nine thousand eight hundred forty-five (3,439,845) of the
issued and outstanding common shares of MCI, or a total of approximately
ninety-eight percent (98%) of all of the issued and outstanding common shares of
MCI.
ARTICLE II
2.1 Merger of MCI into JMW. In accordance with the provisions of
Section 70 of the Utah Business Corporation Act (Section 16-10-70, Utah Code
Ann.), a copy of this Plan of Merger shall be mailed to each shareholder of
record of MCI. Thirty (30) days after the date of the mailing of this Plan of
Merger to the shareholders of MCI, MCI shall be merged with and into JMW upon
the filing of original Articles of Merger with, and the issuance of a
certificate of merger by, the Department of Business Regulation, Division of
Corporations and Commercial Code, of the State of Utah (the "Effective Time").
The separate corporate existence of MCI shall thereupon cease and JMW shall be
the surviving corporation. JMW is herein sometimes referred to as the "Surviving
Corporation".
2.2 Effective the Merger. At and after the Effective Time, the separate
existence of MCI shall cease, and the Surviving Corporation shall have all the
rights, privileges, immunities and powers, and shall be subject to all the
duties and liabilities of both of the Constituent Corporations to the same
degree as each of the respective Constituent Corporations prior to the Effective
Time. Further, the Surviving Corporation shall be subject to and shall possess
the further rights and obligations set forth in Section 71 of the Utah Business
Corporation Act, (Section 16-10-71(2)(d) and (e) Utah Code Ann.) as though fully
set forth herein.
ARTICLE III
3.1 Articles of Incorporation. At the Effective Time, the Articles of
Incorporation of JMW, as in effect immediately prior to the Effective Time,
shall be and remain the Articles of Incorporation of the Surviving Corporation
until further amended in accordance with the provisions of the Utah Business
Corporation Act.
3.2 By-Laws. The By-Laws of JMW, as in effect immediately prior to the
Effective Time, shall be the By-Laws of the Surviving Corporation until duly
amended in accordance with law.
3.3 Officers and Directors. The officers and directors of JMW
immediately prior to the Effective Time shall, after the Effective Time, be and
remain the officers and directors of the Surviving Corporation until their
respective successors are duly appointed or elected and qualified.
ARTICLE IV
4.1 Conversion of Stock. Each common share of MCI which is issued and
outstanding immediately prior to the Effective Time, except for shares held by
JMW or shares held by MCI as treasury shares, shall, by virtue of the merger and
without any action on the part of the holder thereof, be converted into and
become one issued and outstanding common share of the Surviving Corporation. All
MCI common shares held by JMW or by MCI as treasury shares shall be canceled at
the Effective Time.
4.2 Conversion of Warrants. Each outstanding stock purchase warrant
held by shareholders of MCI immediately prior to the Effective Time, shall, by
virtue of the merger and without any action on the part of the holder thereof,
be converted into and become a warrant to purchase an identical number of the
common shares of the Surviving Corporation. Such warrants to purchase common
shares of the Surviving Corporation shall be identical, in every respect, to the
warrants to purchase MCI common shares which are outstanding immediately prior
to the Effective Time.
4.3 Exchange of Securities.
(a) At or immediately following the Effective Time, each
holder of a stock certificate or certificates representing issued and
outstanding common shares of MCI shall surrender the same to the Surviving
Corporation or its designated exchange agent. Each such holder shall be
entitled, upon such surrender, to receive in exchange therefore a certificate or
certificates representing the number of the common shares of the Surviving
Corporation into which the common shares of MCI represented by such certificate
or certificates so surrendered have been converted as stated in this Plan of
Merger. Until they are surrendered to the Surviving Corporation, each
certificate which, prior to the Effective Time, represented issued and
outstanding shares of MCI, shall be deemed for all corporate purposes to
evidence the right to receive the number of common shares of the Surviving
Corporation into which the same shall have been converted.
(b) No dividends or other distributions declared after the
Effective Time with respect to the common shares of the Surviving Corporation
and payable to the holders of record thereof after the Effective Time shall be
paid to the holder of any unsurrendered certificates representing MCI common
shares.
4.4 Exchange of Warrants.
(a) At or immediately following the Effective Time, each
holder of an outstanding stock purchase warrant for MCI common shares shall
surrender the same to the Surviving Corporation or its designated exchange
agent. Each such holder shall be entitled, upon such surrender, to receive in
exchange therefore a stock purchase warrant for common shares of the Surviving
Corporation which shall be identical in all respects to the stock purchase
warrant so surrendered.
(b) After the Effective Time, no stock purchase warrant for
the common shares of MCI shall be exercisable for MCI common shares.
4.5 Fractional Shares. To avoid the issuance of fractional shares, in
lieu of issuing a fraction of a common share of the Surviving Corporation, the
Surviving Corporation shall deliver cash to each person otherwise entitled to
receive a fraction of a common share of the Surviving Corporation, equal to the
fair value thereof.
IN WITNESS WHEREOF, the Board of Directors of JMW Acquisition Co. has
adopted the foregoing Plan of Merger in accordance with Section 70 of the Utah
Business Corporation Act (Section 16-10-70, Utah Code Ann.) as of the date set
forth above.
JMW ACQUISITION CO.
By: /s/ Stephen H. Ober
Its: President
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
JMW ACQUISITION CO.
Pursuant to the provisions of the Utah Business Corporation Act, the
undersigned corporation hereby adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is JMW ACQUISITION CO.
SECOND: The following amendment to the Articles of Incorporation of the
corporation was approved by the shareholders of the corporation on the 18th day
of December, 1987, in the manner required by the Utah Business Corporation Act.
The amendment revises Article I of the Articles of Incorporation of the
corporation, to read in its entirety as follows:
"The name of the corporation is IOMED, INC."
THIRD: The total number of shares of the corporation outstanding at the
time of the adoption of the amendment set forth in paragraph "SECOND" hereof was
3,864,225 Common Shares, 67,200 Series A Preferred Shares, 3,975,618 Series B
Preferred Shares, and 172,800 Series C Preferred Shares. Each of the outstanding
Common Shares of the corporation and each of the outstanding Preferred Shares of
the Corporation was entitled to one vote upon the amendment set forth in
paragraph "SECOND" hereof.
FOURTH: None of the outstanding shares of the corporation were entitled
to vote upon the amendment set forth herein as a class.
FIFTH: The total number of shares voted for the amendment set forth
herein was 2,747,200 Common Shares, -0- Series A Preferred Shares, 2,199,842
Series B Preferred Shares, and -0- Series C Preferred Shares. The number of
shares voted against the amendment set forth herein was 10,000.
SIXTH: There was no class of outstanding shares entitled to vote as a
class upon the amendment set forth herein.
SEVENTH: The amendment set forth herein does not provide for any
exchange, reclassification or cancellation of issued shares of the corporation.
EIGHTH: The amendment set forth herein does not affect any change in
the amount of the stated capital of the corporation.
DATED this 18th day of December, 1987.
JMW ACQUISITION CO.
By: /s/ Stephen H. Ober
STEPHEN H. OBER
President
By: /s/ Joel D. Kellman
JOEL D. KELLMAN
Secretary
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
I, Mary A. Crowther, a Notary Public, do hereby certify that on this
18th day of December, 1987, personally appeared before me Stephen H. Ober, who
being first duly sworn did state that he is the President of JMW Acquisition
Co., a Utah corporation, that he executed the within and foregoing document in
his capacity as the President of JMW Acquisition Co., and that the statements
set forth in the within and foregoing document are true and correct.
/s/ Mary A. Crowther
Notary Public
Residing in Salt Lake City, Utah
My Commission Expires:
<PAGE>
ASSIGNMENT AND CONSENT
TO USE OF NAME
The undersigned, Robert C. Delahunty, hereby assigns to JMW Acquisition
Co., a Utah corporation, whose address is 1290 West 2320 South, Suite A, Salt
Lake City, Utah, all of the undersigned's right, title and interest in and to
the name IOMED, INC. Further, the undersigned hereby consents to the use of the
name IOMED, INC. by JMW Acquisition Co. and requests the Division of
Corporations and Commercial Code of the State of Utah to accept for filing
Articles of Amendment to the Articles of Incorporation of JMW Acquisition Co.
setting forth therein the name of such corporation as IOMED, Inc.
DATED this 18th day of December, 1987.
/s/ Robert C. Delahunty
Robert C. Delahunty
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
I, a Notary Public, do hereby certify that on this 18th day of
December, 1987, personally appeared before me Robert C. Delahunty, who being
first duly sworn, acknowledged to me that he executed the within and foregoing
Assignment and Consent to Use of Name and that the statements set forth therein
are true and correct.
/s/ Melissa J. Gage
Notary Public
Residing in Salt Lake City, Utah
My Commission Expires:
1/23/91
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
IOMED, INC.
Pursuant to the provisions of the Utah Business Corporation Act, the
undersigned Corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is IOMED, INC.
SECOND: The following Amendment of the Articles of Incorporation was
adopted by the shareholders of the corporation on the 10th day of November,
1989, in the manner prescribed by the Utah Business Corporation Act. The
amendment revises Article VII of the Articles of Incorporation of the
corporation by adding to such Article VII a new Section 4, which reads in its
entirety as follows:
"4. Control Shares Acquisition Act. The provisions of the Utah
Control Shares Acquisition Act shall not apply to control
shares acquisitions of the common or preferred shares of the
corporation."
THIRD: The total number of shares of the corporation outstanding at the
time of the adoption of the amendment set forth in paragraph "SECOND" hereof was
3,814,805 Common Shares, 67,200 Series A Preferred Shares, 3,975,618 Series B
Preferred Shares, and 172,800 Series C Preferred Shares. Each of the outstanding
Common Shares of the corporation and each of the outstanding Preferred Shares of
the Corporation was entitled to one vote upon the amendment set forth in
paragraph "SECOND" hereof.
FOURTH: None of the outstanding shares of the corporation were entitled
to vote upon the amendment set forth in paragraph "SECOND" hereof as a separate
class.
FIFTH: The total number of shares voted for the amendment set forth
herein was 3,299,325 Common Shares, zero Series A Preferred Shares, 3,958,391
Series B Preferred Shares, and zero Series C Preferred Shares. The number of
shares voted against the amendment set forth herein was zero.
SIXTH: There was no class of outstanding shares entitled to vote as a
class upon the amendment set forth herein.
SEVENTH: The amendment set forth herein does not provide for any
exchange, reclassification or cancellation of issued shares of the corporation.
EIGHTH: The amendment set forth herein does not affect any change in
the amount of the stated capital of the corporation.
DATED this 16th day of November, 1989.
IOMED, INC.
BY: /s/ Stephen H. Ober
STEPHEN H. OBER
President
BY: /s/ Mary A. Crowther
MARY A. CROWTHER
Assistant Secretary
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
I, Mary A. Crowther, a Notary Public, do hereby certify that on this
16th day of November, 1989, personally appeared before me Stephen H. Ober, who
being first duly sworn did state that he is the President of Iomed, Inc., a Utah
corporation, that he executed the within and foregoing document in his capacity
as the President of Iomed, Inc., and that the statements set forth in the within
and foregoing document are true and correct.
/s/ Mary A. Crowther
Notary Public
Residing in Salt Lake City, Utah
My Commission Expires: 03/22/91
ARTICLES OF AMENDMENT
TO THE
REVISED ARTICLES OF INCORPORATION
OF
IOMED, INC.
Pursuant to the provisions of the Utah Revised Business Corporation Act
(the "Act"), the undersigned corporation adopts the following Articles of
Amendment to its Revised Articles of Incorporation:
FIRST: The name of the corporation is IOMED, INC.
SECOND: The first full paragraph o9f Article IV of the Revised Articles
of Incorporation of Iomed, Inc. is amended to read in its entirety as follows:
"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 40,000,000.
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."
THIRD: The foregoing amendment was adopted by the Shareholders of the
corporation on November 21, 1994, at a duly called and convened meeting of such
Shareholders at which a quorum was present.
FOURTH: A total of 9,760,535 shares of the corporation's Common Stock
and 3,380,177 shares of the corporation's Preferred Stock were outstanding upon
the date of the adoption of the foregoing Amendment. The corporation's Common
Shares were entitled to vote separately on the foregoing Amendment, and each
such share was entitled to one vote upon the Amendment. The corporation's
Preferred Shares were entitled to vote separately on the foregoing Amendment,
and each such share was entitled to one vote upon the Amendment. A total of
6,823,146 shares of the corporation's Common Stock were indisputably represented
at the Shareholders meeting at which the foregoing Amendment was adopted, either
in person or by proxy. A total of 3,178,377 shares of the corporation's
Preferred Stock were indisputably represented at the Shareholders meeting at
which the foregoing Amendment was adopted, either in person or by proxy. At the
Shareholders meeting at which the foregoing Amendment was adopted, a total of
5,286,746 of the corporation's Common Shares were voted for the adoption of the
Amendment, a total of 1,528,900 of the corporation's Common Shares were voted
against the Amendment and a total of 7,500 of the corporation's Common Shares
abstained from voting in regard to the adoption of the Amendment. At the
Shareholders meeting at which the foregoing Amendment was adopted, a total of
3,178,377 of the corporation's Preferred Shares were voted for the adoption of
the Amendment and none of the corporation's Preferred Shares were voted against
or abstained from voting in regarding to the adoption of the Amendment.
DATED this 8th day of February, 1995.
IOMED, INC.
/s/ Robert J. Lollini
Robert J. Lollini
Vice President
BYLAWS
OF
IOMED, INC.
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 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.
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 ten (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 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 6. 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.
Section 2. Number, Tenure and Qualifications. The number of directors
of the corporation shall be six (6). 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 of 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 6. 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. Manner 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.
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 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.
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 other
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 corporation 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
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
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.
XI. CONTROL SHARES
The provisions of the Control Shares Acquisitions Act, as set forth in
Section 61-61-1, et seq. of the Utah Code Annotated shall not apply to control
share acquisitions of shares of the Corporation.
Secretary
<PAGE>
RESOLUTIONS
OF THE
BOARD OF DIRECTORS
OF
IOMED, INC.
RESOLVED, that Article III, Section 2 of the By-Laws of the Corporation be, and
it hereby is amended to read in its entirety as follows (the "Amendment"):
"The number of directors of the corporation shall be seven (7). 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."
RESOLVED FURTHER, that the Amendment shall be effective as of the 30th day of
May, 1997.
RESOLVED, that Mr. Michael Sember be and he hereby is elected and appointed to
fill the vacancy on the Corporation's Board of Directors created by the
Amendment; and
RESOLVED FURTHER, that Mr. Sember shall serve as a director of the Corporation
until the next annual meeting of the shareholders of the Corporation; and
RESOLVED FURTHER, that at the next annual meeting of the shareholders of the
Corporation, Mr. Sember (or such other person selected by Elan Corporation
("Elan") to serve as a member of the Corporation's Board of Directors) shall be
nominated by the Corporation for election as a director and the Corporation
shall recommend to its shareholders that Mr. Sember (or such other person
designated by Elan) be elected to serve as a member of the Corporation's Board
of Directors, all in accordance with the requirements of certain agreements
entered into by the Corporation and Elan, effective as of April 14, 1997.
LEASE AGREEMENT
THIS LEASE AGREEMENT, is executed in duplicate as of this 1st day of
September 1 1997, 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 initial term of this lease shall be twenty-eight (28)
months, commencing September 1, 1997, and ending at midnight, December 31, 1999.
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 before each such exercise. 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 may be increased as set forth in paragraph 3
below.
3. Rent. Rent hereunder shall be payable as follows:
(a) Rent Over Initial Term: Tenant agrees to pay as rent to
Landlord the sum of Two Hundred Twenty-four Thousand Dollars ($224,000.00)
payable at the rate of Eight Thousand Dollars ($8,000.00) per month for the 28
months of the initial lease term;
(b) Base Rent Over Option Periods: Rent over each of the
option periods granted hereunder shall continue at the rate of Ninety-Six
Thousand Dollars ($96,000.00) per year, to which shall be added an amount equal
to the total sum (if any) by which real property taxes, assessments and yearly
premiums for insurance procured by Landlord under paragraph 16(a) of the Lease,
and payable by Landlord during the twelve months immediately preceding the
option period exceeds the total of such taxes, assessments and insurance paid by
Landlord during calendar year 1997. In no event, however, shall any single
annual increase during the option periods exceed Three Percent (3%) of the total
rent payable over the twelve months immediately preceding the effective option
period.)
(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. Any payment received after
the 15th day of the month it is due shall bear and include interest at an annual
rate of 18% (as provided in paragraph 30 below), calculated from the 1st day of
said month.
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 Tenants maintenance
obligations contained in paragraphs 6(b) and 6(c), Landlord agrees to maintain
the structure and foundation of the building in good condition and repair.
Tenant shall promptly notify Landlord of any repairs to 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 that Landlord has
contracted to replace the roof prior to or shortly after the commencement of the
initial lease term hereunder. Until such time as the roof is replaced, Landlord
agrees to undertake responsibility for repair and maintenance thereof as
outlined in subparagraph (e) above, and 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 and repair, as necessary. Tenant assumes responsibility for all roof
maintenance, consistent with the provisions of subparagraph (c) above, from and
after the date of installation and final acceptance of a new roof.
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
existing 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 Tenants 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 budding 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 a 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 and hold Landlord harmless from, and defend Landlord against,
any 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 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 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. General real property taxes
and assessments on the leased property shall be paid by Landlord, in
consideration of the rent payable by Tenant hereunder. Tenant shall pay all
other taxes, assessments, license fees and charges incidental to the conduct of
Tenants business on the leased premises during the term of this lease, and any
extensions thereof, including any taxes assessed on Tenants personal property
situated on the premises, and shall preserve the leased premises free and clear
of any liens or charges attributable thereto; provided, however, that Tenant may
contest or dispute any such tax, or the amount thereof, upon providing
sufficient surety for the payment thereof.
13. Assignment and Subletting. Neither this lease nor any interest
herein may be assigned by Tenant voluntarily, involuntarily 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 judgment 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 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 ten-n 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 Tenant's 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
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.
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 an 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 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.
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 default 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
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, at 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. AR 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 thereof or Tenants 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 Tenants 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 remainder 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 hen
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.
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. 0. Box 45000
Salt Lake City, Utah 84145-5000
If to Tenant, at the following address:
IOMED, Inc.
Attn: Robert Lollini, Vice President
of Finance and CFO
3385 West 1820 South
Salt Lake City, Utah 84104
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.
27. 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 Tenants expense. On or prior to the expiration date of this lease, Tenant
shall surrender to Landlord all keys to the leased premises.
28. 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.
29. 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 attorneys
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 judgment.
30. Past Due Sums. If Tenant fails to pay, when the same is due and
payable, any 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%).
31. 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.
32. 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 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.
33. 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/ S. J. Hayter By: /s/ Robert J. Lollini
Its Company Secretary Its Vice President & CFO
THIS AGREEMENT CONTAINS CONFIDENTIAL TERMS WHICH HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
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.
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.
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
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.
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. ****
26.1.3. ****
****; and
26.2. ****;
26.2.1. ****;
26.2.2. ****;
26.2.3. ****;
26.2.4 ****; and
26.2.5. ****.
****.
****,
****.
****.
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 DEVELOPNIENT 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.
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.
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. ****.
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.
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. ****.
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.
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.
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. ****.
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.
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.
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
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
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;
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:
2.1 ****.
2.2. ****.
2.3. ****.
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 ****.
****.
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.
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);
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 ELAM 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; provide4 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.
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.
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.
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.
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.
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 PIC.
Monkstand, Athlone,
Co. Westmeath,
Ireland.
Attention: President Elan Pharmaceutical Technologies,
a division of Elan Corporation
plc
Telephone: 353 902 94666
Telefax: 353 902 92427
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.
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.
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.
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:
THIS AGREEMENT CONTAINS CONFIDENTIAL TERMS WHICH HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
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
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.
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. CONFIDENTLAL 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.
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
19.1.3. ****; and
19.2. ****
19.2.1. ****;
19.2.2. ****;
19.2.3. ****;
19.2.4. ****; and
19.2.5. ****.
****.
****.
****.
****.
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.
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.
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
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.
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. ****.
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.
Said written statements shall set forth (1) 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.
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;
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;
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. ****.
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. ****.
****.
2.3. ****.
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 ****.
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.
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;
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.
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
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.
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.
****.
****.
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.
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.
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.
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. ****.
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. ****;
16.3.2. ****;
16.3.3. ****;
16.3.4. ****;
and
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.
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.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement in duplicate.
Signed by IOMED on _____ April, 1997.
By: /s/ Ned M. Weinshenker
Name: Ned M. Weinshenker
Title: President & CEO
Executed by DDS ______ April, 1997.
By: /s/ Thomas G. Lynch
Name: Thomas G. Lynch
Title: Director
PROMISSORY NOTE
$10,000,000 Salt Lake City, Utah
April 14, 1997
FOR VALUE RECEIVED, and good and valuable consideration, the
undersigned, IOMED, Inc., a Utah corporation with offices at 3385 West 1820
South, Salt Lake City, Utah 84104 (the "Company"), unconditionally promises to
pay to Elan International Management, Ltd., a Bermuda corporation, or any other
holder of this Note (the "Holder"), at such place as may be designated by the
Holder to the Company, the principal amount of $10,000,000, together with
interest thereon, from and after the date hereof, at a rate per annum equal to
the lesser of (x) the rate publicly announced by Morgan Guaranty Trust Company
of New York at its principal office as its prime or base rate (such rate being
initially, on the date hereof, 8.50%) plus 1% per year and (y) the maximum rate
of interest permitted by applicable law, compounded on semi-annual basis, such
compounding to commence on October 15, 1997. This Note (including accrued and
unpaid interest on this Note) shall be due and payable on April 14, 1999;
provided, that if the Company shall have completed its initial public offering
of equity securities prior to such date, this Note shall become due and payable
upon completion of such offering, as provided in the Agreement (as defined
below). Interest on and the principal amount of this Note shall be paid solely
as provided below. The interest rate hereunder shall be adjusted on a
semi-annual basis, prospectively, on each July 1 and January 1 from the date
hereof until repayment is complete, to the then-current Prime Rate.
This Note is not prepayable by the Company without the prior
written consent of the Holder, in its sole discretion.
This Note (and interest hereon) shall immediately become due
and payable, without notice or deemed, upon the occurrence of any of the
following events: the filing by or against the Company of any petition under the
United States Bankruptcy Act or any similar state proceeding (which, in the
event of a filing against the Company, is not cured or stayed within 30 days);
application for, or appointment of, a receiver of the Company's property;
appointment of a committee of the Company's creditors; making by the Company of
an assignment for benefit of creditors; or default in payment or performance of
this Note or of any of the obligations of this Note.
The Company hereby waives grace, demand and presentment for
payment, notice of nonpayment, protest and notice of protest, diligence, filing
suit, and all other notice and promises to pay the Holder its costs of
collection of all amounts due hereunder, including reasonable attorneys' fees.
In the event of any default or breach of this Note by the Company, this Note
(and accrued and unpaid interest on this Note) shall, in additional to all other
rights and remedies of
In the event of any default or breach of this Note by the
Company, this Note (and accrued and unpaid interest on this Note) shall, in
addition to all other rights and remedies of the Holder, be and become
immediately due and payable; this Note shall continue to bear interest after
such default or breach at the interest rate otherwise in effect hereunder. This
Note is made in connection with a Note Purchase and Warrant Agreement dated as
of the date hereof (the "Agreement") between the Company and the Holder
originally named herein. This Note (and accrued interest hereon) shall be repaid
solely as provided in the Agreement. This note is the A Note referred to in the
Agreement.
This Note may not be changed or terminated orally and shall be
construed in accordance with the internal laws of the State of New York without
reference to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, the Company has executed this Note on the
date first above written.
IOMED, Inc.
By: /s/ Ned M. Weinshenker
Ned M. Weinshenker
President and Chief Executive Officer
ATTEST:
Name:
SECURED PROMISSORY NOTE
$5,000,000 Salt Lake City, Utah
April 14, 1997
FOR VALUE RECEIVED, and good and valuable consideration, the
undersigned, IOMED, Inc., a Utah corporation with offices at 3385 West 1820
South, Salt Lake City, Utah 84104 (the "Company"), unconditionally promises to
pay to Elan International Management, Ltd., a Bermuda corporation, or any other
holder of this Note with the consent of the Company (the "Holder"), at such
place as may be designated by the Holder to the Company, the principal amount of
$5,000,000, together with interest thereon, from and after the date hereof, at a
rate per annum equal to the lesser of (x) the rate publicly announced by Morgan
Guaranty Trust Company of New York at its principal office as its prime or base
rate (such rate being initially, on the date hereof, 8.50 %) plus 1 % per year
and (y) the maximum rate of interest permitted by applicable law, compounded on
a semi-annual basis, such compounding to commence on October 15, 1997. This Note
(including accrued and unpaid interest on this Note) shall be due and payable in
five equal installments of principal of $1,000,000 each on each of the fifth,
sixth, seventh, eighth and ninth anniversaries of the date hereof, together
with, in each case, accrued and unpaid interest on this Note; provided, that if
the Company shall have completed its initial public offering of equity
securities. at any time that all or any portion of this Note remains
outstanding, all or such portion of this Note shall be due and payable on a date
specified by the Company and agreed to by the Holder, which shall be within 10
days of such offering, as provided in the Agreement (as defined below). The
interest rate hereunder shall be adjusted on a semi-annual basis, prospectively,
on each July 1 and January 1 from the date hereof until repayment is complete,
to the then-current Prime Rate.
This Note shall be prepayable by the Company upon at least 30
days' written notice to the Holder.
This Note (and interest due hereon) shall immediately become
due and payable, without notice or demand, upon the occurrence of any of the
following events: a default or breach under the A Note (as defined in the
Agreement (as defined below)); the filing by or against the Company of any
petition under the United States Bankruptcy Act or any similar state proceeding
(which, in the event of a filing against the Company, is not cured or stayed for
30 days); application for, or appointment of, a receiver of the Company's
property; appointment of a committee of the Company's creditors; making by the
Company of an assignment for benefit of creditors, or; default in payment or
performance of this Note or of any of the material obligations of this Note.
The Company hereby waives grace, demand and presentment for
payment, notice of nonpayment, protest and notice of protest, diligence, filing
suit, and all other notice and promises to pay the Holder its costs of
collection of all amounts due hereunder, including reasonable attorneys' fees.
This Note is made in connection with a Note Purchase and
Warrant Agreement dated as of the date hereof (the "Agreement") between the
Company and the Holder originally named herein and is entitled to the security
provided for therein. In the event of any default or breach of the Agreement or
this Note by the Company, this Note (and accrued and unpaid interest on this
Note) shall, in addition to all other rights and remedies of the Holder, be and
become immediately due and payable; this Note shall continue to bear interest
after such default or breach at the interest rate otherwise in effect hereunder.
This Note is the B Note referred to in the Agreement. This Note is secured by a
first security interest in and to all the Elan Iontophoretic Intellectual
Property (as defined in the various agreements) and is entitled to the benefits
and rights of such security interest.
This Note may not be changed or terminated orally and shall be
construed in accordance with the internal laws of the State of New York without
reference to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, the Company has executed this Note on the
date first above written.
IOMED, Inc.
By: /s/ Ned M. Weinshenker
Ned M. Weinshenker
President and Chief Executive Officer
ATTEST:
Name:
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").
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.
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.
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 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
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 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
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
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.
(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 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.
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.
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, 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, 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
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 EIMI, 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 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: /s/ Ned M. Weinshenker
Name: Ned M. Weinshenker
Title: President & CEO
Elan International Services, Ltd.
By: /s/ Kevin Insley
Kevin Insley
President
Elan International Management, Ltd.
By: /s/ Kevin Insley
Kevin Insley
Vice President
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
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, f-411y 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 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 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 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.
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:/s/ Ned M. Weinshenker
Name: Ned M. Weinshenker
Title: President and Chief Executive Officer
Dated effective April 14, 1997
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of April 14,1997, by
and between IOMED, Inc., a Utah corporation (the "Company"), and Elan
International Services, Ltd., a Bermuda corporation ("EIS").
RECITALS:
A. Pursuant to a Note Purchase and Wan-ant Agreement (the "Purchase
Agreement") EIS acquired (x) the right to acquire certain shares of common
stock, par value $.001 per share (the "Common Stock") of the Company, and (y) a
Warrant (the "Warrant") to acquire up to 500,000 shares of Common Stock.
B. The closings under the Purchase Agreement have occurred on the
date hereof, it being a condition to such closings that the parties execute and
deliver this Agreement.
C. The parties desire to set forth herein their agreement related
to the granting of certain registration rights to the Holders (as defined below)
of any Common Stock or Warrants.
AGREEMENT:
The parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Affiliate" of any Person shall mean any other Person
controlling, controlled by or under common control with such particular Person.
In the case of a natural Person, his Affiliates include members of such Person's
immediate family, natural lineal descendants of such Person or a trust for the
exclusive benefit of such Person and his immediate family and natural lineal
descendants.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Holders", "holders" or "Holders of Registrable Securities"
shall mean EIS and any Person who shall have acquired Registrable Securities
from EIS as permitted herein, either individually or jointly as the case may be.
"Person" shall mean an individual, a partnership, a company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental quasi-governmental entity or any department,
agency or political subdivision thereof.
"Registrable Securities" means (i) any Common Stock issued or
issuable upon conversion of or in connection with the holding of the Notes or
the New Stock (as defined in the Purchase Agreement) or the exercise of the
Warrant or otherwise acquired by any Holders, and (ii) any Common Stock issued
or issuable in respect of the securities referred to in clause (i) above upon
any stock split, stock dividend, recapitalization or similar event; excluding in
all cases, however, any Registrable Securities sold by a Person in a transaction
(including a transaction pursuant to a registration statement under this
Agreement and transaction pursuant to Rule 144 promulgated under the Securities
Act) in which registration rights are not transferred pursuant to Section 9
hereof.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, other than
Selling Expenses, incurred by the Company in complying with Sections 2 or 3
hereof, including without limitation, all registration, qualification and filing
fees, exchange listing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the
expense of any special audits incident to or required by any such registration
and the reasonable fees and disbursements, not to exceed $ 1 0,000 in the
aggregate, of one counsel for the Holders, such counsel to be selected by
Holders holding a majority of the Registrable Securities held by the Holders and
included in such registration.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and the costs of any accountants, counsel or other
experts retained by the Holders.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, a as t e same shall be in effect at the time.
2. Demand Registrations. (a) Requests for Registration. Any
Holder which holds Registrable Securities representing at least 1,000,000 shares
of Common Stock (subject to the Anti-dilution Adjustments as (defined in the
Purchase Agreement)) has the right at any time from time to time, but only after
the Company shall have initially registered any of its shares of Common Stock
under Sections 12(b) or 12(g) of the 1934 Act (the "IPO"), to request
registration under the Securities Act of all or part of their Registrable
Securities on Form S-1, S-2 or S-3 (if available) or any similar registration
(each, a "Demand Registration"). Each written request for a Demand Registration
(as defined below) shall specify the approximate number of Registrable
Securities requested to be registered. Within IO days after receipt of any such
request, the Company will give written notice of such requested registration to
all other Holders of Registrable Securities and, if they request to be included
in such registration, the Company shall include such Holders' Registrable
Securities in such offering if they have responded affirmatively within 15 days
after the receipt of the Company's notice. The Holders in aggregate will be
entitled to request two Demand Registrations. A registration will not count as
one of the permitted Demand Registrations until it has become effective (unless
such Demand Registration has not become effective diie solely to the fault of
the Holders requesting such registration, including a request by such Holders
that such registration be withdrawn). The Company will pay all Registration
Expenses in connection with any Demand Registration whether or not it has become
effective.
(b) Priority on Demand Registrations. If a Demand Registration
is an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering,
exceeds the number of Registrable Securities and other securities, if any, which
can be sold in such offering without adversely affecting the marketability of
the offering, the Company will include in such registration:
(i) first, the Registrable Securities requested to be included
in such registration by the Holders (or, if necessary, such Registrable
Securities pro rata among the Holders thereof based upon the number of
Registrable Securities owned by each such Holder); and
(ii) thereafter, other securities requested to be included in
such registration.
(c) Restrictions on Demand Registrations. The Company may
postpone for up to three months in any 12 month period, the filing or the
effectiveness of a registration statement for a Demand Registration if the
Company determines in good faith that such Demand Registration would reasonably
be expected to have a material adverse effect on any proposal or plan by the
Company to engage in any acquisition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer or similar
transaction; provided, that in such event, the Holders initially requesting such
Demand Registration will be entitled to withdraw such request and, if such
request is withdrawn, such Demand Registration will not count as one of the
permitted Demand Registrations hereunder and the Company will pay all
Registration Expenses in connection with such registration.
(d) Selection of Underwriters. The Holders will have the right
to select the investment banker(s) and manager(s) to administer an offering
pursuant to a Demand Registration, subject to the Company's approval, which will
not be unreasonably withheld.
(e) Other Registration Rights. Except as provided in this
Agreement, so long as any Holder owns any Registrable Securities, the Company
will not grant to any Persons the right to request the Company to register any
equity securities of the Company, or any securities convertible or exchangeable
into or exercisable for such securities, which is superior to or in conflict
with the rights granted to the Holders hereunder, without the prior written
consent of the Holders of at least 50% of the Registrable Securities held by the
Holders; it being understood that the Company may grant rights to other Persons
to (i) participate in Piggyback Registrations so long as such rights are
subordinate or pari passu to the rights of the holders of Registrable Securities
with respect to such Piggyback Registrations and (ii) request registrations so
long as the Holders of Registrable Securities are entitled to participate in any
such registrations with such Persons pro rata on the basis of the number of
shares owned by each such Holder.
3. Piggyback Registrations. (a) Right to Piggyback. After the
IPO, and whenever the Company proposes to register any of its securities under
the Securities Act (other than in a registration on Form S-3 relating to sales
of securities to participants in a Company dividend reinvestment plan, S-4 or
S-8 or any successor form or in connection with an exchange offer or an offering
of securities solely to the existing stockholders or employees of the Company)
(each, a "Piggyback Registration"), the Company will give prompt written notice
to all Holders of Registrable Securities of its intention to effect such a
registration and, subject to Section 3(b) and the other terms of this Agreement,
will include in such registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within 15
days after the receipt of the Company's notice.
(b) Priority on Piggyback Registrations. If a Piggyback
Registration is an underwritten registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company will include in such registration:
(i) first, the securities the Company proposes to sell;
(ii) second, the Registrable Securities requested to be
included in such registration by
the Holders and any securities requested to be included in such registration by
any other Person, pro rata among the Holders of such Registrable Securities and
such other Persons, on the basis of the number of shares owned by each of such
Holders; and
(iii) thereafter, other securities requested to be
included in such registration.
(c) Right to Terminate Registration. If, at any time after
giving written notice of its intention to register any of its securities as set
forth in Section 3(a) and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register such securities, the Company may, at
its election, give written notice of such determination to each Holder of
Registrable Securities and thereupon be relieved of its obligation to register
any Registrable Securities in connection with such registration (but not from
its obligation to pay the Registration Expenses in connection therewith as
provided herein).
(d) Selection of Underwriters. The Company will have the right
to select the investment banker(s) and manage(s) to administer an offering
pursuant to a Piggyback Registration.
4. Expenses of Registration. Except as otherwise provided
herein, all Registration Expenses incurred in connection with all registrations
pursuant to Sections 2 and 3 shall be borne by the Company. Unless otherwise
stated, all Selling Expenses relating to securities registered on behalf of the
Holders of Registrable Securities shall be borne by such holders.
5. Holdback Agreements. (a) The Company agrees (i) not to
effect any public sale or distribution of its equity securities, or any
securities convertible into or exchangeable or exercisable for such securities,
during the seven days prior to and during the 90-day period beginning on the
effective date of any underwritten Demand Registration or any underwritten
Piggyback Registration (except as part of such underwritten registration or
pursuant to registrations on Form S-8 or any successor form), unless the
underwriters managing the registered public offering otherwise agree, and (ii)
to use reasonable efforts to cause each holder of at least 5% (on a
fully-diluted basis) of its Common Stock, or any securities convertible into or
exchangeable or exercisable for Common Stock, purchased from the Company at any
time after the date of this Agreement (other than in a registered public
offering) to agree not to effect. any public sale or distribution (including
sales pursuant to Rule 144) of any such securities during such periods (except
as part of such underwritten registration, if otherwise permitted), unless the
underwriters managing the registered public offering otherwise agree.
(b) Each holder of Registrable Securities whose Registrable
Securities are eligible for inclusion in a Registration Statement filed pursuant
to Section 2 hereof agrees, if requested by the managing underwriter or
underwriters in an underwritten offering of any Registrable Securities, not to
effect any public sale or distribution of Registrable Securities, including a
sale pursuant to Rule 144 (or any similar provision then effect) under the
Securities Act (except as part of such underwritten registration), during the
seven-day period prior to, and during the 90-day period or such shorter period
as may be agreed to by the parties hereto) following the effective date of such
Registration Statement to the extent timely notified in writing by the Company
or the managing underwriter or underwriters.
6. Registration Procedures. Whenever the Holders of
Registrable Securities have requested that any Registrable Securities be
registered pursuant to this Agreement, the Company will use its best efforts to
effect the registration and the sale of such Registrable Securities in
accordance with the intended method of distribution thereof, and pursuant
thereto the Company will as expeditiously as possible:
(a) prepare and file with the Commission a registration
statement on any form for which the Company qualifies with respect to such
Registrable Securities and use its best efforts to cause such registration
statement to become effective (provided that before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
will (i) furnish to the counsel selected by the Holders copies of all such
documents proposed to be filed, which documents will be subject to the review of
such counsel, and (ii) notify each holder of Registrable Securities covered by
such registration of any stop order issued or threatened by the Commission);
(b) -prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of not less than nine months and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;
(c) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdiction as any seller reasonably requests and do any and all other acts and
things which may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such seller (provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 6(d), (ii) subject itself
to taxation in any jurisdiction or (iii) consent to general service of process
in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company will prepare
a supplement of amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASD automated quotation
system and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ National market system security within the
meaning of Rule 11Aa2-1 of the Commission or, failing that, to secure NASDAQ
authorization for such Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such Registrable Securities with the NASD;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or , facilitate
the disposition of such Registrable Securities (including without limitation,
effecting a stock split or a combination of shares);
(i) make available for inspection by a representative of the
Holders of Registrable Securities included in the registration statement, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter all pertinent financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonable requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months beginning with the first day of the
Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder.
(k) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(1) obtain a so-called "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters; and
(m) undertake such other actions and do all other things which
the Holders shall reasonably request and which shall be customary at the time
for such registrations.
7. Indemnification. (a) The Company agrees to indemnify, to
the fullest extent permitted by applicable law, each Holder of Registrable
Securities, its officers and directors and each Person who controls such Holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities, expenses or any amounts paid in settlement of any litigation,
investigation or proceeding commenced or threatened (collectively, "'Claims") to
which each such indemnified party may become subject under the Securities Act
insofar as such Claim arose out of (i) any untrue or alleged untrue statement of
material fact contained, on the effective date thereof, in any registration
statement, prospectus or preliminary prospectus or -any amendment thereof or
supplement thereto, (ii) any 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 violations by the Company of any federal,
state or common law rule or regulation applicable to the Company and relating to
action required of or inaction by the Company in connection with any such
registration, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company will indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.
(b) In connection with any registration statements in which a
holder of Registrable Securities is participating, each such Holder will furnish
to the Company in writing such customary information and affidavits as the
Company reasonably requests for use in connection with any such registration
statement or prospectus (the "Seller's Information") and, to the fullest extent
permitted by applicable law will indemnify the Company, its directors and
officers and each Person who controls the Company (within the meaning of the
Securities Act) against any and all Claims to which each such indemnified party
may become subject under the Securities Act insofar as such Claim arose out of
(i) any untrue or alleged untrue statement of material fact contained, on the
effective date thereof, in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto, (ii) any 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
violations by such Person of any federal, state or common law rule or regulation
applicable to such Person and relating to action required of or inaction by such
Person in connection with any such registration; provided that with respect to a
Claim arising pursuant to clause (i) or (ii) above, the material misstatement or
omission is contained in such Seller's Information; provided, further, that the
obligation to indemnify will be individual to each Holder and will be limited to
the net amount of proceeds received by such Holder from the sale of Registrable
Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (but the failure to provide such notice shall
not release the indemnifying party of its obligation under paragraphs (a) and
(b), unless and then only to the extent that, the indemnifying party has been
prejudiced by such failure to provide such notice) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.
(d) The indemnifying party shall not be liable to indemnify an
indemnified party for any settlement, or consent to judgment of any such action
effected without the indemnifying party's consent (but such consent will not be
unreasonably withheld). Furthermore, the indemnifying party shall not, except
with the approval of each indemnified party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to each indemnified party of a
release from all liability in respect to such claim or litigation without any
payment or consideration provided by each such indemnified party.
(e) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under clauses (a) and (b) above in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the Company,
the underwriters, the sellers of Registrable Securities and any other sellers
participating in the registration statement from the sale of shares pursuant to
the registered offering of securities to which indemnity is sought but also the
relative fault of the Company, the underwriters the sellers of Registrable
Securities and any other sellers participating in the registration statement in
connection with the statement or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the underwriters,
the sellers of Registrable Securities and any other sellers participating in the
registration statement shall be deemed to be based on the relative relationship
of the total net proceeds from the offering (before deducting expenses) to the
Company, the total underwriting commissions and fees from the offering (before
deducting expenses) to the underwriters and the total net proceeds from the
offering (before deducting expenses) to the sellers of Registrable Securities
and any other sellers participating in the registration statement. The relative
fault of the Company, the underwriters, the sellers of Registrable Securities
and any other sellers participating in the registration statement shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by
registration statement and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(f) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or ,any officer, director or controlling person
of such indemnified party and will survive the transfer of securities.
8. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements, (b) as expeditiously as possible notifies the
Company of the occurrence of any event as a result of which such prospectus
contains an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (c) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
9. Transfer of Registration Rights. The rights granted to any
Person under this Agreement may be assigned to a transferee or assignee in
connection with any transfer or assignment of Registrable Securities by a
Holder; provided, that: (a) such transfer may otherwise be effected in
accordance with applicable securities laws, (b) if not already a party hereto,
the assignee or transferee agrees in writing prior to such transfer to be bound
by the provisions of this Agreement applicable to the transferor, (c) such
transferee shall own Registrable Securities representing at least 250,000 shares
of Common Stock (subject to the Anti-dilution Adjustments), and (d) EIS shall
act as agent and representative for such Holder for the giving and receiving of
notices hereunder.
10. Information by Holder. Each Holder shall furnish the
Company such written information regarding such Holder and any distribution
proposed by such Holder as the Company may reasonably request in writing and as
shall be reasonably required in connection with any registration qualification
or compliance referred to in this Agreement.
11. Exchange Act Compliance. After the IPO, the Company shall
comply with all of the reporting requirements of the Securities Exchange Act of
1934 applicable to it and shall comply with all other public information
reporting requirements of the Commission which are conditions to the
availability of Rule 144 for the sale of the Registrable Securities. The Company
shall cooperate with each Purchaser in supplying such information as may be
necessary for such Purchaser to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to the
availability of Rule 144.
12. Limitation on Registration-. The Company shall not be
obligated to effect a registration of any Holder's Registrable Securities
pursuant to Sections 2 or 3 hereof if all of the Registrable Securities have
been sold under Rule 144, Regulation S or similar provision under the Securities
Act so that there is no further restriction on the transfer by the transferee.
13. Miscellaneous. (a) No Inconsistent Agreements. The Company
will not hereafter enter into any agreement with respect to its securities which
is inconsistent with or violates the rights granted to the Holders of
Registrable Securities in this Agreement.
(b) Remedies. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(c) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived only upon the
prior written consent of the Company and Holders of at least 50% of the
Registrable Securities; provided, that without the prior written consent of all
the Holders, no such amendment or waiver shall reduce the foregoing percentage.
(d) Successors and Assigns. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
Holders of Registrable Securities are also for the benefit of, and enforceable
by, any subsequent holder of Registrable Securities.
(e) Severabiliiy. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(f) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
will constitute one and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
(h) Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement and the exhibits and schedules
hereto will be governed by the internal law, and not the law of conflicts, of
New York.
(i) Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient or by telecopy, one day after being sent to t he
recipient by reputable overnight courier service (charges prepaid) or three days
after being mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications will be sent to the parties hereto at the addresses indicated on
the signature page hereto and to the Company at the address indicated below:
IOMED, Inc.
3385 West 1820 South
Salt Lake City, Utah 84104
Telecopier: (801) 972-9072
Attention: President
(j) Termination. This Agreement shall terminate on the date as
of which each Holder has sold all remaining Registrable Securities in a
transaction or transactions of the type described in Section 12 hereof.
(k) Standstill. The Holders shall not sell any Registrable
Securities (and if requested by the Company's underwriters, EIS will not sell
any Common Stock received in connection with the repayment of the B Note),
publicly or otherwise, or exercise any Demand Registration rights acquired
hereunder within 180 days of the IPO; provided, that all or a substantial
portion of (I) the Company's directors and senior executive officers and (II)
holders of securities representing 5% or greater of the outstanding Common
Stock, on a fully diluted basis, shall have agreed in writing to substantially
similar provisions.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
IOMED, Inc.
By: /s/ Ned M. Weinshenker
Name: Ned M. Weinshenker
Title: President & CEO
Elan International Services, Ltd.
By: /s/ Kevin Insley
Name: Kevin Insley
Title:
102 St. James Court
Flatts Smiths
FL 04 Bermuda
Attention: Chief Executive Officer
Facsimile No.
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).
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").
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
(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).
(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,
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.
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.
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,
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.
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
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: /s/ Ned M. Weinshenker By:
Title: President & CEO Title:
SELLER'S FEIN: 87-0441272 PURCHASER'S FEIN: 62-1474076
THIS AGREEMENT CONTAINS CONFIDENTIAL TERMS WHICH HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
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 of **** (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:
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 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 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 the basis of the greater of (i) ****, 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, 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 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.
(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.
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.
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.
(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 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 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 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 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
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 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: /s/ Ned M. Weinshenker
Its: President & CEO
THE LICENSEE:
FILLAUER, INC.
By: /s/ B. Kenneth (Illegible)
Its: President & COO
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.
(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 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.
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 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.
(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.
(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:
(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.
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.
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: /s/ Ned M. Weinshenker
Its: Chief Executive Officer
Address:
3385 West 1820 South
Salt Lake City, Utah 84104
Dated effective December 1, 1996
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and shall be effective as of November 29, 1996,
by and between IOMED, Inc., a Utah corporation (the "Company") and Child Health
Investment Corporation, a Kansas corporation ("CHIC").
WHEREAS: The Company desires to issue and sell to CHIC, and CHIC
desires to purchase from the Company, certain authorized, but previously
unissued shares of the Company's common stock, on the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recital 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:
ARTICLE I
PURCHASE AND SALE OF COMMON STOCK
1.1 Common Stock. On the terms and subject to the conditions set forth
in this Agreement, at the Closing (as defined below) the Company agrees to sell
to CHIC, and CHIC agrees to purchase from the Company, a total of 178,571 shares
of the Company's authorized but unissued common stock, par value $.001 per share
(the "Common Shares").
1.2 Purchase Price. The purchase price for each of the Common Shares
shall be $1.40, for an aggregate purchase price of $249,999.40 (the "Purchase
Price").
1.3 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of the Company, in
Salt Lake City, Utah, on December 3, 1996, or on such other date as may be
mutually agreed upon by the parties. At the Closing, the Company shall deliver
to CHIC one or more certificates evidencing the Common Shares, and CHIC shall
deliver the Purchase Price to the Company, in cash, by wire transfer to an
account designated by the Company, or by the delivery of other immediately
available funds.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company hereby represents and warrants to, and covenants with, CHIC
as follows:
2.1 Organization. The Company is a corporation duly organized, validly
existing and in 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.
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 Common Shares, when issued, sold and delivered
in accordance with the terms hereof and for the consideration expressed herein,
will be duly and validly issued, fully paid and nonassessable.
2.4 No Violation. Neither the execution and delivery of this Agreement
by the Company nor its performance and consummation of the transactions
contemplated hereby will violate (a) any provision of the Articles of
Incorporation or the Bylaws of the Company, (b) any statute or law or any
judgment, decree, order, regulation or rule of any court or governmental agency
that is applicable to the Company, or (c) any material agreement to which the
Company is a party.
2.5 Capitalization. As of the date hereof, the authorized capital stock
of the Company consists solely of (i) 40,000,000 shares of common stock, $.001
par value per share (the "Common Stock"), and (ii) 4,215,618 shares of preferred
stock, $.001 par value per share (the "Preferred Stock"). Immediately following
the Closing, after giving effect to the transactions contemplated hereby, the
issued and outstanding capital stock of the Company will consist solely of
15,037,966 shares of Common Stock and 172,800 shares of Series C Preferred
Stock. As of October 31, 1996, options to purchase approximately 1,553,314
shares of Common Stock, and a warrant to purchase 10,000 shares of Common Stock,
were outstanding. Except for (a) the options and warrants described above, (b)
an obligation to issue additional shares of Common Stock to Laboratoires
Fournier, pursuant to the adjustment provisions of the agreement between Iomed,
Inc. and Laboratoires Fournier S.C.A. ("Fournier"), dated February 20, 1996 (the
"Fournier Agreement") and (c) a Warrant, dated December 1, 1996, to purchase
215,000 shares of Common Stock, issued by the Company to the Alliance for
Children's Hospitals, Inc. (a subsidiary of CHIC), the Company does not have
outstanding any rights (either 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 capital stock or securities convertible into or
exchangeable for its capital stock. Pursuant to the Fournier Agreement, the
Company will issue 4,644 additional shares of Common Stock to Fournier in
connection with this sale of Common Stock to CHIC.
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 or 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.
(a) CHIC heretofore has been furnished with complete and
correct copies of the unaudited consolidated balance sheet of the Company as of
September 30, 1996 and of the unaudited interim consolidated statements of
operations and cash flow for the three month period then ended and of the
audited balance sheets of the Company as of June 30, 1996 and as of June 30,
1995 and the related income statements and statements of cash flows for the
fiscal years then ended.
(b) Each of the financial statements referred to in (a) above
was prepared in accordance with generally accepted accounting principles applied
on a basis consistent with prior periods. 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.
(c) The Company shall deliver to CHIC:
(i) 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
(ii) as soon as available and in any event within 45
days after the end of each fiscal quarter of the Company (other than 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 year-end audit adjustments.
2.8 Material Adverse Change. There has been no material adverse change
in the business, properties or financial condition of the Company since June 30,
1996.
2.9 Other Documents. CHIC heretofore has been furnished with complete
and correct copies of (i) the Articles of Incorporation and the Bylaws of the
Company, (ii) the Preferred Stock Purchase Agreement, dated as of August 4,
1987, by and between the Company and the Investors named therein (the "Preferred
Stock Purchase Agreement").
2.10 Use of Proceeds. The proceeds from the sale of the Common Share
will be used by the Company for general corporate purposes in connection with
its primary business activity.
2.11 Disclosure. No representation or warranty by the Company contained
in this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein not
misleading in light of the circumstances under which they were made; provided,
it is understood that any projections or other forward-looking information
contained herein represent the Company's good faith estimate under the
circumstances based on assumptions which the Company believes are reasonable,
and the Company does not represent or warrant that such projections or future
events will occur; and provided further, that CHIC acknowledges the disclosures
made by IOMED with respect to (i) the status of the Ciba-Geigy development
projects and (ii) patent issues, and agrees that such disclosures shall
constitute supplements to the other written statements and certificates
furnished to CHIC pursuant hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CHIC
CHIC hereby represents and warrants to the Company as follows:
3.1 Organization. CHIC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Kansas.
3.2 Authorization. CHIC 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 CHIC,
and constitutes the valid and binding obligation of CHIC, 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.
3.3 Experience. It is experienced in evaluating and investing in
emerging companies such as the Company.
3.4 Investment Intent. It is acquiring the Common Shares pursuant to
this Agreement (the "Securities"), for its own account and not with a present
view to, or for resale in connection with, any distribution. It understands that
the Securities have not been registered under the Securities Act of 1933, as
amended (the "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.
3.5 Holding Period. It acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Act, or unless an
exemption from the registration requirements thereof is available. It is aware
of the provisions of Rule 144 promulgated under the Act, the limitations on
resales of securities imposed thereby, that the public information required
thereby is not presently published by the Company, and that the Company is under
no obligation to so publish such information in the future.
3.6 No Public Market. It understands that no public market now exists
for any of securities issued by the Company (including without limitation the
Securities) and that there is no assurance that a public market will ever exist
for the Securities. Additionally, it is aware that, except as specifically set
forth in Article IV hereof, the Company is under no obligation to register any
of the Securities under the Act.
3.7 Discussions with the Company. It has had an opportunity to discuss
the Company's business, management and financial affairs with management of the
Company and an opportunity to review the Company's facilities. It understands
that such discussions were intended to describe the aspects of the Company's
business and prospects which the Company believes to be material, but were not
necessarily a thorough or exhaustive description, and do not constitute
representations or warranties of the Company hereunder.
3.8 Sophisticated Investor. It is a sophisticated investor with such
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of a prospective investment in the
Securities, and it is capable of bearing the economic risks of an investment in
the Securities.
3.9 Due Diligence. It, both by itself and through its agents, has been
solely responsible for its "due diligence" investigation of the Company and its
management and business, for the analysis of the merits and risks of this
investment and of the fairness and desirability of the terms of the investment.
3.10 Independent Legal Counsel. It has had the opportunity to be
advised by legal counsel of its own choice in connection with the purchase of
the Securities and has either been advised by such counsel or concluded that
such advice is not required. It acknowledges that Parsons Behle & Latimer is
acting solely as counsel for the Company in connection therewith.
3.11 Restrictive Legend. It acknowledges that the certificates
representing the Common Share shall be endorsed with the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED EXCEPT (i)
PURSUANT TO A REGISTRATION STATEMENT UNDER THE ACT WHICH HAS BECOME EFFECTIVE
AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC
EXEMPTION FROM REGISTRATIONS UNDER THE ACT BUT ONLY UPON A HOLDER HEREOF FIRST
HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE CORPORATION, OR OTHER
COUNSEL ACCEPTABLE TO THE CORPORATION, THAT THE PROPOSED DISPOSITION IS
CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE ACT AS WELL AS ANY APPLICABLE
"BLUE SKY" OR SIMILAR SECURITIES LAW.
The Company need not register a transfer of any of the Securities,
unless the conditions specified in the foregoing legend are satisfied. The
Company may also instruct its transfer agent not to register the transfer of any
of the Securities unless such conditions are satisfied.
3.12 Reliance on Written Representations and Warranties. In connection
with its decision to enter into this Agreement and to purchase the Common Shares
hereunder, CHIC has relied only upon the written representations and warranties
of the Company which are set forth herein, and it has not relied upon any other
representation, warranty document or statement by the Company, its officers,
directors, employees or agents concerning the Company, its business or its
affairs.
3.13 Disclosure. No representation or warranty by CHIC contained in
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein not
misleading in light of the circumstances under which they were made.
ARTICLE IV
REGISTRATION RIGHTS
4.1 Definitions. As used in this Article IV:
(a) The term "Registrable Securities" means the Common Shares
issued hereunder excluding in all cases, however, any Registrable Securities
sold by a person in a transaction in which his rights under this Article IV are
not assigned to the purchaser; provided, however, that such Common 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.
(b) The term "Holder" means CHIC and any other person or
entity that acquires any Registrable Securities in compliance with Sections 3.11
and 4.5 hereof.
(c) The term "SEC" means the Securities and Exchange
Commission or any successor agency thereto.
4.2 Company Registration.
(a) If at any time, or from time to time, prior to the date
seven (7) years after the date of this Agreement, 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:
(i) promptly give to each Holder written notice
thereof; and
(ii) 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 Section
4.2(a)(i) above, on the same terms and conditions as the shares of Common Stock,
if any, otherwise being sold through the underwriter in such registration.
(b) 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 clause (i)
of Section 4.2(a). In such event the right of any Holder to registration
pursuant to this Section 4.2 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 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.
(c) Notwithstanding any other provision of this Section 4.2,
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.
(d) Notwithstanding any other provision of this Section 4.2,
no Holder shall be entitled to include any Registrable Securities in a
registration pursuant to this Section 4.2 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 the
Preferred Stock Purchase Agreement. 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.
4.3 Expenses of Registration. All expenses incurred in connection with
any registration, qualification or compliance pursuant to this Article IV,
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.
4.4 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
Article IV 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.
4.5 Transfer of Registration Rights. The rights to cause the Company to
register securities granted by the Company under Section 4.2 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 Agreement 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.
4.6 "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:
(a) 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;
(b) such agreement shall not apply to any shares of
Registrable Securities that are included in such public offering; and
(c) 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.
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.
ARTICLE V
NOTICE OF CHANGE-IN-CONTROL
5.1 Change-in-Control Transactions. If the Company receives notice that
a shareholder or group of shareholders, other than CHIC (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 CHIC. 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 Section 5.1, 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. For purposes of this Section
5.1, 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.
ARTICLE VI
MISCELLANEOUS
6.1 Notice. Any notice or other communication required or permitted
hereunder must be in writing, and shall be delivered personally, by facsimile or
by certified, 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 (3) business days after the date of deposit in the
United States mails, as follows:
(i) if to the Company:
IOMED, Inc.
3385 West 1820 South
Salt Lake City, Utah 84104
Attn: President
Fax: (801) 972-9072
with a copy to:
Parsons Behle & Latimer
201 South Main Street, Suite 1800
Salt Lake City, Utah 84111
Attn: Robert C. Delahunty
(ii) if to CHIC, to:
Child Health Investment Corporation
6803 West 64th Street
Suite 208
Shawnee Mission, Kansas 66220
Attn: President
Fax:
with a copy to:
Attn:
6.2 Governing Law. This Agreement shall be governed by the laws of the
State of Utah, without giving effect to the choice of laws provisions thereof.
6.3 Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
instrument.
6.4 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
THE COMPANY:
IOMED, Inc.
a Utah Corporation
By: /s/ Ned M. Weinshenker
Ned M. Weinshenker, President and
Chief Executive Officer
CHIC:
CHILD HEALTH INVESTMENT
CORPORATION, a Kansas corporation
By: /s/ illegible
Its: Chief Operating Officer
THIS AGREEMENT CONTAINS CONFIDENTIAL TERMS WHICH HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
MANUFACTURING AGREEMENT
Annual Renewal
The following constitutes the first annual renewal agreement between IOMED
Clinical Systems, the purchaser, and KWM Electronics Corporation (hereafter
called "KWM"), the supplier, for the ***. This renewal agreement is based upon
the initial manufacturing agreement in effect since November 1, 1995, for the
****.
This renewal agreement will be effective starting November 1, 1996, and shall
remain in force with annual renewals for succeeding years with the agreement of
both parties until canceled. Addendum's may be added for future ****
manufacturing with the agreement of both KWM and IOMED Clinical Systems. This
manufacturing agreement may be terminated by either party with a written notice
of six months.
I. Quantities and Delivery Schedule
1. IOMED Clinical Systems will review its demand at the beginning
of each month, starting November 1, 1996 and will provide to
KWM a six month rolling forecast with the first two months
being a frozen firm commitment and the last four months being
a best estimate forecast.
II. Equipment
1. All equipment provided by IOMED Clinical Systems will be
returned to IOMED Clinical Systems at the termination of this
agreement. Costs to dismantle, crate, and ship the equipment
to IOMED Clinical Systems will be the responsibility of IOMED
Clinical Systems.
2. Unless otherwise agreed to, any modification to IOMED Clinical
System's equipment being used by KWM to **** will be the
responsibility of KWM with notification to IOMED Clinical
Systems of such modifications.
III. Raw Materials
1. IOMED Clinical Systems will plan, purchase, receive, inspect,
pay for, and transfer to KWM the following items custom to the
Phoresor systems in accordance with the IOMED Clinical Systems
forecast:
****
2. The custom inventory, outlined in III. I above, will be
warehoused at KWM. KWM will provide IOMED Clinical Systems
with a monthly report at each month end by part number
outlining quantities on-hand and quantities scrapped.
3. All raw materials and purchasing beyond that outlined in 111.
I will be the responsibility of KWM.
IV. Pricing
1. **** pricing for the year starting November 1, 1996 will be
****.
2. **** pricing for subsequent years will be agreed to
separately, in one year periods, ****. All price increases
must be documented and agreed to by IOMED Clinical Systems as
reasonable and justified.
3. KWM will give IOMED Clinical Systems a minimum of 120 days
notice of any anticipated price increases associated with
manufacturing. Any significant increases in the cost of raw
materials will be brought to the attention of IOMED Clinical
Systems as soon as KWM is aware of the increase. KWM and IOMED
Clinical Systems will negotiate in good faith to determine if
a change to the **** price needs to be made based on changes
in raw materials.
V. Documentation, Specifications and Procedures
1. IOMED Clinical Systems will be responsible for maintaining all
original GMP controlled documentation except the **** for the
**** by KWM.
2. KWM will be responsible for insuring that all **** are ****
according to current applicable FDA GMP requirements using
KWM's workmanship standards and ECO controlled processes.
3. KWM will provide a certificate of compliance with each ****
shipment and test data certifying that the **** have been ****
per the current applicable procedures and that they have been
tested per the current applicable performance criteria. The
certificate will also state the **** meet all specifications
as outlined by IOMED Clinical Systems. All **** rework to
devices must be documented and made a part of the ****.
4. With reasonable advance notice, KWM shall at any time allow
IOMED Clinical Systems or their representative to audit KWM's
documents, records, and manufacturing to review all aspects
for FDA GMP compliance and/or ISO 9001 international
standards.
5. KWM acknowledges the **** is a **** and will maintain original
**** for a period of time equivalent to the design and
expected life of the ****.
6. A copy of all manufacturing procedures, component
specifications, and design changes will be available to IOMED
Clinical Systems for signature approval before release to
production at KWM.
7. IOMED Clinical Systems will specify individual **** parts for
lot tracking by KWM during ****. The designated **** lot
numbers will be tracked from receipt by KWM, through
manufacturing and test, and recorded **** prior to shipment to
IOMED Clinical Systems. Specifically, For the ****, the
following **** require lot tracking by KWM:
****
IOMED Clinical Systems reserves the right to add or delete
**** to those listed above.
8. No specification changes may be made without the prior written
consent of IOMED Clinical Systems. Manufacturing process
changes may be made under KWM's GMP controls, with IOMED
Clinical System's notification and acceptance prior to
implementation. Written notification of all changes will be
made at or prior to shipment of the lot of **** which has the
changes incorporated in it.
VI. Other Terms and Conditions
1. FOB is West Jordan, Utah, USA. ****.
2. All **** products must pass IOMED Clinical Systems QC/QA
inspection, in a timely manner, prior to acceptance and
payment. (See section 1, Payment... above.)
3. All information, documentation, tooling, drawings, schematics,
and assembly procedures that are disclosed to KWM by IOMED
Clinical Systems are to be considered proprietary and
confidential and must not be divulged to any third party
without the prior written consent of IOMED Clinical Systems.
In the event of termination of this agreement, all information
must be surrendered to IOMED Clinical Systems, upon request,
within 30 days. KWM may not use any of IOMED Clinical System's
products for display, advertising, or promotion without IOMED
Clinical Systems prior written consent.
4. KWM may not disclose this OEM arrangement without IOMED
Clinical Systems prior written consent.
5. Acceptance of all purchase orders from IOMED Clinical Systems
will be either written confirmation or acceptance of payment.
6. The cost of process changes, due to IOMED Clinical Systems
product changes, will be reimbursed to KWM at ****. All such
process changes must be approved by IOMED Clinical Systems in
writing and with a separate purchase order issued to confirm
approval and to enable payment.
7. IOMED Clinical Systems may request KWM to perform ****. IOMED
Clinical Systems will advise KWM of specific documentation
requirements for FDA GMP and ISO 9000 compliance. Any further
details and conditions regarding KWM's **** will be subject of
a separate agreement or purchase order.
8. With the exception of product failure caused by design or user
excessive abuse, KWM warrants the IOMED Clinical Systems ****
against defects in workmanship or materials supplied by KWM
for a period of ****.
9. IOMED Clinical Systems will indemnify KWM against any harm
resulting from the **** and IOMED Clinical Systems will supply
proof of liability insurance to this effect prior to any
pre-production or production shipments.
10. Any controversy or claim arising out of or relating to the
contract, or any breach thereof, shall be settled by
arbitration in Salt Lake City, Utah, in accordance with the
Commercial Association Rules of the American Arbitration
Association, and the judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction
thereof.
Approved by IOMED Clinical Systems Approved by KWM Electronics
/s/ W. Tim Miller /s/ Clark T. Mabey
Executive VP & General Manager Controller
/s/ Robert J. Lollini /s/ Kent W. Mabey
Vice President and CFO President
/s/ Ned W. Weinshenker, Ph.D.
President and CEO
THIS AGREEMENT CONTAINS CONFIDENTIAL TERMS WHICH HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
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 the 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 **** License 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 I above, upon execution of this Agreement Dermion will issue
and deliver Eight 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 (1) 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 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 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 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 THIS 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.
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, Ph.D
Name: Ned M. Weinshenker, Ph.D.
Title: President and CEO
THIS AGREEMENT CONTAINS CONFIDENTIAL TERMS WHICH HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PATENT LICENSE AGREEMENT
This Patent License Agreement (the "Agreement") is entered into as of
March 29, 1996 ("Effective Date"), by and between Iomed, Inc., a Utah
corporation ("Iomed") and Dermion, Inc., a Delaware corporation ("Dermion").
RECITALS
A. Iomed owns, and has licensed from third parties, certain patent and
other intellectual property rights relating to iontophoretic drug delivery
systems.
B. Iomed wishes to grant to Dermion, and Dermion wishes to accept, a
license to such intellectual property rights under the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
obligations, representations, warranties and covenants contained herein, the
parties hereto agree as follows:
AGREEMENT
1. Definitions. As used in this Agreement, the following capitalized
terms shall have the meanings set forth below:
1.1 "Intellectual Property Rights" shall mean (a) the ****
Patents, (b) the Iomed Patents, and (c) the Iomed Trade Secrets.
1.2 "Iomed Patents" shall mean the Patent Rights set forth on
Schedule 1. I (b)(i) to the Research and Development Agreement.
1.3 "Iomed Technology" shall mean the Iomed Patents and the
Iomed Trade Secrets, collectively, and shall include any improvements thereto
made by Dermion during the term of the Research and Development Agreement.
1.4 "Iomed Trade Secrets" shall mean any trade secret rights
or other know-how relating to the manufacture, use, lease, marketing or sale of
Systems owned by Iomed as of the Effective Date.
1.5 "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.
1.6 "Research and Development Agreement" shall mean that
certain Research and Development Agreement, dated of even date herewith, by and
between Iomed, Dermion and Ciba-Geigy Corporation, a New York corporation,
acting through its Pharmaceuticals Division.
1.7 "Sublicensee" shall mean any third party to whom Dermion
grants rights under the Intellectual Property Rights in accordance with this
Agreement.
1.8 "Systems" shall mean iontophoretic transderrnal drug
delivery systems. incorporating a current source, current controller, drug
containment device/electrode, dispersive electrode and method for attachment.
1.9 "Territory" shall mean ****.
1.10 ****.
1.11 ****.
2. Grant of License.
2.1 Subject to the terms and conditions of this Agreement,
Iomed hereby grants to Dermion a paid-up, royalty-free, non-exclusive,
non-transferable (except as expressly provided in Section 7), license under the
Iomed Technology (with the right to grant sublicenses) to make, have made, use,
lease, market and sell Systems in the Territory. The license granted in this
Section 2.1 shall continue from the Effective Date until the date of expiration
of the last to expire of any Iomed Patent or Iomed Trade Secret.
2.2 Subject to the terms and conditions of this Agreement,
Iomed hereby grants to Dermion a paid-up, royalty-free, non-exclusive,
non-transferable (except as expressly provided in Section 7), worldwide license
under the **** Patents (with the right to grant sublicenses) to make, have made,
use and sell power supply units and electrode kits for iontophoretic drug
delivery. The license granted in this Section 2.2 shall continue from the
Effective Date until the date of expiration of the last to expire of any ****
Patent.
2.3 The license granted to Dermion under Section 2.2 shall be
subject to the applicable conditions and limitations of the **** License, which
are incorporated herein by this reference. Without limiting the generality of
the foregoing, Dermion agrees to make patent markings, prosecute patent
applications and maintain patents, keep books and records, and take any other
actions required by the **** License of Iomed or Iomed affiliates under that
agreement, other as provided in Section 4 below.
2.4 Iomed shall notify Dermion of any disputes or other
problems that may arise that may materially affect the enforceability of the
**** License, and shall take all commercially reasonable actions to allow
Dermion and its Sublicensees to enjoy the benefit of the licenses granted to
Dermion pursuant to Sections 2.1 and 2.2.
2.5 Dermion shall enter into a sublicensing agreement with
each of its Sublicensees containing, to the extent applicable, substantially
similar obligations by the Sublicensee to Derinion as Dermion has to Iomed under
this Agreement.
2.6 Except as expressly provided in this Agreement, no right
or license of any kind is granted or implied hereunder. Without limitation,
Dermion shall have no right, license, title or interest in the Intellectual
Property Rights except as expressly provided in this Agreement.
2.7 Nothing in this Agreement shall limit Iomed's fight to
develop, license, sell and distribute Systems or any other products, whether or
not incorporating Intellectual Property Rights, including products which may
compete with or use the same or similar ideas or concepts as those developed by
Dermion.
3. Patent Prosecution.
3.1 Dermion may, at its own expense and using patent counsel
of its choice, elect to file patent applications covering any part of the Iomed
Technology. Any such patent application shall be in the-name of the inventors
and with Iomed as the assignee. Upon issuance, any such patent shall
automatically become subject to the license granted in Section 2.1 hereof. In
the event that Dermion files such a patent application, Dermion shall be
responsible for diligently prosecuting the patent application, and for paying
all related fees. Iomed shall cooperate fully with Dermion in the preparation,
filing and prosecution of all patent applications filed covering the Iomed
Technology, such as by causing the execution by Iomed and its employees of any
and all papers, agreements and instruments as are necessary in the patent
application process.
3.2 Dermion shall assume all responsibilities of Iomed under
Section 9 (PATENT PROSECUTION AND MAINTENANCE) of the **** License.
4. **** Payments. Iomed shall remain responsible to pay all
amounts it is required to pay to the **** under Sections 3.1 and 3.2 of the ***
License.
5. Infringement.
5.1 Dermion shall promptly inform Iomed in writing of any
suspected infringement by a third party of any Intellectual Property Rights, and
provide Iomed with any available evidence of infringement.
5.2 During the term of this Agreement, Dermion shall have the
fight, but not the obligation, to prosecute at its own expense any infringement
of the Iomed Technology. If Dermion does not bring any such action within a
reasonable time, Iomed shall have the right, but not an obligation, to prosecute
at its own expense the infringement. Any recovery of damages and costs in such
suits shall be apportioned so that the party bringing suit shall first recover
an amount equal to the costs and expenses incurred by such party directly
related to the prosecution of such action, and the remainder shall be divided
between Dermion and Iomed in proportion to the damage incurred by each party as
a result of the infringement.
5.3 In the event that Dermion is sued by a third party for
infringement based upon Dermion's manufacture, use or sale of Systems
incorporating Iomed Technology, Dermion shall defend the lawsuit at its expense,
and have full control of the lawsuit, including without limitation the right to
settle without Iomed's consent.
5.4 In any infringement or patent defense suit as either party
may institute or defend pursuant to this Agreement, the other party hereto
shall, at the request of the party initiating or defending such suit, reasonably
cooperate at the other party's expense, including without limitation by becoming
a party plaintiff in such a suit.
6. Product Liability.
6.1 Dermion shall at all times during the term of this
Agreement and thereafter, indemnify, defend and holder Iomed and its officers,
employees and affiliates harmless against all claims and expenses, including
legal expenses and reasonable attorneys' fees, arising out of the death of or
injury to any person or persons or out of any damage to property and against any
other claim, proceeding, demand, expense and liability of any kind whatsoever
resulting from the research, development, production, manufacture, sale, use,
lease, consumption or advertisement of products and/or processes sold or
performed by Dermion or its Sublicensees under any license granted by this
Agreement.
6.2 Iomed shall promptly notify Dermion in writing after Iomed
receives notice of any claim. Dermion shall have the sole control of the
defense, trial, and any related settlement negotiations regarding any such
claim. Iomed shall reasonably cooperate, at Dermion's expense, with Dermion in
the defense of any such claim.
6.3 Dermion shall obtain and carry in full force and effect
liability insurance which shall protect Dermion and Iomed in regard to events
covered by Section 6.1 above. Dermion shall provide to Iomed evidence of such
insurance in the form of a certificate, and Iomed as additional insured, and
setting forth a ****.
6.4 Except as otherwise expressly set forth in this Agreement,
Iomed makes no representations and extends no warranties of any kind, either
express or implied, including but not limited to warranties of merchantability,
fitness for a particular purpose, and validity of patent rights claims, issued
or pending. Nothing in this Agreement shall be construed as a representation
made or warranty given by Iomed that the practice by Dermion of the licenses
granted hereunder shall not infringe the patent rights of any third party.
7. Assignment. Iomed may assign any of its rights or
obligations under this Agreement with Dermion's prior written consent (except in
the context of a sale of all or substantially all of Iomed's business or assets,
in which case such consent shall not be required). Dermion may not sublicense
(except as expressly provided in Section 2), assign or transfer this Agreement,
or any rights, licenses or obligations hereunder, except (a) by merger,
consolidation, or a sale of all or substantially all of Dermion's assets, or (b)
with Iomed's prior written consent. Notwithstanding the foregoing, the ability
of Dermion to effect any sublicense, assignment or transfer is also subject to
Section 2.3 hereof. Any permitted assignee shall agree in writing to comply with
all the terms and conditions of this Agreement.
8. Non-Use of Names. Neither party shall use the names of the
other party, or of its employees, officers or agents, in any advertising,
promotional or sales literature without prior written consent obtained from the
other party.
9. Limitation of Liability. Iomed shall not be liable or
obligated in any mariner for any special, incidental, consequential or punitive
damages relating to this Agreement or its conduct in furtherance hereof, even if
informed of the possibility thereof in advance. In no event shall Iomed's
maximum liability hereunder exceed an amount equal to the aggregate license fees
paid by Dermion to Iomed hereunder.
10. Notices. Any payment, notice or other communication
pursuant to this Agreement shall be sufficiently made or given on the date of
mailing if sent to such party by certified first class mail, postage prepaid,
addressed to it at its address below or as it shall designate by written notice
given to the other party:
In the case of Iomed: Iomed, Inc.
3385 West 1820 South
Salt Lake City, Utah 84104
Attn: President
In case of Dermion: Dermion, Inc.
1290 West 2320 South
Salt Lake City, Utah 84119
Attn: President
In either case with a copy to: Morrison & Foerster LLP
345 California Street
San Francisco, California 94104
Attn: C. Patrick Machado, Esq.
11. Miscellaneous.
11.1 This Agreement shall be construed, governed, interpreted
and applied in accordance with the laws of the State of Delaware, except that
questions affecting the construction and effect of any patent shall be
determined by the law of the country in which the patent was granted.
11.2 The parties hereto acknowledge that this Agreement sets
forth the entire Agreement and understanding of the parties hereto as to the
subject matter hereof, and shall not be subject to any charge or modification
except by the execution of a written instrument subscribed to by the parties
hereto.
11.3 The provisions of this Agreement are severable, and in
the event that any provision of this Agreement shall be determined to be invalid
or unenforceable under any controlling body of law, such invalidity or
unenforceability shall not in any way affect the validity or enforceability of
the remaining provisions hereof.
11.4 The failure of either party to assert a right hereunder
or to insist upon compliance with any term or condition of this Agreement shall
not constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition or condition by the other party.
11.5 This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but such counterparts together shall constitute but one and the same
instrument.
11.6 Iomed and Dermion are independent contractors. Nothing
herein contained shall be construed to place Iomed and Dermion in the
relationship of joint venturers, partners, associates, or principal and agent;
and both Iomed and Dermion are acting as principals. Neither of the parties will
make any warranties or representations on the other party's behalf nor shall
have the power to obligate or bind the other in any manner whatsoever.
11.7 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 attorneys' fees and other costs incurred in such
action or proceeding, in addition to any other relief to which it may be
entitled.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their authorized representatives as of the date first set forth above.
IOMED, INC. DERMION, INC.
By: /s/ Robert J. Lollini By: /s/ Ned M. Weinshenker
Title: Title:
Secretary President and CEO
THIS AGREEMENT CONTAINS CONFIDENTIAL TERMS WHICH HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
RESEARCH AND DEVELOPMENT AGREEMENT
among
IOMED, INC.,
DERMION, INC.
and
CIBA-GEIGY CORPORATION
Dated as of March 29, 1996
<TABLE>
<CAPTION>
TABLE OF CONTENTS
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
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>
Schedules
Schedule Description
Schedule 1.1(a) Ciba Technology
Schedule 1.1(b) Dermion Technology
Schedule 3.1 Ciba Fields
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:
"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 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 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.
"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 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, ****; 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.
"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
charge ****.
"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 ****.
"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 ****.
"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 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.
(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;
(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 shall be filled by
the party who appointed the departing member.
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 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.
(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 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 ****. 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 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
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 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. ****.
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
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 (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, 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 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.
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 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
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 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
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.
(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.
(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 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
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:
(i) ****;
(ii) ***; and
(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.
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 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 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.
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.
(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 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.
(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.
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 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 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 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
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 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.
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
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 o-r 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 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 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
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.
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.
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.
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
DERMION, INC.
By: /s/ Robert J. Lollini
Name: Robert J. Lollini
Title: Secretary
CIBA-GEIGY CORPORATION
Pharmaceuticals Division
By: /s/ James M. Callahan
Name: James M. Callahan
Title: Unlisted
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 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 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 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.
(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.
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 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 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
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 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
President and Chief Executive Officer
CIBA-GEIGY CORPORATION,
a New York corporation, acting through
its Pharmaceuticals Division
By: /s/ James M. Callahan
Its:
DERMION, INC., a Delaware corporation
By: /s/ Robert J. Lollini
Its: Secretary
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement ("Agreement") is made as of March 29,
1996, by and among Dermion, Inc., a Delaware corporation (the "Company"),
Ciba-Geigy Corporation, a New York corporation ("Ciba"), acting through its
Pharmaceuticals Division, and IOMED, Inc., a Utah corporation ("IOMED").
A. The Company and IOMED have entered into that certain Contribution
Agreement, dated of even date herewith (the "Contribution Agreement"), pursuant
to which IOMED has agreed to contribute certain assets to the Company in
exchange for Eight Hundred Thousand (800,000) newly issued shares (the "IOMED
Shares") of the Company's Common Stock, $.001 par value per share (the "Common
Stock").
B. The Company and Ciba have entered into a Stock Purchase Agreement,
dated of even date herewith (the "Stock Purchase Agreement"), pursuant to which
Ciba has agreed to purchase from the Company, and the Company has agreed to sell
to Ciba, Two Hundred Thousand (200,000) newly issued shares (the "Ciba Shares")
of Common Stock.
C. In consideration of the investment to be made by Ciba in the Company
pursuant to the Stock Purchase Agreement, the Company desires to grant certain
rights to Ciba, and IOMED desires to agree to certain provisions, in each case
on the terms and subject to the conditions set forth herein.
Accordingly, in consideration of the covenants set forth herein and in
the Contribution Agreement and the Stock Purchase Agreement and as an inducement
for the purchase of the Ciba Shares by Ciba, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement the following terms shall have the
meanings set forth below.
Act. The term "Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
Affiliate. The term "Affiliate" shall mean, with respect to any party
hereto, any person or entity which controls, is controlled by, or is under
common control with, such party, or any shareholder or other equity owner in a
control relationship with any of the foregoing. For this purpose the term
"control" shall mean the direct or indirect beneficial ownership of more than
fifty percent (50%) of the voting stock or interest in the income of such person
or entity, or such other relationship as, in fact, constitutes actual control.
Affiliate Transfer. The term "Affiliate Transfer" means any Transfer to
(i) the ancestors, descendants or spouse of the transferor, (ii) to a trust for
the benefit of either the transferor or any of the persons referred to in clause
(i) above, (iii) to the partners, shareholders or other holders of any equity
interest in the transferor, or (iv) to any Affiliate of the transferor.
Change of Control. The term "Change of Control" means any transaction or
series of related transactions, other than a registered public offering, as a
result of which the owners of the outstanding Voting Stock immediately prior to
such transaction or series of related transactions cease to own a majority of
the outstanding Voting Stock thereafter.
Ciba Percentage. The "Ciba Percentage" shall initially be twenty five
percent (25%); provided, however, that such percentage shall be subject to
reduction from time to time in the event that Ciba and its Affiliates cease to
own in the aggregate at least Two Hundred Thousand (200,000) shares (the
"Initial Share Number") of Eligible Securities (adjusted for stock splits,
combinations and the like). At any such time or times, the Ciba Percentage shall
be reduced by the percentage by which the number of shares of Eligible
Securities then owned by Ciba and its Affiliates in the aggregate is less than
the Initial Share Number. Any downward adjustment made to the Ciba Percentage
pursuant to the previous sentence shall be reversed in a like manner if, when
and to the extent that Ciba or its Affiliates subsequently acquire additional
shares of Eligible Securities; provided, however, that the Ciba Percentage shall
in no event exceed twenty five percent (25%).
Common Stock. The term "Common Stock" means the common stock, $.001 par
value per share, of the Company.
Eligible Securities. The term "Eligible Securities" means (i) the Ciba
Shares, and (B) any Common Stock 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 Ciba Shares.
Exchange Act. The term "Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.
Form S-3. The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the 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.
Holder. The term "Holder" means Ciba and any other person or entity
that acquires any Registrable Securities in compliance with Sections 3. 1 0 and
6.1 hereof
Initial Public Offering. The term "Initial Public Offering" means the
first registered underwritten public offering of the Company's Common Stock that
generates aggregate proceeds to the Company (net of underwriting discounts and
commissions but prior to other offering expenses payable by the Company) of at
least $ 1 0,000,000 at a price per share of at least $ 1.00 (adjusted to reflect
subsequent stock dividends, stock splits and the like).
Initiating Holders. The term "Initiating Holders" means any Holder or
Holders of not less than the lesser of (i) One Hundred Thousand (100,000) shares
of Registrable Securities (as adjusted for stock splits, combinations and the
like) and (ii) seventy-five percent (75%) of all shares of Registrable
Securities then held by the Holders.
Prohibited Transfer. The term "Prohibited Transfer" means any Transfer
other than (i) to the partners, shareholders of other holders of any equity
interest in the transferor, or (ii) pursuant to an effective registration
statement under the Act.
Registrable Securities. The term "Registrable Securities" means (i) the
Ciba Shares, (ii) any Common Stock 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 Ciba Shares, and (iii) any Common Stock, and any Common Stock issuable upon
the conversion, exercise or exchange of any warrant, right or other security,
acquired by Ciba pursuant to its preemptive rights under Section 4.4 hereof-,
excluding in all cases, however, any Registrable Securities sold by a person in
a transaction in which its rights under Article III of this Agreement are not
assigned; provided, however, that such shares of Common Stock 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 or pursuant to Rule 144 under the Act.
Sale of Control. The term "Sale of Control" means any of the following
events: (i) any transaction or series of related transactions, other than a
registered public offering, as a result of which persons owning the outstanding
Voting Stock of the Company immediately prior to such transaction or series of
related transactions cease to own a majority of the outstanding Voting Stock of
the Company thereafter; (ii) the consolidation or merger of the Company with or
into another person, whether or not the Company is the surviving entity of such
transaction, unless immediately after such consolidation or merger persons
owning (directly or indirectly) the outstanding Voting Stock of the Company
prior to the transaction own a majority of the outstanding Voting Stock 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 the Company to a third party
in a single transaction or series of related transactions. Notwithstanding the
foregoing, an Affiliate Transfer shall in no event constitute a Sale of Control.
Sale of Control Premium. The term "Sale of Control Premium" means (i)
if the Acquisition Consideration is Seven Million Dollars ($7,000,000) or less,
zero, (ii) if the Acquisition Consideration is more than Seven Million Dollars
($7,000,000) and less than Ten Million Dollars ($10,000,000), the product of (x)
.4167 multiplied by (y) the amount by which the Acquisition Consideration
exceeds Seven Million Dollars ($7,000,000), and (iii) if the Acquisition
Consideration is Ten Million Dollars ($10,000,000) or more, One Million Two
Hundred Fifty Thousand Dollars ($1,250,000).
SEC. The term "SEC" means the Securities and Exchange Commission or any
successor agency thereto.
Securities. The term "Securities" means any shares of, or securities
convertible into or exercisable or exchangeable for any shares of, any class of
capital stock of the Company, excluding (i) up to Eighty Eight Thousand Eight
Hundred Eighty Eight (88,888) shares of Common Stock (or options issued
therefor) to employees, consultants and independent contractors of the Company
in connection with their employment by or performance of services for the
Company, and (ii) any securities issued in connection with a bona fide business
acquisition by the Company, whether by merger, consolidation, purchase of
assets, exchange of stock or otherwise.
Transfer. The term "Transfer" means (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.
Voting Stock. The term "Voting Stock" means any issued and outstanding
shares of capital stock or other securities of the Company at any given time,
which entitle the holders thereof to vote generally in the election of
directors.
ARTICLE 11
BOARD REPRESENTATION
Section 2.1 Size of Board. The Company agrees to maintain the size of
its board of directors at no more than five persons. IOMED agrees to vote all
shares of Voting Stock owned by it at the time of such vote (a) in favor of any
proposal to fix the size of the Company's board of directors at no more than
five persons and (b) against any proposal to fix the size of the Company's board
of directors at more than five persons.
Section 2.2 Right to Appoint Director. Ciba shall have the right,
exercisable by it at its option, to nominate one (1) person for election to the
Company's board of directors; provided that such person shall be reasonably
acceptable to the Company (the "Ciba Nominee"). Ciba may replace the Ciba
Nominee at any time and from time to time in its discretion, provided that each
replacement is reasonably acceptable to the Company.
Section 2.3 Voting Agreement; Cooperation of Company. In the event Ciba
exercises its right to nominate a Ciba Nominee, IOMED agrees to vote all shares
of Voting Stock owned by it at the time of such vote to nominate, elect and
maintain in office the Ciba Nominee, and the Company agrees promptly to take all
corporate actions required to enable IOMED to fulfill such obligation.
Section 2.4 Certain Restrictions on Participation. Notwithstanding
anything to the contrary contained herein, the Ciba Nominee shall not be
entitled to attend any meeting, vote on or consent to any matter or receive any
material distributed to the directors of the Company if and to the extent that
any subject or document (a) to be reviewed, discussed or voted upon at any such
meeting, (b) to be consented to without a meeting, or (c) contained in any such
distributed material is, in the good faith determination of the members of the
Company's board of directors other than the Ciba Nominee, one that should not be
disclosed to Ciba because of confidentiality or competitive concerns of either
the Company or any person with whom the Company has engaged, or proposes to
engage, in a business relationship.
Section 2.5 Termination. The rights granted to Ciba in this Article II
shall terminate upon the earlier to occur of (a) the closing of the first public
offering of the Company's securities pursuant to a registration statement
declared effective under the Act, or (b) such time as Ciba and its Affiliates
cease to own an aggregate of One Hundred Thousand (100,000) shares of
Registrable Securities (as adjusted for stock splits, combinations and the
like).
Section 2.6 No Assignment. The rights of Ciba under this Article II ma
not be assigned to, or exercised by, any other person or entity, other than a
successor to Ciba's Pharmaceutical Division, whether by merger, consolidation,
stock sale, asset sale or otherwise.
Section 2.7 Legends.
(a) Until the termination of the rights granted to Ciba in
this Article II, each certificate representing shares of Common Stock now owned
or hereafter acquired by IOMED shall bear a legend in substantially the,
following forms:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AGREEMEENT, DATED MARCH 29, 1996, PURSUANT TO WHICH THE
HOLDER HEREOF HAS AGREED TO VOTE THESE SECURITIES IN THE MANNER SET
FORTH THEREIN. A COPY OF THE STOCKHOLDERS' AGREEMEENT IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMEPANY.
The Company shall reissue promptly certificates without such legend upon
expiration of the rights granted to Ciba in this Article II.
(b) Until the termination of the restrictions imposed on IOMED
pursuant to Section 4.3(a) hereof, each certificate representing shares of
Common Stock now owned or hereafter acquired by IOMED shall bear a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AGREEMIENT, DATED MARCH 29, 1996, PURSUANT TO WHICH THE
HOLDER HEREOF IS SUBJECT TO CERTAIN RESTRICTIONS ON ITS ABILITY TO
TRANSFER THESE SECURITIES. A COPY OF THE STOCKHOLDERS' AGREEMEENT IS
AVAILABLE FOR INSPECTION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
COMPANY.
The Company shall reissue promptly certificates without such legend upon
expiration of the restrictions imposed on IOMED pursuant to Section 4.3 (a)
hereof
(c) Until the termination of the restrictions imposed on IOMED
pursuant to Section 4.3(b) hereof, each certificate representing shares of
Common Stock now owned or hereafter acquired by IOMED shall bear a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS' AGREEMEENT, DATED MARCH 29, 1996, PURSUANT TO WHICH THE
HOLDER HEREOF IS SUBJECT TO A RIGHT OF FIRST OFFER IN CONNECTION WITH
TRANSFERS OF THESE SECURITIES. A COPY OF THE STOCKHOLDERS' AGREEMENT IS
AVAILABLE FOR INSPECTION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
COMEPANY.
The Company shall reissue promptly certificates without such legend upon
expiration of the restrictions imposed on IOMED pursuant to Section 4.3(b) or
the last sentence of Section 6.1 hereof.
ARTICLE III
REGISTRATION RIGHTS
Section 3.1 Requested Registration.
(a) In case the Company shall receive from Initiating Holders,
at any time after one hundred eighty (180) days following the first registered
public offering of the Company's Common Stock, regardless of whether such
offering is the Initial Public Offering, a written request that the Company
effect any registration under the Act, qualification or compliance with respect
to all of the Registrable Securities then held by such Initiating Holders, or
any portion thereof the sale of which is reasonably expected to yield gross
proceeds to the Initiating Holders of at least $2,000,000, the Company will:
(i) give written notice of the proposed registration,
qualification or compliance to all other Holders within ten (10) days after
receipt thereof, and
(ii) use its diligent best efforts to effect, as soon
as practicable, all such registrations, qualifications and compliances as may be
so requested and as would permit or facilitate the sale and distribution of all
of the Registrable Securities held by such Initiating Holders, together with all
of the Registrable Securities of any Holder or Holders who joins in such request
in a written request received by the Company within thirty (30) days after such
written notice is given; provided, that the Company shall not be obligated to
take any action to effect any such registration, qualification, or compliance
pursuant to this Section 3.1:
(A) In any particular jurisdiction in which
the Company would be required to execute a general consent to service of
process, to register as a dealer, or to cause any officer or employee of the
Company to register as a salesman in effecting such registration, qualification
or compliance;
(B) Within one hundred eighty (180) days
immediately following the effective date of any registration statement
pertaining to an underwritten public offering of securities of the Company for
its own account;
(C) After the Company has effected two (2)
such registrations pursuant to this Section 3.1;
(D) If the Company shall furnish to the
Initiating Holders a certificate signed by the Chief Executive Officer of the
Company stating that in the good faith judgment of the Board of Directors it
would be seriously detrimental to a material transaction then being pursued by
the Company or its stockholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 3.1 shall be deferred for a period not to
exceed one hundred eighty (180) days from the date of receipt of written request
from the Initiating Holders; provided, however, that the Company shall only be
entitled to such deferral one (1) time with respect to each registration
pursuant to this Section 3.1
(b) Subject to the foregoing, the Company will use its best
efforts to file a registration statement covering the Registrable Securities as
soon as practicable after receipt of the request or requests of the Initiating
Holders.
(c) The Initiating Holders shall include in their request made
pursuant to this Section 3.1 the name, if any, of the underwriter or
underwriters that such Initiating Holders would propose, with the consent of the
Company (which consent shall not be unreasonably withheld), to employ in
connection with the public offering proposed to be made pursuant to the
registration requested, and the Company shall include such information in the
written notice referred to in clause (i) of Section 3.1(a). The right of any
Holder to registration pursuant to this Section 3.1 shall be conditioned on such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting. The Company shall (together with all
Holders proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting in the manner set forth above.
Notwithstanding any other provision of this Section 3. 1, if the underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Initiating
Holders shall so advise all Holders of Registrable Securities and the number of
shares of Registrable Securities that may be included in the registration and
underwriting, as determined by the underwriters, shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities requested to be registered by such Holders (or
in such other manner as the Holders requesting registration may elect in a
written notice to the Company signed by all such Holders). No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration.
Section 3.2 Form S-3 Registration.
(a) In case the Company shall receive from any Holder or
Holders 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:
(i) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(ii) 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 Holder or
Holders joining in such request as are specified in a written request given
within thirty (30) 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 3.2: (i) if
the Company is not qualified as a registrant entitled to use Form S-3; (ii) if
the Holders propose to sell Registrable Securities at an aggregate sales price
to the public of less than $1,000,000; (iii) in any particular jurisdiction in
which the Company would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance and in which
it has not already filed such a consent; (iv) if the Company has effected one
such registration pursuant to this Section 3.2 during the preceding twelve (12)
months; or (v) if the Company has effected a registration on Form SI within the
preceding one hundred eighty (180) days. Subject to the foregoing, the Company
shall file a 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.
(b) Registrations effected pursuant to this Section 3.2 shall
not be counted as a Request for Registration effected pursuant to Section 3.1
hereof.
Section 3.3 Company Registration.
(a) If at any time, or from time to time, the Company shall
determine to register any of its securities, either for its own account or f6r
the account of a security holder or holders, other than (i) a registration on
Form 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, (ii) a registration pursuant to Sections 3.1 or 3.2
hereof, or (iii) the Initial Public Offering (provided that at least ninety
percent (90%) of the securities sold therein are sold for the account of the
Company and that any selling shareholders acquired their shares in their
capacity as employees of the Company or its Affiliates), the Company will:
(i) promptly give to each Holder written notice
thereof; and
(ii) 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 thirty (30) days after such written notice is given on the same terms and
conditions as the Common Stock, if any, otherwise being sold through the
underwriter in such registration.
(b) 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 clause (i)
of Section 3.3(a). In such event the right of any Holder to registration
pursuant to this Section 3.3 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. The
Company and 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.
(c) Notwithstanding any other provision of this Section 3.3,
if the underwriter determines in good faith that marketing factors require a
limitation of the number of shares to be underwritten, and gives written notice
thereof to the Company or the Holders, 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 requested to be
registered by such Holder.- 'or in such ot4ier manner as the Holders requesting
registration may eject in a written notice to the Company signed by all such
Holders). No Registrable Securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
Section 3.4 Expenses of Registration. All expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Article III, including without limitation, all registration, filing and
qualification fees, printing expenses, escrow fees, fees and disbursements of
counsel for the Company and the reasonable fees and disbursements of one counsel
to the selling stockholders, 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' discounts or commissions relating to Registrable Securities.
Section 3.5 Registration Procedures. If and whenever the Company is
required by the provisions of this Article III to use its best efforts to effect
the registration of any of the Registrable Securities under the Act, the Company
will, as expeditiously as possible:
(a) Prepare and file with the SEC a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for such period as may be
necessary to permit the successful marketing of such securities (but not
exceeding one hundred eighty (180) days) or until the Holder or Holders have
completed the distribution described in the registration statement relating
thereto, whichever first occurs.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Act; and to
keep such registration statement effective for that period of time specified in
Section 3.5(a) hereof.
(c) Furnish to each Holder participating in the registration
such number of prospectuses and preliminary prospectuses in conformity with the
requirements of the Act, and such other documents as such Holder may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities being sold by such Holder;
(d) 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 underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(e) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the 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.
(f) Furnish, at the request of' any Holder requesting
registration of Registrable Securities pursuant to this Article III, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Article III, 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 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 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.
(g) Use its best efforts to register or qualify the
Registrable Securities covered by such registration statements under such other
securities or blue sky laws of such jurisdictions as each such selling Holder of
Registrable Securities shall reasonably request and do any and all other acts
and things which may be necessary or desirable to enable such Holder to
consummate the public sale or other disposition in such jurisdictions, provided
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or file a general consent to service of
process in any such jurisdictions.
(h) Give the Holders requesting registration of Registrable
Securities pursuant to this Article III, their underwriters, if any, and their
respective counsel and accountants, the opportunity to participate in the
preparation of any registration statement, each prospectus included therein or
filed with the SEC, and each amendment thereof or supplement thereto, and will
give each of them such access to its books and records and such opportunities to
discuss the business, finances and accounts of the Company and its subsidiaries
with its officers, directors and the independent public accountants who have
certified its financial statements as shall be necessary, in the reasonable
judgment of such Holders' and such underwriters' respective counsel, to conduct
a reasonable investigation within the meaning of the Act.
(i) Provide a transfer agent and registrar for all Registrable
Securities covered by such registration not later than the effective date of the
registration statement with respect to such Registrable Securities.
(j) Use its best efforts to list all Registrable Securities
covered by the registration statement on any securities exchange on which any of
the Registrable Securities are then listed.
Section 3.6 Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Holder of Registrable Securities with respect to which a registration statement
has been filed under the Act pursuant to this Article III, each of such Holder's
partners, officers, directors, employees, agents and advisors, each underwriter
of any of the Registrable Securities included in such registration statement,
and each person, if any, who controls any such Holder or underwriter within the
meaning of the Act or the Exchange Act (hereinafter collectively referred to as
the "Holder Underwriters"), as follows:
(i) against any and all loss, liability, claim (joint
or several), damage and expense whatsoever arising out of any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement (or any amendment thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading, or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any final prospectus
(or any amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
unless such untrue statement or omission or such alleged untrue statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company by any Holder-Underwriter expressly for use in such
registration statement (or any amendment thereto) or such final prospectus (or
any amendment or supplement thereto);
(ii) against any and all loss, liability, claim,
damage and expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission or any such alleged
untrue statement or omission, if such settlement is effected with the written
consent of the Company; and
(iii) against any and all legal or other expense
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under clause (i) or
(ii) above, which expenses under this clause (iii) shall be paid by the Company
as incurred.
(b) The Company shall be notified in writing of any matter
potentially giving rise to a claim under this Section 3.6 within a reasonable
time after the assertion thereof, but failure to so notify the Company shall not
relieve the Company from any liability which it may have pursuant to this
indemnity agreement or otherwise, except if and to the extent that the Company
is materially prejudiced by such delay. In case of any such notice, the Company
shall be entitled to participate at its expense in the defense, or if it so
elects within a reasonable time after receipt of such notice, to assume the
defense of any suit brought to enforce any such claim (unless in the
Holder-Underwriter's reasonable judgment a conflict of interest between such
Holder-Underwriter and the Company may exist in respect of such claim); but if
it so elects to assume the defense, such defense shall be conducted by counsel
chosen by it and reasonably acceptable to the Holder-Underwriter or
Holder-Underwriters. In the event that the Company elects to assume the defense
of any such suit and retain such counsel, the Holder-Underwriter or
Holder-Underwriters shall have the right to retain separate counsel to
participate in such proceedings, but at the sole cost. and expense of the
Holder-Underwriters. No indemnifying party shall consent to entry of any
judgment or enter into any settlement of any pending or threatened proceeding in
respect of which an indemnified party is or could have been a party and
indemnity could have been sought under paragraph (a) of this Section 3.6 which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation without the consent of the indemnified party.
(c) Each Holder severally agrees that it will indemnify and
hold harmless the Company, each officer, director, employee, agent and advisor
of the Company, each person, if any, who controls the Company within the meaning
of the Act, each underwriter of Registrable Securities included in any
registration statement which has been filed under the Act pursuant to this
Article III, and each person, if any, who controls such underwriter within the
meaning of the Act, against any and all loss, liability, claim, damage and
expense described in clauses (a)(i) through (a)(iii), inclusive, of Section 3.6
above, up to the amount of the gross proceeds actually received from the
offering by such Holder, but only with respect to statements or omissions, or
alleged statements or omissions made in such registration statement (or any
amendment thereto) or final prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information furnished to the
Company by such Holder expressly for use in such registration statement (or any
amendment thereto) or such final prospectus (or any amendment or supplement
thereto). In case any action shall be brought against the Company or any person
so indemnified pursuant to the provisions of this Section 3.6(c) and in respect
of which indemnity may be sought against any Holder, the Holders from whom
indemnity is sought shall have the rights and duties given to the Company, and
the Company and the other persons so indemnified shall have the rights and
duties given to the persons entitled to indemnification by the provisions of
Section 3.6(b) above.
Section 3.7 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, and the distribution proposed by
such Holder or Holders, as the Company may reasonably request in writing and as
shall be required in connection with any registration, qualification or
compliance referred to in this Article III.
Section 3.8 Sale Without Registration. If at the time of any transfer
(other than a transfer not involving a change in beneficial ownership) of any
Registrable Securities, such Registrable Securities shall not be registered
under the Act, the Company may require, as a condition of allowing such
transfer, that the Holder or transferee furnish to the Company (a) such
information as is necessary in order to establish that such transfer may be made
without registration under the Act, and (b) (if the transfer is not made in
compliance with Rule 144) at the expense of the Holder or transferee, an opinion
of counsel reasonably satisfactory to the Company in form and substance to the
effect that such transfer may be made without registration under the Act.
Section 3.9 Rule 144 Reporting. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts 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 an offering of its Common Stock to the general public; and
(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the Exchange Act.
Section 3.10 Transfer of Registration Rights. The rights to cause the
Company to register securities granted by the Company under Sections 3.1, 3.2
and 3.3 hereof may be assigned in writing by any Holder of Registrable
Securities to a transferee or assignee of not less than Forty Thousand (40,000)
shares of the Registrable Securities (as appropriately adjusted from time to
time for stock splits and the like); provided, that such transfer may otherwise
be effected in accordance with the terms of this Agreement and applicable
securities laws; and provided further, that the Company is given written notice
by such holder of Registrable Securities at the time of or within a reasonable
time after said transfer, stating the name and address of said transferee or
assignee and identifying the securities with respect to which such registration
rights are being assigned.
Section 3.11 "Market Stand-off" Agreement.
(a) If requested by the underwriter in any registration
pursuant to Section 3.3, the Holders shall not 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 (i) such agreement shall not apply to
any shares of Registrable Securities that are included in such public offering
in accordance with the terms hereof and (ii) all executive officers and
directors of the Company, and all persons who own more than ten percent (10%) of
the issued and outstanding shares of capital stock of the Company, 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.
(b) If requested by an underwriter in any registration
pursuant to Section 3.1 or 3.2, the Company shall not sell or otherwise transfer
or dispose of any shares of the Company's capital stock during the one hundred
eighty (180) day period following the effective date of a registration statement
of the Company filed under the Act, except for sales by the Company (i) pursuant
to registrations on Form S-4 or S-8 (or any successor or similar forms thereto),
or (ii) in connection with a bona fide acquisition or strategic alliance
transaction.
Section 3.12 Additional Registration Rights. The Company has not
previously entered into any agreement granting any registration rights to any
person or entity. If on or after the date of this Agreement the Company enters
into any agreement with respect to its securities which grants more favorable
registration rights to any person or entity than those granted to the Holders
pursuant to this Agreement, this Agreement shall be deemed to be amended, as of
the date of any such agreement, to grant such more favorable registration rights
to the Holders.
ARTICLE IV
COVENANTS
Section 4.1 Transactions with Affiliates. Prior to the occurrence of an
Initial Public Offering, the Company shall not (and shall not permit any of its
subsidiaries to), without the consent of Ciba, enter into or perform any
transaction, including without limitation, the purchase, leasing, sale or
exchange of property or assets or the hiring or rendering of any service (a
"Transaction"), with any affiliate of the Company (including IOMED and
directors, officers or employees of the Company or IONLED), except at prices and
on terms not less favorable to the Company or such subsidiary than that which
would have been obtained in an arms-length transaction with a non-affiliated
party.
Section 4.2 Financial Statements. So long as Ciba holds at least five
percent (5%) of the outstanding shares of the Company's capital stock and the
Company is not otherwise publicly reporting, the Company will deliver to Ciba
the following financial statements. As soon as available and in any event within
forty five (45) days after the end of each fiscal quarter (other than the fiscal
quarter ending on the fiscal year end), the Company will deliver an unaudited
consolidated balance sheet of the Company and its subsidiaries as of the end of
such fiscal quarter and the related consolidated statements of income,
stockholders' equity and cash flows for such fiscal quarter and for the period
from the beginning of the then current fiscal year to the end of such fiscal
quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous fiscal year. As soon as
available and in any event within ninety (90) days after the end of each fiscal
year, the Company will deliver (a) the consolidated balance sheet of the Company
and its subsidiaries as of the end of such fiscal year and the related
consolidated statements of income, stockholders' equity and cash flows for such
fiscal year, setting forth in each case in comparative form the corresponding
figures for the previous fiscal year, and (b) a report thereon of independent
certified public accountants of recognized national standing selected by the
Company and stating that such consolidated financial statements fairly present
the consolidated financial position of the Company and its subsidiaries as of
the dates indicated and the results of their operations and their cash flows for
the periods indicated in accordance with generally accepted accounting
principles applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the examination by such
accountants has been made in accordance with Unites States generally accepted
auditing standards.
Section 4.3 Transfer Restrictions.
(a) Prohibition on Certain Transfers. For a period of two (2)
years from the date of this Agreement, IOMED shall not, without the prior
written consent of Ciba, make a Prohibited Transfer of any, shares of Common
Stock (or securities convertible into, exchangeable for or otherwise entitling
the holder thereof to receive shares of Common Stock) now owned or hereafter
acquired by it.
(b) Right of First Offer on Certain Transfers.
(i) Offer. Subject to Section 4.3(a), if at any time
IOMED proposes to enter into a Prohibited Transfer of any shares of Common Stock
(or securities convertible into, exchangeable for or otherwise entitling the
holder thereof to receive shares of Common Stock) now owned or hereafter
acquired by it, and the consequence of such Prohibited Transfer would be to
cause a Change of Control of the Company (any such Prohibited Transfer, a
"Transaction"), then it shall promptly forward to Ciba a written notice (the
"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 IOMED of its acceptance of the Offer.
(ii) 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), IOMED 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 4.3(b).
(iii) Survival. The offer rights of Ciba described in
this Section 4.3(b) shall survive for a period of twelve (12) months from the
effective date of termination of that certain Research and Development
Agreement, dated of even date herewith, by and between the Company, IOMED and
Ciba, and shall thereafter terminate automatically and cease to be of any
further force and effect.
Section 4.4 Preemptive Rights.
(a) At least ten (10) days prior to consummating any sale of
Securities (a "Sale"), the Company shall notify Ciba in writing of such pending
Sale (the "Sale Notice"). Each Sale Notice shall describe all of the material
terms of the Sale and of the Securities to be sold therein (including, without
limitation, the number of such Securities to be sold and the sale price). Ciba
shall have the right, exercisable for a period of ninety (90) days following its
receipt of each Sale Notice, to purchase from the Company, at the purchase price
set forth in such Sale Notice, up to a number of newly issued Securities of the
type to be sold in such Sale (which Securities shall be in addition to those
sold by the Company in such Sale) equal to the product of the Ciba Percentage
multiplied by the total number of such Securities proposed to be sold in such
Sale. Such right shall be exercised by delivering to the Company, within the
ninety (90) day period noted above, a written notice of exercise (an "Exercise
Notice"), which shall specify the number of Securities Ciba wishes to purchase
and the date on which Ciba wishes to consummate such purchase (the "Closing
Date"), which shall be no later than ten (10) business days after the later of
(i) the date of the consummation of the, Sale and (ii) the date of the Exercise
Notice.
(b) The preemptive right granted in this Section 4.4 shall
terminate upon the consummation of, and shall not be valid with respect to, the
Initial Public Offering.
(c) The closing of a purchase of Securities by Ciba pursuant
to this Section 4.4 shall take place at the principal office of the Company on
the Closing Date (or at such other time and place. as the Company and Ciba shall
agree upon). At such closing the Company shall issue and deliver the applicable
Securities and Ciba shall deliver a certified check to the Company for the
applicable purchase price. The parties shall also execute and deliver customary
closing documents, including, without limitation, investment representations.
(d) The rights of Ciba under this Section 4.4 may not be
assigned to, or exercised by, any other person or entity, other than a successor
to Ciba's Pharmaceutical Division, whether by merger, consolidation, stock sale,
asset sale or otherwise.
Section 4.5 Payment upon First Sale of Control. No later than thirty
(30) days after consummation of the first Sale of Control of the Company
occurring after March 29, 1996 in which the consideration paid by the acquiring
party or parties (the "Acquisition Consideration") is more than Seven Million
Dollars ($7,000,000) (the "First Sale of Control"), the Company shall pay to the
holders of the Ciba Shares, on a pro-rata basis, cash in an aggregate amount
equal to the product of (x) the Sale of Control Premium, multiplied by (y) the
percentage of the Ciba Shares that remain outstanding immediately prior to the
closing of the First Sale of Control. Such payment shall be paid prior and in
preference to any dividend or distribution of the assets or surplus funds of the
Company to the holders of any other shares of stock of the Company by reason of
their ownership of such stock.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of the Company. The Company
hereby represents and warrants to Ciba and IOMED as follows:
(a) Corporate Authorization. The Company has full corporate
power and authority to execute and deliver this Agreement and to perform its
respective obligations hereunder. The execution, delivery and performance by the
Company of this Agreement has been duly and validly authorized, and no
additional corporate authorization or consent is required in connection with the
execution, delivery and performance by the Company of this Agreement.
(b) Consents and Approvals. No consent, approval, waiver or
authorization is required to be obtained by the Company from, and no notice or
filing is required to be given by the Company to, or to be made by the Company
with, any federal, state, local or other governmental authority or any other
person in connection with the execution, delivery and performance by the Company
of this Agreement.
(c) Non-Contravention. The execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby does not and will not (i) violate any provision
of the charter, bylaws or other organizational documents of the Company, (ii)
conflict with, or result in the breach of, or constitute a default under, or
result in the termination, cancellation or acceleration (whether after the
filing of notice or the lapse of time or both) of any right or obligation of the
Company under, or to a loss of any benefit to which the Company is entitled
under, any agreement, contract, lease, license, note, bond, indenture or other
written document of any type, or result in the creation of any encumbrance upon
any of the assets of the Company, or (iii) violate or result in a breach of or
constitute a default under any law, rule, regulation, judgment, injunction,
order, decree or other restriction of any court or governmental authority to
which the Company is subject.
(d) Binding Effect. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and legally binding obligation
of the Company, enforceable 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 equity principles.
(e) Capitalization. The authorized capital stock of the
Company consists of Four Million (4,000,000) shares of Common Stock, $.001 par
value per share, Eight Hundred Thousand (800,000) 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. Except as set forth
in this 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
capital stock or securities convertible into or exchangeable for its capital
stock.
Section 5.2 Representations and Warranties of Ciba. Ciba hereby
represents and warrants to the Company and IOMED as follows:
(a) Corporate Authorization. Ciba has full corporate power and
authority to execute and deliver this Agreement and to perform its respective
obligations hereunder. The execution, delivery and performance by Ciba of this
Agreement has been duly and validly authorized, and no additional corporate
authorization or consent is required in connection with the execution, delivery
and performance by Ciba of this Agreement.
(b) Consents and Approvals. No consent, approval, waiver or
authorization is required to be obtained by Ciba from, and no notice or filing
is required to be given by Ciba to, or to be made by Ciba with, any federal,
state, local or other governmental authority or any other person in connection
with the execution, delivery and performance by Ciba of this Agreement.
(c) Non-Contravention. The execution, delivery and performance
by Ciba of this Agreement and the consummation by Ciba of the transactions
contemplated hereby does not and will not (i) violate any provision of the
charter, bylaws or other organizational documents of Ciba, (ii) conflict with,
or result in the breach of, or constitute a default under, or result in the
termination, cancellation or acceleration (whether after the filing of notice or
the lapse of time or both) of any right or obligation of Ciba under, or to a
loss of any benefit to which Ciba is entitled under, any agreement, contract
lease, license, note, bond, indenture or other written document of any type, or
result in the creation of any encumbrance upon any of the assets of Ciba, or
(iii) violate or result in a breach of or constitute a default under any law,
rule, regulation, judgment, injunction, order, decree or other restriction of
any court or governmental authority to which Ciba is subject.
(d) Binding Effect. This Agreement has been duly executed and
delivered by Ciba and constitutes a valid and legally binding obligation of
Ciba, enforceable 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 equity principles.
Section 5.3 Representations and Warranties of IOMED. IOMED hereby
represents and warrants to the Company and Ciba as follows:
(a) Authorization. IOMED has full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance by IOMED of this Agreement
has been duly and validly authorized, and no additional corporate authorization
or consent is required in connection with the execution, delivery and
performance by IOMED of this Agreement.
(b) Consents and Approvals. No consent, approval, waiver or
authorization is required to be obtained by IOMED from, and no notice or filing
is required to be given by IOMED to, or to be made by IOMED with, any federal,
state, local or other governmental authority or any other person in connection
with the execution, delivery and performance by IOMED of this Agreement.
(c) Non-Contravention. The execution, delivery and performance
by IOMED of this Agreement and the consummation by IOMED of the transactions
contemplated hereby does not and will not (i) violate any provision of the
articles of incorporation or bylaws of IOMED, (ii) conflict with, or result in
the breach of, or constitute a default under, or result in the termination,
cancellation or acceleration (whether after the filing of notice or the lapse of
time or both) of any right or obligation of IOMED under, or to a loss of any
benefit to which IOMED is entitled under, any agreement, contract, lease,
license, note, bond, indenture or other written document of any type, or result
in the creation of any encumbrance upon any of the assets of IOMED, or (iii)
violate or result in a breach of or constitute a default under any law, rule,
regulation, judgment, injunction, order, decree or other restriction of any
court or governmental authority to which IOMED is subject.
(d) Binding Effect. This Agreement has been duly executed and
delivered by IOMED and constitutes a valid and legally binding obligation of
IOMED, enforceable 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 equity principles.
(e) Ownership of Shares. IOMED owns of record and beneficially
the IOMED Shares, free and clear of any judgment, lien, charge, claim, security
interest or other encumbrance of any kind whatsoever, other than as set forth on
Schedule 5.3(e).
ARTICLE VI
MISCELLANEOUS
Section 6.1 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes. Without limiting the generality of the foregoing,
the provisions of Article II and Section 4.3 hereof shall be binding upon any
persons who acquire shares of Common Stock from IOMED; provided, however, that
the provisions of Section 4.3(b) shall not be binding upon any shareholders of
IOMED who acquire shares of Common Stock from IOMED pursuant to the declaration
and payment by IOMED of a dividend payable in Common Stock.
Section 6.2 Amendment and Waiver. Any term hereof may be amended and
the observance of any term hereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with (a) the
written consent of the Company, Ciba and IOMED, with respect to the terms of
Article II hereof or any other provision of this Agreement as it pertains to
such Article II, and (b) the written consent of the Company and of the Holders
of a majority of the outstanding Registrable Securities, with respect to any
other terms or provisions of this Agreement. Any amendment or waiver of this
Agreement so effected shall be binding upon the Company, Ciba, IOMED and all
Holders of Registrable Securities.
Section 6.3 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
Section 6.4 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of New York as applied to contracts among
New York residents entered into and to be performed entirely within New York.
Section 6.5 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 instrument.
Section 6.6 Notice. Any notice required under this Agreement shall be
given in writing and shall be deemed effectively given upon actual receipt if
delivered either personally (including by overnight express courier) or by
facsimile to the party to be notified or three (3) business days after deposit
with the United States Post Office by registered or certified mail, postage
prepaid (or with an equivalent independent postal service or courier) and
addressed to the party at the address last shown on the books of the Company for
such purpose or to such other address as may be designated by a party by ten
(10) days' advance notice to the Company.
Section 6.7 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
DERMION, INC., a Delaware corporation CIBA-GEIGY CORPORATION, a New
York corporation, acting through its
Pharmaceuticals Division
By: /s/ Robert J. Lollini By: /s/ James M. Callahan
Name: Robert J. Lollini Name: James M. Callahan
Title: Secretary Title:
IOMED, INC., a Utah corporation
By: /s/ Ned M. Weinshenker
Name: Ned M. Weinshenker
Title: President & CEO
THIS AGREEMENT CONTAINS CONFIDENTIAL TERMS WHICH HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
AGREEMENT
BY AND BETWEEN
IOMED, INC.
AND
LABORATOIRES FOURNIER S.C.A.
Dated as of February 20, 1996
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C> <C>
ARTICLE I. DEFINITIONS............................................................................1
ARTICLE 11. REPRESENTATIONS AND WARRANTIES.........................................................6
2.01. WARRANTIES OF IOMED..............................................................6
2.02. WARRANTIES OF FOURNIER...........................................................7
ARTICLE 111. 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
ARTICLE IX. GENERAL PROVISIONS....................................................................18
9.01. AMENDMENTS......................................................................15
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>
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 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.....****.
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 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 improvements) 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 improvements) 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
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.....****.
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.
(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 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 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.
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-non 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.
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.
(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 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.
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) 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 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
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 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
(I)-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.
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 11 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
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;
(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; 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 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 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 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
THIS AGREEMENT CONTAINS CONFIDENTIAL TERMS WHICH HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
AGREEMENT
Agreement made this 28th day of July 1993, by and between ALZA
Corporation, a Delaware corporation ("ALZA"), and Iomed, Inc., a Utah
corporation ("IOMED").
R E C I T A L S
ALZA owns and has licensed certain patents and patent applications
pertaining to products which transport compounds across a biological membrane,
such as the skin, nails or mucosal surfaces, for local or systemic therapy,
under the influence of an electric potential gradient across such membrane.
IOMED also owns and has licensed certain patents and patent applications
pertaining to products which transport compounds across a biological membrane,
such as the skin, nails or mucosal surfaces, for local or systemic therapy,
under the influence of an electric potential gradient across such membrane. Each
party is desirous of acquiring certain rights under the other party's patents
and patent applications.
NOW THEREFORE, the parties agree as follows:
1. Definitions.
1.1 "Affiliate" shall mean a corporation or any other business
entity that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with, the designated
party. "Control" shall mean ownership of at least 50% of the shares of stock
entitled to vote for the election of directors in the case of a corporation and
at least 50% of the interests in profits in the case of a business entity other
than a corporation.
1.2 "ALZA Client" shall mean any individual or organization
which has heretofore entered, or which hereafter enters, into a development
agreement with ALZA or its Affiliate for the development of an ALZA Product
which is covered -by a valid claim of at least one issued patent in the IOMED
Patents.
1.3 "ALZA Patents" shall mean ****; any United States or
foreign patents that may issue based on any of the above patents or applications
or any continuation, division, re-issue, reexamination or substitution
applications based on any of the above applications, and any patents that may
issue based on any foreign applications that have been or may be filed
corresponding to any of the above patents or patent applications. A patent shall
be considered "Expired" upon its expiration, abandonment, cancellation,
disclaimer, or declaration of invalidity or unenforceability by a court or other
authority of competent jurisdiction from which no further appeal has or can be
taken. An "Unexpired" patent means a patent which has not Expired.
1.4 "ALZA Product" shall mean any product made or sold by
ALZA, by an Affiliate of ALZA and/or by an ALZA Client which product, but for
the license set forth in Section 2, would infringe one or more claims of at
least one issued unexpired patent
1.5 "Excluded Companies" shall mean **** as any affiliate
thereof or any successor in interest thereto, and any other entity which ****.
1.6 "Field" shall mean the transport of compounds across a
biological membrane, such as skin, under the influence of an electric potential
gradient across such membrane, solely for the purpose of inducing body sweat.
Field shall not mean the transport of compounds across a biological membrane,
such as skin, under the influence of an electric potential gradient across such
membrane for the primary purpose of achieving a therapeutic effect and wherein
inducing body sweat is incidental to said therapeutic effect.
1.7 "IOMED Client" shall mean any individual or organization
which has heretofore entered, or which hereafter enters, into a development
agreement with IOMED or its Affiliate for the development of an IOMED Product
which is covered by a valid claim of at least one patent of the ALZA Patents.
1.8 "IOMED Patents" shall mean ****; any United States or
foreign patents that may issue based on any of the above patents or on any
continuation, division, reissue, reexamination or substitution applications
based on any of the above, and any patents that may issue based on any foreign
applications that have been or may be filed corresponding to any of the above
patents or patent applications. A patent shall be considered "Expired"-upon its
expiration, abandonment, cancellation, disclaimer, or declaration of invalidity
or unenforceability by a court or other authority of competent jurisdiction from
which no further appeal has or can be taken. An "Unexpired" patent means a
patent which has not Expired.
1.9 "IOMED Product" shall mean any product made or sold by
IOMED, by an Affiliate of IOMED and/or by an IOMED Client which product, but for
the license set forth in Section 3, would infringe one or more claims of at
least one issued unexpired patent in the ALZA Patents or the **** Patent.
1.10 "Net Sales" shall mean the amount received from
commercial sales of an IOMED Product by IOMED, by an IOMED Affiliate and/or by
an IOMED Client to independent, unrelated parties in bona fide arm's-length
transactions, ****.
1.11 "Payment Computation Period" shall mean each three month
period, or any portion thereof, ending March 31, June 30, September 30, or
December 31 of each year during that portion of the term of this Agreement
during which payments under Sections 4.1(a) are owed to ALZA.
1.12 "**** Patent" shall mean **** and/or any reissued or
reexamined patent based thereon. The **** Patent is licensed to ALZA outside the
Field pursuant to a license agreement with ****.
2. License to ALZA.
2.1 IOMED hereby grants to ALZA a royalty-free nonexclusive
right and license under the IOMED Patents to manufacture, have others
manufacture, use, and sell any ALZA Product. The license granted hereunder shall
be for the life of the IOMED Patents and shall include the right to sublicense
ALZA Affiliates and ALZA Clients.
2.2 ALZA shall not grant any sublicense under the IOMED
PATENTS to an Excluded Company.
3. License to IOMED.
3.1 ALZA hereby grants to IOMED a royalty-free nonexclusive
right and license under the ALZA Patents to manufacture, have others
manufacture, use, and sell any IOMED Product which utilizes **** which contains,
or which is composed of, ****. The license granted hereunder shall be for the
life of the ALZA Patents and shall include the right to sublicense IOMED
Affiliates and IOMED Clients.
3.2 ALZA hereby grants to IOMED a royalty bearing nonexclusive
right and sublicense under the **** Patent to manufacture, have others
manufacture, use, and sell any IOMED Product for use outside the Field. The
license granted hereunder shall be for the life of the **** Patent and shall
include the right to sublicense IOMED Affiliates and IOMED Clients outside the
Field.
3.3 IOMED shall not grant any sublicense under the ALZA
Patents and/or the **** Patent to an Excluded Company.
3.4 Notwithstanding the provisions of Sections 1.5 and 3.3
concerning ****, Iomed shall have the right to sublicense **** under the ALZA
Patents but only for the purpose of marketing of ****, which **** are (i) made
by IOMED or an Affiliate of IOMED, and (ii) used for **** administration of
****, optionally with co-administration of a ****, in a clinical setting.
3.5 Notwithstanding the provisions of Sections 1.5 and 3.3,
either party upon receiving written consent of the other party, which written
consent shall be given or withheld in the other party's absolute discretion, may
grant to an Excluded Company a sublicense to a patent licensed hereunder for an
explicitly identified purpose.
4. Royalties and Other Payments.
4.1 Payments.
(a) In consideration of the license to IOMED under
the **** Patent as provided for in Section 3.2, IOMED shall pay to ALZA:
A royalty payment of **** of Net Sales greater than **** per year of IOMED
Product sold by IOMED, by an IOMED Client and/or by an Affiliate of IOMED under
the license granted to IOMED under Section 3.2.
(b) ALZA shall pay to **** of all payments received
by ALZA under Section 4.1(a).
(c) Within 30 days of receipt by ALZA, ALZA shall
refund to IOMED the remaining **** of said payments made under Section 4.1(a).
(d) All payments by one party to the other under
Sections 4.1(a) and 4.1(c) shall be made in accordance with Sections 5 and 6.
5. Accounting.
5.1 Within 90 days after the end of each Payment
Computation Period IOMED shall render an accounting to ALZA with respect to all
payments due for such Payment Computation Period. Such report shall indicate for
such Payment Computation Period the dollar amount of (i) Net Sales of IOMED
Product, and (ii) the royalty payments calculated under Section 4.1(a) due and
payable to ALZA; provided, however, that if IOMED shall not have received from
any sublicensee or distributor a report of its sales, then such sales may be
included in the next quarterly report. IOMED shall keep accurate records in
sufficient detail to enable the payments due hereunder to be determined.
5.2 At ALZA's request, IOMED shall permit an
independent certified public accountant selected by ALZA to have access and
examine, once in each calendar year during regular business hours and upon
reasonable notice to IOMED, to such of the records of IOMED as may be necessary
to verify the accuracy of the reports and payments made under this Agreement,
but said accountant shall not disclose to ALZA any information except that which
should properly have been contained in such reports. The parties agree that
information furnished as a result of any such examination shall be limited to a
written statement by such certified public accountant to the effect that they
have reviewed the books of account of IOMED and either (i) that the amounts of
the payments due or charges made under this Agreement are in conformity with
such books of account and the applicable provisions of this Agreement or (ii)
setting forth any required adjustments. The fees and expenses of the accountant
performing such verification shall be borne by ALZA. If any such audit shows any
underpayment or overcharge, a correcting payment or refund shall be made within
30 days after receipt of the written statement described above. The right of
review of each quarterly account shall terminate two years after ALZA's receipt
thereof.
6. Times and Currencies of Payment.
6.1 All payments required to be made hereunder shall be made
in U.S. dollars. Payments shown by each report submitted pursuant to Section 5.1
to be due and payable by IOMED to ALZA shall accompany each such report. Any and
all taxes due or payable by or on behalf of ALZA on such payments or with
respect to the remittance thereof and required to be paid by IOMED shall be
deducted from such payments and shall be paid by IOMED to the proper taxing
authorities, and proof of payment shall be secured and sent to ALZA as evidence
of such payment.
6.2 Late Payments. All payments not made when due hereunder
shall bear interest at the ****.
7. Reexamination and Interference Regarding an ALZA Patent and/or
an IOMED Patent.
The parties shall pursue the following course of action with
respect to any Reexamination proceeding concerning either an ALZA Patent or an
IOMED Patent, any suit brought under 35 USC ss.145 concerning either an ALZA
Patent or an IOMED Patent, and/or any interference between an IOMED Patent and
an ALZA Patent. ALZA, in the case of an IOMED Patent, and IOMED, in the case of
an ALZA Patent, shall not in any way assist the US Patent Office in any such
Reexamination or any suit brought under 35 USC ss.145, unless ordered by a court
to do so. The parties agree to promptly negotiate in good faith to settle any
such interference between an ALZA Patent and an IOMED Patent, if and when an
interference is declared, in a manner consistent with the spirit and scope of
this agreement.
8. Commercialization.
8.1 Neither party shall be under any obligation to use
diligence or otherwise be under any obligation to develop, manufacture, use
or-sell any product in the United States or any foreign country.
9. Notice of Patents.
9.1 ALZA (in the case of a patent in the ALZA Patents) and
IOMED (in the case of a patent in the IOMED Patents) shall each promptly notify
the other party of the reissue, reexamination, lapse, revocation, surrender,
invalidation or abandonment of any such patent; provided, however, that neither
party shall revoke, surrender, abandon or permit to lapse any such patent
without 60 days prior written notice to the other party of its intention to do
so. In the event of such notice, the other party shall have the right to
continue the prosecution or maintenance of the patent at its own expense.
10. Effective Date and Term.
10.1 This Agreement will become effective on the day and year
written in the first paragraph of this Agreement and, unless terminated in
accordance with any of the provisions hereof, shall remain in full force and
effect for the life of the ALZA Patents, the **** Patent and IOMED Patents.
11. Termination.
11.1 Either party may, in its discretion, terminate this
Agreement in the event that the other party:
(a) breaches any material obligation hereunder and
such breach continues for a period of 60 days after written notice thereof; or
(b) enters into any proceeding, whether voluntary or
otherwise, in bankruptcy, reorganization or arrangement for the appointment of a
receiver or trustee to take possession of its assets or any other proceedings
under any law for the relief of creditors or makes an assignment for the benefit
of its creditors.
11.2 Termination of this Agreement for any reason shall be
without prejudice to:
(i) ALZA's right to receive all payments accrued
under Section 4.1(a) prior to the effective date of such termination; and
(ii) any other remedies which either party may then
or thereafter have hereunder or otherwise.
12. Assignment.
12.1 Either party may assign its rights under this Agreement
to any Affiliate or any third party with which the party is merged or
consolidated or by which the party is acquired or which purchases, directly or
indirectly, all or substantially all of its assets; provided, however, that (1)
neither party may assign its rights under this agreement to an Excluded Company
without first receiving written consent from the other party, which written
consent shall be given or withheld in the other party's absolute discretion, and
(2) any successor shall execute an agreement, in form reasonably satisfactory to
said other party assuming each of the assigning party's obligations hereunder.
ALZA (in the case of a patent within the ALZA Patents) and IOMED (in the case of
a patent within the IOMED Patents) may not otherwise assign the right, title and
interest in any such patent to a third party. This Agreement shall not otherwise
be assignable by either party without the prior written consent of the other
party.
13. Arbitration.
13.1 Disputes; Service. In case any dispute arises out of this
Agreement, the parties will endeavor to settle such dispute amicably. If the
parties fail to agree, any such dispute shall be finally settled by arbitration
conducted in San Francisco, California in accordance with the then existing
rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. The parties hereby agree that service of any notices in the course of
such arbitration at their respective addresses as provided in Section 16 of this
Agreement shall be valid and sufficient.
13.2 Arbitrators. In any arbitration pursuant to Section 13.1,
the award shall be rendered by a majority of the members of a board of
arbitration consisting of three members, all of whom will be appointed by the
parties jointly or, if the parties cannot agree as to three arbitrators within
30 days after commencement of the arbitration proceeding, one arbitrator shall
be appointed by each party within 45 days after the commencement of the
arbitration proceeding, and the third shall be appointed by mutual agreement of
the two appointed arbitrators. In the event of failure of said two arbitrators
to agree upon the third arbitrator within 75 days after commencement of the
arbitration proceeding, the third arbitrator shall be appointed by the American
Arbitration Association in accordance with its then existing rules.
Notwithstanding the forgoing, if any party shall fail to appoint an arbitrator
within the specified time period, such arbitrator as well as the third
arbitrator shall be appointed by the American Arbitration Association in
accordance with its then existing rules. For the purposes of this Section 12.2,
the "commencement of arbitration proceeding" shall be deemed to be the date upon
which a written demand for arbitration is received by one party from the other.
13.3 Costs and Attorneys Fees. In any arbitration pursuant to
Section 13, the party receiving the award shall be reimbursed for all reasonable
arbitration costs, including attorneys fees if any, by the other party.
14. Representations and Warranties.
14.1 Neither ALZA, in the case of any of the ALZA Patents and
the **** Patent, nor IOMED, in the case of any of the IOMED Patents, makes (i)
a warranty or representation as to the validity or scope of any of said patents;
or (ii) 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 a patent of a third party.
14.2 Neither ALZA, in the case of an IOMED Product, nor IOMED,
in the case of an ALZA Product, assumes any responsibility with respect to the
other party's use, sale or other disposition of any said product.
15. Patent Markings.
15.1 ALZA, in the case of an ALZA Product which is made and
sold by ALZA or an Affiliate of ALZA, agrees to mark said ALZA Product with the
word "Patent" or "Patents" and the number or numbers of the IOMED Patents
applicable thereto.
15.2 ALZA, in the case of an ALZA Product which is made or
sold by an ALZA Client or its Affiliate, agrees to advise said ALZA Client to
mark said ALZA Product with the word "Patent" or "Patents" and the number or
numbers of the IOMED Patents applicable thereto.
15.3 IOMED, in the case of an IOMED Product which is made or
sold by IOMED or an Affiliate of IOMED, agrees to mark said IOMED Product with
the word "Patent" or "Patents" and the number or numbers of the ALZA Patents and
the **** Patent applicable thereto.
15.4 IOMED in the case of an IOMED Product which is made or
sold by an IOMED Client or its Affiliate, agrees to advise said IOMED Client to
mark said IOMED Product with the word "Patent" or "Patents" and the number or
numbers of the ALZA Patents and the **** Patent applicable thereto.
16. Notices.
16.1 Any notice or other communication required or permitted
to be given to either party under this Agreement shall be in writing and shall
be delivered by hand or registered mail, postage prepaid and return receipt
requested, addressed to each party at the following addresses or such other
addresses as may be designated by notice pursuant to this Section 16:
If to IOMED: IOMED, Inc.
1290 West 2320 South
Salt Lake City, UT 84119
Attention: President
If to ALZA: ALZA CORPORATION
950 Page Mill Road
Palo Alto, CA 94304
Attention: Vice-President, Legal
Any notice or communication given in conformity with this Section 16
shall be deemed to be effective when received by the addressee, if delivered by
hand, and five days after mailing, if mailed.
17. Counterparts.
17.1 This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an-original
and all of which when taken together shall constitute this Agreement.
18. Governing Law.
18.1 This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied between residents
of that state entering into contracts wholly to be performed in that state.
19. Severability.
19.1 If any provision of this Agreement shall be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless,, continue in full force without being
impaired or invalidated in any way.
20. Amendments.
20.1 No amendment, modification or addition hereto shall be
effective or binding on either party unless 17 set forth in writing and executed
by a duly authorized representative of the party to be charged.
21. Waiver.
21.1 No waiver-of any right under this Agreement shall be
deemed effective unless contained in a writing signed by the party charged with
such a 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.
22. Headings.
22.1 The section headings contained in this Agreement are
included for convenience only and form no part of the agreement between the
parties.
23. Entire Agreement.
23.1 This Agreement constitutes the entire agreement between
the parties as to the subject matter hereof and supersedes and replaces all
other agreements, understandings or arrangements, whether oral or in writing,
between the parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed thisAgreement on the date
first set forth above. IOMED, Inc.
By: /s/ Ned M. Weinshenker
Ned M. Weinshenker
President and
Chief Executive Officer
ALZA Corporation
By: /s/ Jane E. Shaw
Jane E. Shaw
President
THIS AGREEMENT CONTAINS CONFIDENTIAL TERMS WHICH HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
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 30mi 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 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. 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 Investigation
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 ****.
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 term
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 ****.
Delivery of Product by Abbott may vary from quantities ordered by Iomed plus or
minus ****. 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 label 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 or 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
nonconformance. Failure to confirm within such **** day period shall constitute
agreement with Imo'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 Imo'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.
6.5.2 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 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 and shall have been
manufactured pursuant to current Good Manufacturing Practice, as prescribed by
regulations promulgated by the FDA. *****.
6.8.3 ****.
****.
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 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.
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.
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:
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 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.
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.
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: /s/ Illegible
By: /s/ Ned M. Weinshenker
Title: President, Hospital Products Title: President & CEO
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
March 8, 1993, is made by and between IOMED, Inc., a Utah corporation (the
"Company") and The CIT Group/Venture Capital, Inc., a New Jersey corporation
("CIT").
A. The Company desires to issue and sell to CIT, and CIT
desires to purchase from the Company, shares of the Company's common stock,
$.001 par value (the "Common Stock"), and rights to acquire additional shares of
the Common Stock, on the terms and subject to the conditions set forth in this
Agreement
Accordingly, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMMON STOCK AND COMMON STOCK RIGHTS
1.1 Common Stock. On the terms and subject to the conditions
set forth in this Agreement, at the Closing (as defined below) the Company
agrees to sell to CIT, and CIT agrees to purchase from the Company, the number
of shares of Common Stock set forth below CIT's name on the signature page of
this Agreement. At the Closing, title to such shares of Common Stock shall pass
to CIT, who, as record and beneficial owner, shall thereafter be entitled to all
rights with respect to its ownership of such shares.
1.2 Common Stock Rights.
(a) Each share of Common Stock purchased by CIT
hereunder shall be accompanied by a contingent right (a "Common Stock Right") to
receive from the Company on March 8. 1994, automatically, without any further
action being required on the part of CIT and without the payment of any
consideration in addition to the Purchase Price (as defined below), the
Applicable Number (as defined below) of newly issued shares of Common Stock, in
the event, but only in the event, that the closing of an initial public offering
of the Company's Common Stock that meets the conditions set forth in Section
1.2(b) below has not occurred prior to such date.
(b) Each Common Stock Right shall automatically
terminate and cease to be of any further force and effect, without any liability
on the part of the company or any of its officers or directors, upon the closing
of the initial public offering of the Company's Common Stock in which the
Company receives proceeds (net of any underwriting discounts and commissions but
prior to the deduction of any other offering expenses) in excess of $5,000,000
and in which the public offering price is not less than $2.00 per share (as
adjusted to reflect stock splits, combinations or the like).
(c) As used herein, "Applicable Number" shall be the
number of shares equal to the product of one Dollar ($1.00) divided by the
"Conversion Price." The "Conversion Price" shall initially be One Dollar
($1.00); provided, however, that in the event that, on or before March 8, 1994,
the Company shall issue shares of its Common Stock, options or warrants thereon,
or securities convertible into or exchangeable for its Common Stock, in a
transaction the primary purpose of which is to raise capital for a price per
share (the "Subsequent Issue Price") less than the Conversion Price in effect
immediately prior to such issuance, the Conversion Price shall be adjusted by
multiplying such conversion Price by a fraction (1) 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 Company for the total number of shares so issued
would purchase at such Conversion Price, and (2) the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
issue plus the number of such shares of Common Stock so issued or sold.
(d) For purposes of determining a new Conversion
Price pursuant to Section 1.2(c) above, shares of Common Stock issuable upon the
exercise or conversion of outstanding securities of the Company which are, by
their terms, exercisable or convertible into Common Stock shall be taken into
account but only to the extent that (i) such securities have been exercised,
converted or exchanged or (ii) the consideration to be paid upon such exercise
or conversion per share of underlying Common Stock is less than (including zero)
or equal to the Conversion Price.
(e) No fractional shares shall be issuable upon
maturity of the Common Stock Rights held by CIT. In lieu thereof, the Company
shall round up to the nearest whole number of shares the aggregate number of
shares issuable upon maturity of the Common Stock Rights held by CIT.
(f) The number of shares of Common Stock issuable
upon maturity of the Common Stock Rights shall be equitably adjusted to account
for any stock splits, combinations or the like.
1.3 No Rights as Shareholder. The Common Stock Rights shall
not entitle CIT to any rights as a shareholder of the Company until such time,
if ever, that shares of Common Stock are issued to CIT pursuant to the maturity
of such Common Stock Rights.
1.4 Purchase Price. The purchase price for the Common Stock
and the accompanying Common Stock Rights being purchased hereunder shall be Two
Dollars ($2.00) per unit (the "Purchase Price"), each unit consisting of one
share of Common Stock and one Common Stock Right.
1.5 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of the Company on
March 8, 1993, or on such later date as may be mutually agreed upon by the
parties. At the Closing, the Company shall deliver to CIT one or more
certificates evidencing the shares of Common Stock being purchased by it
hereunder against receipt from CIT of a check, made payable to the Company, in
an amount equal to the Purchase Price multiplied by the number of shares of
Common Stock and accompanying Common Stock Rights being purchased by it. In
addition, at the Closing (i) the Company shall deliver to CIT completed,
executed copies of SBA Form 480 and SBA Form 652; and (ii) CIT shall have
received an executed copy of a Redemption Rights Agreement in substantially the
form attached hereto as Exhibit A.
ARTICLE II
REPRESENTATIONS,_WARRANTIES AND COVENANTS OF THE COMPANY
The Company hereby represents, warrants and covenants to CIT
as follows:
2.1 Organization, etc. The Company is a corporation duly
organized, validly existing and in 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.
2.2 Authorization, etc. 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
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights and by general equitable principles.
2.3 Valid Issuance. The shares of Common Stock being purchased
by CIT hereunder, when issued, sold and delivered in accordance with the terms
hereof for the consideration expressed herein, and the shares of Common Stock,
if any, that are issued upon the maturity of the Common Stock Rights, when
issued and delivered in accordance with the terms hereof, will be duly and
validly issued, fully paid and nonassessable and, based in part upon the
representations of CIT in this Agreement, will be issued in compliance with
applicable state and federal securities laws.
2.4 No Violation. Neither the execution and delivery of this
Agreement by the Company nor its performance and consummation of the
transactions contemplated hereby (including the issuance of the Common Stock
underlying the Common Stock Rights) will violate (a) any provision of the
Articles of Incorporation or the Bylaws of the Company, (b) any statute or law
or any judgment, decree, order, regulation or rule of any court or governmental
agency that is applicable to the Company, or (c) any material agreement to which
the Company is a party.
2.5 Capitalization. As of the date hereof, the authorized
capital stock of the Company consists solely of (i) 15,000,000 shares of Common
Stock, $.001 par value per share, and (ii) 4,215,618 shares of preferred stock,'
$.001 par value per share (the "Preferred stock"). Immediately following the
Closing, after giving effect to the transactions contemplated hereby (other than
the issuance of shares of Common Stock upon the maturity of the Common Stock
Rights), the issued and outstanding capital stock of the Company will consist
solely of 8,157,096 shares of Common Stock and 3,407,057 shares of Preferred
Stock. As of January 29, 1993, options to purchase 1,322,576 shares of Common
Stock, and a warrant to purchase 10,000 shares of Common Stock, were
outstanding. Except for (i) the options and warrants set forth above and (ii)
the Common Stock Rights issued hereunder and pursuant to the Stock Purchase
Agreement, dated as of February 19, 1993, by and between the Company and the
Investors named therein (the "Prior Agreement"), the Company does not have
outstanding any rights (either 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 capital stock or securities convertible into or
exchangeable for its capital stock. Except for the Shareholder Agreement, dated
as of August 4, 1987, by and between the Company, Stephen C. Jacobsen, Stephen
H. Ober and the Investors named therein, a copy of which has previously been
provided to CIT, the Company is not a party to, or aware of, any stockholders'
agreement, voting trust, proxy or similar arrangement relating to the Company or
its capital stock.
2.6 Reports and Financial Statements.
(a) CIT heretofore has been furnished with complete
and correct copies of (i) the unaudited balance sheet of the Company as of
December 31, 1992 and the related income statements and statements of cash flows
for the six months then ended, and (ii) the audited balance sheets of the
Company as of June 30, 1992 and 1991 and the related income statements and
statements of cash flows for the fiscal years then ended.
(b) Each of the financial statements referred to in
(a) above was prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods, except that the
financial statements referred to in (a)(i) above are subject to year end audit
adjustments and do not include footnotes which might be required by such
accounting principles. 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.
2.7 Material Adverse Change. There has been no material
adverse change in the business, properties or financial condition of the Company
since December 31, 1992.
2.8 Other Documents. CIT heretofore has been furnished with
complete and correct copies of (i) the Articles of Incorporation and the Bylaws
of the Company, (ii) the Prior Agreement, and (iii) the Preferred Stock Purchase
Agreement, dated as of August 4, 1987, by and between the Company and the
Investors named therein.
2.9 Environmental Protection. The Company has obtained all
material permits, licenses and other authorizations that are required under
applicable federal, state and local laws including, without limitation,
regulations, codes, plans, orders, decrees, judgments, injunctions, notices or
demand letters issued, entered, promulgated or approved thereunder relating to
pollution control or hazardous substances (the "Environmental Laws"), including,
without limitation, emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic, or hazardous
substances or wastes into the environment (including, without limitation,
ambient air, surface water, ground water, land surface, or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants,
chemicals, or industrial, toxic, or hazardous substances or wastes. The Company
is in material compliance with all terms and conditions of such permits,
licenses and authorizations, and is in material compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws. There
is no pending or, to the best knowledge of the Company, threatened, civil or
criminal litigation, notice of violation or lien, or administrative proceeding
relating to Environmental Laws involving the Company. The Company has not, to
the best of its knowledge, transported hazardous substances or arranged for the
transportation of hazardous substances to any location which is the subject of
federal, state, provincial or local enforcement actions or other investigations
which could reasonably be expected to lead to materially adverse claims against
the Company for clean-up costs, remedial work, damages to natural resources or
personal injury.
2.10 Small Business Concern. The information provided by the
Company on SBA Forms 480 and 652 delivered in connection herewith is true and
correct as of the date of such forms.
2.11 Use of Proceeds. The proceeds from the sale of the Common
Stock issued hereby will be used solely for general corporate purposes in
connection with its primary business activity. No portion of the proceeds will
be used (i) to provide capital to a corporation licensed under the Small
Business Investment Act of 1958, as amended, or (ii) outside the United States
(except (x) to acquire abroad materials and industrial property rights for a
domestic operation or (y) for transfer to a controlled foreign subsidiary, so
long as at least 51% of the assets and activities of the Company will remain
within the United States). The Company's primary business activity does not
involve, directly or indirectly, providing funds to others, the purchase or
discounting of debt obligations, factoring or long-term leasing or equipment
with no provision for maintenance or repair, and the Company is not classified
under Major Group 65 (Real Estate) of the SIC Manual.
2.12 SBIC Compliance Information. Upon request, the Company
promptly (and in any event within 20 days of such request) will furnish to CIT
all information necessary in order to enable CIT to prepare and file SBA Form
684 and any other information requested or required by any governmental
authority asserting jurisdiction over CIT. The Company will at all times comply
with the nondiscrimination requirements of 13 C.F.R. Parts 112 and 113.
2.13 Conversion. Pursuant to a Conversion Agreement, dated as
of February 18, 1993, by and between the Company and the Investors named
therein, the promissory notes previously issued by the Company to such
Investors, in the aggregate principal amount of $750,000, have been converted
into shares of Common Stock.
2.14 Disclosure. No representation or warranty by the Company
contained in this Agreement, nor, to the best of the Company's knowledge, any
other written statement or certificate furnished to CIT pursuant hereto (when
read together and as supplemented in the second proviso below) contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading in light of
the circumstances under which they were made; provided, however, it is
understood that any projections or other forward-looking information contained
therein represent the Company's good faith estimate under the circumstances
based on assumptions which the Company believes are reasonable, and the Company
does not represent or warrant that such projections or future events will occur;
and provided further, that CIT acknowledges the disclosures made by IOMED with
respect to (i) the status of the onychomychosis project and (ii) the patent
issues with ALZA Corporation, and agrees that such disclosures shall constitute
supplements to the other written statements and certificates furnished to CIT
pursuant hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CIT
CIT hereby represents and warrants to the Company as follows:
3.1 It is experienced in evaluating and investing in emerging
companies such as the Company.
3.2 It is acquiring the Common Stock and the accompanying
Common Stock Rights being issued pursuant to this Agreement (collectively, the
"Securities"), for its own account and not with a view to, or for resale in
connection with, any distribution. It understands that the Securities have not
been registered under the Securities Act of 1933, as amended (the "Act"), by
reason of a specific exemption from the registration provisions of the Act which
depends upon, among other things, the bona fide nature of the investment intent
as expressed herein.
3.3 It acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Act or an exemption from
such registration is available. It is aware of the provisions of Rule 144
promulgated under the Act and the limitations on resales of securities imposed
thereby.
3.4 It understands that no public market now exists for any of
the securities issued by the Company and that there can be no assurances that-a
public market will ever exist for the Securities.
3.5 It has had an opportunity to discuss the Company's
business, management and financial affairs with its management and an
opportunity to review the Company's facilities. It understands that such
discussions were intended to describe the aspects of the Company's business and
prospects which the Company believes to be material but were not necessarily a
thorough or exhaustive description.
3.6 It is a sophisticated investor with such knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of a prospective investment in the Securities and who is
capable of bearing the economic risks of such investment.
3.7 It, both by itself and through its agents, has been solely
responsible for its "due diligence" investigation of the Company and its
management and business, for the analysis of the merits and risks of this
investment and of the fairness and desirability of the terms of the investment;
provided, however, that the representations, warranties and covenants of the
Company herein are absolute regardless of any such investigation or analysis.
3.8 It has had the opportunity to be advised by legal counsel
of its own choice in connection with the purchase of the Securities and has
either been advised by such counsel or concluded that such advice is not
required. It acknowledges that Morrison & Foerster is acting sole y as counsel
for the Company in connection therewith.
3.9 It acknowledges that the Common Stock issued hereunder,
including the shares of Common Stock, if any, issued upon maturity of the Common
Stock Rights, shall be endorsed with the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED EXCEPT (i)
PURSUANT TO A REGISTRATION STATEMENT UNDER THE ACT WHICH HAS BECOME EFFECTIVE
AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC
EXEMPTION FROM REGISTRATION UNDER THE ACT BUT ONLY UPON A HOLDER HEREOF FIRST
HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE CORPORATION, OR OTHER
COUNSEL ACCEPTABLE TO THE CORPORATION, THAT THE PROPOSED DISPOSITION IS
CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE ACT AS WELL AS ANY APPLICABLE
"BLUE SKY" OR SIMILAR SECURITIES LAW.
The Company need not register a transfer of any of the
Securities, unless the condition specified in the foregoing legend is satisfied.
The Company may also instruct its transfer agent not to register the transfer of
any of the Securities unless the condition specified in the foregoing legend is
satisfied.
3.10 It acknowledges that in no event will all or any portion
of the Common Stock Rights acquired by it hereunder be assignable separate from
the accompanying share(s) of Common Stock.
ARTICLE IV
REGISTRATION RIGHTS
4.1 Definitions. As used in this Article IV:
(a) The term "Registrable Securities" means the
Common Stock issued hereunder and issuable upon maturity of the Common Stock
Rights issued hereunder, excluding in all cases, however, any Registrable
Securities sold by a person in a transaction in which his rights under this
Article IV are not assigned; provided, however, that such shares of Common Stock
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.
(b) The term "Form S-311 means such form under the
Act as i-h effect on the date hereof or any registration form under the 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.
(c) The term "Holder" means CIT and any other person
or entity that acquires any Registrable Securities in compliance with Sections
3.9 and 4.6 hereof.
(d) The term "Initiating Holders" means any Holder or
Holders of not less than (i) 500,000 shares of Registrable Securities (as
adjusted for stock splits, combinations and the like), if measured prior to, the
maturity of the Common Stock Rights, or (ii) 1,000,000 shares of Registrable
Securities (as adjusted for stock splits, combinations and the like), if
measured after the maturity of the Common Stock Rights.
(e) The term "SEC" means the Securities and Exchange
commission or any successor agency thereto.
4.2 Requested Registration.
(a) In case the Company shall receive from Initiating
Holders, at any time after the earlier of (i) one hundred eighty (180) days
following the first registered public offering of Company's Common Stock,
regardless of whether such offering meets the threshold size and per share price
levels set forth in Section 1.2 above, and (ii) March 8, 1996, a written request
that the Company effect any registration, qualification or compliance with
respect to all of the Registrable Securities then held by such Initiating
Holders, or any portion thereof the sale of which is reasonably expected to
yield gross proceeds to the Initiating Holders of at least $500,000, the Company
will:
(i) give written notice of the proposed
registration, qualification or compliance to all other Holders within ten (10)
days after receipt thereof; and
(ii) use its diligent best efforts to
effect, as soon as practicable, all such registrations, qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all of the Registrable Securities held by such Initiating
Holders, together with all of the Registrable Securities of any Holder or
Holders who joins in such request in a written request received by the Company
within thirty (30) days after such written notice is given; provided, that the
Company shall not be obligated to take any action to effect any such
registration, qualification, or compliance pursuant to this Section 4.2:
(A) In any particular jurisdiction
in which the--Company would be required to execute a general consent to service
of process, to register as a dealer, or to cause any officer or employee of the
Company to register as a salesman in effecting such registration, qualification
or compliance;
(B) Within one hundred eighty (180)
days immediately following the effective date of any registration statement
pertaining to an underwritten public offering of securities of the Company for
its own account;
(C) After the Company has effected
one (1) such registration pursuant to this Section 4.2;
(D) If the Company shall furnish to
such Holders a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company or its shareholders for a registration
statement to be filed in the near future, then the Company's obligation to use
its best efforts to register, qualify or comply under this Section 4.2 shall be
deferred for a period not to exceed one hundred eighty (180) days from the date
of receipt of written request from the Initiating Holders; or
(E) If taking any such action could
result in a registration statement being declared effective within one hundred
twenty (120) days of the effective date of any registration statement filed
pursuant to Section 7.2 of that certain Preferred Stock Purchase Agreement,
dated as of August 4, 1987, by and between the Company, Motion Control, Inc. and
the investors named therein (the "Preferred Stock Purchase Agreement").
Subject to the foregoing, the Company will use its best
efforts to file a registration statement covering the Registrable Securities as
soon as practicable after receipt of the request or requests of the Initiating
Holders.
(b) The Initiating Holders shall include in their
request made pursuant to this Section 4.2 the name, if any, of the underwriter
or underwriters that such Initiating Holders would propose, with the consent of
the Company (which consent shall not be unreasonably withheld), to employ in
connection with the public offering proposed to be made pursuant to the
registration requested, and the Company shall include such information in the
written notice referred to in clause (i) of Section 4.2(a). The right of any
Holder to registration pursuant to this Section 4.2 shall be conditioned on such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting. The Company shall (together with all
Holders proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting in the manner set forth above.
Notwithstanding any other provision of this Section 4.2, if the underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Initiating
Holders shall so advise all Holders of Registrable Securities and the number of
shares of Registrable Securities that may be included in the registration and
underwriting, as determined by the underwriters, shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the respective
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.
4.3 Form S-3 Registration. In case the Company shall receive
from any Holder or Holders 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 Holder or
Holders joining in such request as are specified in a written request given
within twenty (20) 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 4.3: (i) if
the Company is not qualified as a registrant entitled to use Form S-3; (ii) if
the Holders propose to sell Registrable Securities at an aggregate sales price
to the public of less than $500,000; (iii) in any particular jurisdiction in
which the Company would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance and in which
it has not already filed such a consent; (iv) if the Company has effected one
such registration pursuant to this Section 4.3 during the preceding twelve (12)
months; (v) if the Company has effected a registration on Form S-1 within the
preceding one hundred eighty (180) days, or (vi) if the date of such written
request occurs more than seven (7) years after the date hereof. Subject to the
foregoing, the Company shall file a 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.
Registrations effected pursuant to this Section 4.3 shall not
be counted as a Request for Registration effected pursuant to Section 4.2
hereof.
4.4 Company Registration.
(a) If at any time, or from time to time, prior to
the date seven (7) years after the date hereof, 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 (i) 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 he sale of
Registrable Securities, or (ii) a registration pursuant to Sections 4.2 or 4.3
hereof, the company will:
(i) promptly give to each Holder written
notice thereof; and
(ii) 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 such written notice is given on the same terms and
conditions as the Common Stock, if any, otherwise being sold through the
underwriter in such registration.
(b) 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 clause (i) of Section 4.4(a). In such event the right of any Holder
to registration pursuant to this Section 4.4 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.
(c) Notwithstanding any other provision of this
section 4.4, if the underwriter determines that marketing factors require a
limitation of the number of shares 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.
(d) Notwithstanding any other provision of this
Section 4.4, no Holder shall be entitled to include any Registrable Securities
in a registration pursuant to this Section 4.4 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 the
Preferred Stock Purchase Agreement. 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.
4.5 Expenses of Registration. All expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Article IV, 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 for counsel to the selling shareholders.
4.6 Transfer of Registration Rights. The rights to cause the
Company to register securities granted by the Company under Sections 4.2, 4.3
and 4.4 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 may otherwise
be effected in accordance with the terms of this Agreement and applicable
securities laws; and provided further, that the Company is given written notice
by such holder of Registrable Securities at the time of or within a reasonable
time after said transfer, stating the name and address of, said transferee or
assignee and identifying the securities with respect to which such registration
rights are being assigned.
4.7 "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:
(a) 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;
(b) such agreement shall not apply to any shares of
Registrable Securities that are included in such public offering in accordance
with the terms hereof; and
(c) 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.
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.
MISCELLANEOUS
5.1 Notice. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile or sent by certified, registered, or express mail, postage prepaid,
and shall be deemed given when so delivered personally or by facsimile or, if
mailed, three (3) days after the date of deposit in the United States mails, as
follows:
(i) if to the Company, to:
IOMED, Inc.
1290 West 2320 South, Suite A
Salt Lake City, Utah 81119
Attn: President
with a copy to:
Morrison & Foerster
345 California Street
San Francisco, California 94104
Attn: Bruce A. Mann, Esq.
(ii) if to CIT, to:
The CIT Group/Venture Capital, Inc.
650 CIT Drive
Livingston, NJ 07039
Attn: Mr. Colby Collier
with a copy to:
Schulte, Roth & Zabel
900 Third Avenue
New York, NY 10022
Attn: Marc Weingarten, Esq.
5.2 Governing Law. This Agreement shall be governed by the
laws of the State of Utah, excluding the conflicts of laws provisions thereof.
5.3 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
5.4 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.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
IOMED, INC.
a Utah corporation
By: /s/ Ned M. Weinshenker
Ned M. Weinshenker
Chief Executive Officer
THE CIT GROUP/VENTURE CAPITAL, INC.,
a New Jersey corporation
By: /s/ Colby W. Collier
Name: Colby W. Collier
Its: Vice President
500,000 shares of Common Stock
500,000 Common Stock Rights
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
February 19, 1993, is made by and between IOMED, Inc., a Utah corporation (the
"Company"), Newtek Ventures, a California limited partnership ("Newtek"), MBW
Venture Partners, Limited Partnership, a Michigan limited partnership
("MBWVP"),, Michigan Investment Fund, L.P., a Michigan limited partnership
("MIF"), Interhealth Limited Partnership, a California limited partnership
("Interhealth"),, and Vadex-Panama, S.A., a Panamanian corporation ("Vadex").
MBWVP and MIF shall sometimes be referred to collectively herein as "MBW."
Newtek, MBW, Interhealth and Vadex shall sometimes be referred to individually
herein as an "Investor," and collectively as the "Investors."
A. The Company desires to issue and sell to the Investors, and
the Investors desire to purchase from the Company, shares of the Company's
common stock, $.001 par value (the "Common Stock"), and rights to acquire
additional shares of the Common Stock,, on the terms and subject to the
conditions set forth in this Agreement.
Accordingly, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMMON STOCK AND COMMON STOCK RIGHTS
1.1 Common Stock. On the terms and subject to the conditions set
forth in this Agreement, at the Closing (as defined below) the Company agrees to
sell to the Investors, and the Investors agree, severally and not jointly, to
purchase from the Company, the number of shares of Common Stock set forth below
each Investor's name on the signature pages of this Agreement. At the Closing,
title to such shares of Common Stock shall pass to the Investors, who, as record
and beneficial owners, shall thereafter be entitled to exercise all rights with
respect to their ownership of such shares.
1.2 Common Stock Rights.
(a) Each share of Common Stock purchased by the
Investors hereunder shall be accompanied by a contingent right (a "Common Stock
Right") to receive from the Company on February 19, 1994, automatically, without
any further action being required on the part of any such Investor and without
the payment of any additional consideration other than the Purchase Price (as
defined below), the Applicable Number (as defined below) of newly issued shares
of Common Stock, in the event, but only in the event, that the closing of an
initial public offering of the Company's Common Stock that meets the conditions
set forth in Section 1.2(b) below has not occurred prior to such date.
(b) Each Common Stock Right shall automatically
terminate and cease to be of any further force and effect, without any liability
on the part of the Company or any of its officers or directors, upon the closing
of the initial public offering of the Company's Common Stock in which the
Company receives proceeds (net of any underwriting discounts and commissions but
prior to the deduction of any other offering expenses) in excess of $5,000,000
and in which the public offering price is not less than $2.00 per share (as
adjusted to reflect stock splits, combinations or the like).
(c) As used herein, "Applicable Number" shall be the
number of shares equal to the product of One Dollar ($1.00) divided by the
"Conversion Price." The "Conversion Price" shall initially be One Dollar
($1.00); provided, however, that in the event that, on or before February 14,
1994, the Company shall issue shares of its Common Stock, or securities
convertible into or exchangeable for its Common Stock, in a transaction the
primary purpose of which is to raise capital-for a price per share (the
"Subsequent Issue Price") less than the Conversion Price in effect immediately
prior to such issuance, the Conversion Price shall be adjusted by multiplying
such Conversion Price by a fraction (1) 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 Company for the total number of shares so issued would purchase
at such Conversion Price, and (2) the denominator of which shall be the number
of shares of Common Stock outstanding immediately prior to such issue plus the
number of such shares of Common Stock so issued or sold.
(d) For purposes of determining a new Conversion
Price pursuant to Section 1.2(c) above, shares of Common Stock issuable upon the
exercise or conversion of outstanding securities of the Company which are, by
their terms, exercisable or convertible into Common Stock shall be taken into
account but only to the extent that (i) such securities have been exercised,
converted or exchanged or (ii) the consideration to be paid upon such exercise
or conversion per share of underlying Common Stock is less than (including zero)
or equal to the Subsequent Issue Price.
(e) No fractional shares shall be issuable upon
maturity of the Common Stock Rights held by any Investor. In lieu thereof, the
Company shall round up to the nearest whole number of shares the aggregate
number of shares issuable upon maturity of the Common Stock Rights held by each
Investor.
(f) The number of shares of Common Stock issuable
upon maturity of the Common Stock Rights shall be equitably adjusted to account
for any stock splits, combinations or the like.
1.3 No Rights as Shareholder. The Common Stock Rights shall
not entitle any holder thereof to any rights as a shareholder of the Company
until such time, if ever, that shares of Common Stock are issued to such holder
pursuant to the maturity of such Common Stock Rights.
1.4 Purchase Price. The purchase price for the Common Stock
and the accompanying Common Stock Rights being purchased hereunder shall be Two
Dollars ($2.00) per unit (the "Purchase Price"), each unit consisting of one
share of Common Stock and one Common Stock Right.
1.5 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of the Company on
February 19, 1993, or on such later date as may be mutually agreed upon by the
parties. At the Closing, the Company shall deliver to each Investor one or more
certificates evidencing the shares of Common Stock being purchased by such
Investor hereunder against receipt from such Investor of a check, made payable
to the Company, in an amount equal to the Purchase Price multiplied by the
number of shares of Common Stock and accompanying Common Stock Rights being
purchased by such Investor; provided, however, that the consideration payable by
Newtek and MBWVP shall be payable first by the . cancellation of any outstanding
indebtedness owed to such Investors by the Company at the Closing, and the
balance, if any, shall be payable in cash.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of the
Investors as follows:
2.1 Organization, etc. The Company is a corporation duly
organized, validly existing and in 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.
2.2 Authorization, etc. 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
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors, rights and by general equitable principles.
2.3 Valid Issuance. The shares of Common Stock being purchased
by the Investors hereunder, when issued, sold and delivered in accordance with
the terms hereof for the consideration expressed herein, and the shares of
Common Stock, if any, that are issued upon the maturity of the Common Stock
Rights, when issued and delivered in accordance with the terms hereof, will be
duly and validly issued, fully paid and nonassessable and, based upon the
representations of the Investors in this Agreement, will be issued in compliance
with applicable state and federal securities laws.
2.4 No Violation. Neither the execution and delivery of this
Agreement by the Company nor its performance and consummation of the
transactions contemplated hereby will violate (a) any provision of the Articles
of Incorporation or the Bylaws of the Company or (b) any statute or law or any
judgment, decree, order, regulation or rule of any court or governmental agency
that is applicable to the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors, on behalf of itself only and not on
behalf of any of the other Investors, hereby represents and warrants to the
Company as follows:
3.1 The Investor is experienced in evaluating and investing in
emerging companies such as the Company.
3.2 The Investor is acquiring the Common Stock and the
accompanying Common Stock Rights being issued pursuant to this Agreement
(collectively, the "Securities"), for its own account and not with a view to, or
for resale in connection with, any distribution. The Investor understands that
the Securities have not been registered under the Securities Act of 1933, as
amended (the "Act"), by reason of a specific exemption from the registration
provisions of the Act which depends upon, among other things, the bona fide
nature of the investment intent as expressed herein.
3.3 The Investor acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Act or an exemption from
such registration is available. The Investor is aware of the provisions of Rule
144 promulgated under the Act and the limitations on resales of securities
imposed thereby.
3.4 The Investor Understands that no public market now exists
for any of the securities issued by the Company and that there can be no
assurances that a public market will ever exist for the Securities.
3.5 The Investor has had an opportunity to discuss the
Company's business, management and financial affairs with its management and an
opportunity to review the Company's facilities. The Investor understands that
such discussions were intended to describe the aspects of the Company's business
and prospects which it believes to be material but were not necessarily a
thorough or exhaustive description.
3.6 The Investor is a sophisticated investor with such
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of a prospective investment in the Securities
and who is capable of bearing the economic risks of such investment.
3.7 The Investor, both by itself and through its agents, has
been solely responsible for the Investor's "due diligence,, investigation of the
Company and its management and business, for the analysis of the merits and
risks of this investment and of the fairness and desirability of the terms of
the investment; that in taking any action or performing any role relative to the
arranging of the proposed investment, such Investor has acted solely in the
Investor's interest, and that neither the Investor nor any of its agents or
employees has acted as an agent of the company, or as an issuer, underwriter,
broker, dealer or investment advisor relative to any of the Securities.
3.8 The Investor has had the opportunity to be advised by
legal counsel of the Investor's own choice in connection with the purchase of
the Securities and has either been advised by such counsel or concluded that
such advice is not required. The Investor acknowledges that Morrison & Foerster
is acting solely as counsel for the Company in connection therewith.
3.9 Each Investor acknowledges that the Common Stock issued
hereunder, including the shares of Common Stock, if any, issued upon maturity of
the Common Stock Rights, shall be endorsed with the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE -ACT-), AND NAY NOT BE SOLD, ASSIGNED OR TRANSFERRED EXCEPT (i)
PURSUANT TO A REGISTRATION STATEMENT UNDER THE ACT WHICH HAS BECOME EFFECTIVE
AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC
EXEMPTION FROM REGISTRATION UNDER THE ACT BUT ONLY UPON A HOLDER HEREOF FIRST
HAVING OBTAINED THE WRITTEN OPINION OF. COUNSEL To THE CORPORATION, OR OTHER
COUNSEL ACCEPTABLE To THE CORPORATIONR THAT THE PROPOSED DISPOSITION IS
CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE ACT AS WELL AS ANY APPLICABLE
"BLUE SKY" OR SIMILAR SECURITIES LAW.
The Company need not register a transfer of any of the
Securities, unless the conditions specified in the foregoing legend is
satisfied. -The Company may also instruct its transfer agent not to register the
transfer of any of the Securities unless the conditions specified in the
foregoing legend is satisfied.
3.10 Each Investor acknowledges that in no event will all or
any portion of the Common Stock Rights acquired by it hereunder be assignable
separate from the accompanying share(s) of Common Stock.
ARTICLE IV
REGISTRATION RIGHTS
4.1 Definitions. As used in this Article IV:
(a) The term "Registrable Securities" means the
Common Stock issued hereunder and issuable upon maturity of the Common Stock
Rights issued hereunder, and any like securities as may be issued in the future
to The CIT Group/Venture Capital, Inc. or any of its affiliates pursuant to a
written agreement which incorporates the terms of this Article IV, excluding in
all cases, however, any Registrable Securities sold by a person in a transaction
in which his rights under this Article IV are not assigned; provided, however,
that such shares of Common Stock 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.
(b) The term "Form S-31, means such form under the
Act as in effect on the date hereof or any registration form under the 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.
(c) The term "Holder" means each of the Investors and
any other person or entity that acquires any Registrable Securities in
compliance with Sections 3.9 and 4.6 hereof.
(d) The term "Initiating Holders" means any Holder or
Holders of not less than (i) 550,000 shares of Registrable Securities (as
adjusted for stock splits, combinations and the like), if measured prior to the
maturity of the Common Stock Rights, or (ii) 1,100,000 shares of Registrable
Securities (as adjusted for stock splits, combinations and the like), if
measured after the maturity of the Common Stock Rights.
(e) The term "SEC" means the Securities and Exchange
Commission or any successor agency thereto.
4.2 Requested Registration.
(a) In case the Company shall receive from Initiating
Holders, at any time after one hundred eighty (180) days following the first
registered public offering of Company's Common Stock, regardless of whether such
offering meets the threshold size and per share price levels set forth in
Section 1.2 above, a written request that the Company effect any registration,
qualification or compliance with respect to all of the Registrable Securities
then held by such Initiating Holders, the Company will:
(i) give written notice of the proposed
registration, qualification or compliance to all other Holders within ten (10)
days after receipt thereof; and
(ii) use its diligent best efforts to
effect, as soon as practicable, all such registrations, qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all of the Registrable Securities held by such Initiating
Holders, together with all of the Registrable Securities of any Holder or
Holders who joins in such request in a written request received by the Company
within thirty (30) days after such written notice is given; provided, that the
Company shall not be obligated to take any action to effect any such
registration, qualification, or compliance pursuant to this Section 4.2:
(A) In any particular jurisdiction
in which the Company would be required to execute a general consent to service
of process, to register as a dealer, or to cause any officer or employee of the
Company to register as a salesman in effecting such registration, qualification
or compliance;
(B) Within one hundred eighty (180)
days immediately following the effective date of any registration statement
pertaining to an underwritten public offering of securities of the Company for
its own account;
(C) After the Company has effected
one (1) such registration pursuant to this Section 4.2;
(D) If the Company shall furnish to
such Holders a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company or its shareholders for a registration
statement to be filed in the near future, then the Company's obligation to use
its best efforts to register, qualify or comply under this Section 4.2 shall be
deferred for a period not to exceed one hundred eighty (180) days from the date
of receipt of written request from the Initiating Holders; or
(E) If taking any such action could
result in a registration statement being declared effective within one hundred
twenty (120) days of the effective date of any registration statement filed
pursuant to Section 7.2 of that certain Preferred Stock Purchase Agreement,
dated as of August 4, 1987, by and between the Company, Motion Control, Inc. and
the investors named therein (the "Preferred Stock Purchase Agreement").
Subject to the foregoing, the Company will use its best
efforts to file a registration statement covering the Registrable Securities as
soon as practicable after receipt of the request or requests of the Initiating
Holders.
(b) The Initiating Holders shall include in their
request made pursuant to this Section 4.2 the name, if any, of the underwriter
or underwriters that such Initiating Holders would propose, with the consent of
the Company (which consent shall not be unreasonably withheld), to employ in
connection with the public offering proposed to be made pursuant to the
registration requested, and the Company shall include such information in the
written notice referred to in clause (i) of Section 4.2(a). The right of any
Holder to registration pursuant to this Section 4.2 shall be conditioned on such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting. The Company shall (together with all
Holders proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting in the manner set forth above.
Notwithstanding-any other provision of this Section 4.2, if the underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Initiating
Holders shall so advise all Holders of Registrable Securities and the number of
shares of Registrable Securities that may be included in the registration and
underwriting as determined by the underwriters, shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the respective
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.
4.3 Form S-3 Registration. In case the Company shall receive
from any Holder or Holders 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 Holder or
Holders joining in such request as are specified in a written request given
within twenty (20) 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 4.3: (i) if
the Company is not qualified as a registrant entitled to use Form S-3; (ii) if
the Holders propose to sell Registrable Securities at an aggregate sales price
to the public of less than $500,000; (iii) in any particular jurisdiction in
which the Company would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance and in which
it has not already filed such a consent; (iv) if the Company has effected one
such registration pursuant to this Section 4.3 during the preceding twelve (12)
months; (v) if the Company has effected a registration on Form S-1 within the
preceding one hundred eighty (180) days, or (vi) if the date of such written
request occurs more than seven (7) years after the date hereof. Subject to the
foregoing, the -Company shall file a 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.
Registrations effected pursuant to this Section 4.3 shall not be
counted as a Request for Registration effected pursuant to Section 4.2 hereof.
4.4 Company Registration.
(a) If at Any time, or from time to time, prior to
the date seven (7) years after the date hereof, 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 (i) 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 he sale of
Registrable Securities, or (ii) a registration pursuant to Sections 4.2 or 4.3
hereof, the company will:
(i) promptly give to each Holder written
notice thereof; and
(ii) 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 such written notice is given on the same terms and
conditions as the Common Stock, if any, otherwise being sold through the
underwriter in such registration.
(b) 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 clause (i) of Section 4.4(a). In such event the right of any Holder
to registration pursuant to this Section 4.4 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.
(c) Notwithstanding any other provision of this
Section 4.4, if the underwriter determines that marketing factors require a
limitation of the number of shares 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.
(d) Notwithstanding any other provision of this
Section 4.4. no Holder shall be entitled to include any Registrable Securities
in a registration pursuant to this Section 4.4 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 the
Preferred Stock Purchase Agreement. 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.
4.5 Expenses of Registration. All expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Article IV, 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 for counsel to the selling shareholders.
4.6 Transfer of Registration Rights. The rights to cause the
Company to register securities granted by the Company under Sections 4.2, 4.3
and 4.4 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 may otherwise
be effected in accordance with the terms of this Agreement and applicable
securities laws; and provided further, that the Company is given written notice
by such holder of Registrable Securities at the time of or within a reasonable
time after said transfer, stating the name and address of said transferee or
assignee and identifying the securities .-.with respect to which such
registration rights are being assigned.
4.7 "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:
(a) 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;
(b) such agreement shall not apply to any shares of
Registrable Securities that are included in such public offering in accordance
with the terms hereof; and
(c) 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.
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.
MISCELLANEOUS
5.1 Notice. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered per.-tonally, by
facsimile or sent by certified, registered, or express mail, postage prepaid,
and shall be deemed given when so delivered personally or by facsimile or, if
mailed, three (3) days after the date of deposit in the United States mails, as
follows:
(i) if to the Company, to:
IOMED, Inc.
1290 West 2320 South, Suite A
Salt Lake City, Utah 81119
Attn: President
with a copy to:
Morrison & Foerster
345 California Street
San Francisco, California 94104
Attn: Bruce A. Mann, Esq.
(ii) if to the Investors, to:
their addresses specified on the records of the Company
5.2 Governing Law. This Agreement shall be governed by the
laws of the State of Utah, excluding the conflicts of laws provisions thereof.
5.3 Counterparts. This Agreement may be executed in any of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
5.4 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.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
IOMED, INC.
a Utah Corporation
By: /s/ Ned M. Weinshenker
Ned M. Weinshenker
Chief Executive Officer
NEWTEK VENTURES
a California limited partnership
By: /s/ Peter J. Wardle
Name: Peter J. Wardle
Its: General Partner
250,000 shares of Common Stock
250,000 Common Stock Rights
MBW VENTURE PARTNERS, LIMITED PARTNERSHIP, a Michigan
Limited partnership
By: MBW Management Inc.
Its: Authorized Agent
By: /s/ James R. Weering
Name: James R. Weering
Its: Managing Director
192,000 shares of Common Stock
192,000 Common Stock Rights
MICHIGAN INVESTMENT FUND, L.P.,
a Michigan limited partnership
By: MBW Management Inc.
Its: Authorized Agent
By: /s/ James R. Weering
Name: James R. Weering
Its: Managing Director
57,500 shares of Common Stock
57,500 Common Stock Rights
INTERHEALTH LIMITED
PARTNERSHIP, a California
limited partnership
By: /s/ Alejandro Zaffaroni Ph.D.
Name: Alejandro Zaffaroni Ph.D.
Its: General & Limited Partner
175,000 shares of Common Stock
175,000 Common Stock Rights
VADEX-PANAMA, S.A., a
Panamanian corporation
By: /s/ Gustavo Nicolich
Name: Gustavo Nicolich
Its President
325,000 shares of Common Stock
325,000 Common Stock Rights
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
This assignment and assumption agreement is entered into among
Vadex-Panama, S.A., a Panamanian corporation "Vadex"), Interhealth Limited
Partnership; a California limited partnership ("Interhealth"), and IOMED, Inc. ,
a Utah corporation ("IOMED").
1. Interhealth hereby assigns to Vadex all of its rights,
interests and obligations under the Stock Purchase Agreement, dated February 19,
1993, among IOMED, Vadex, Interhealth, and the other parties thereto (the
"Purchase Agreement").
2. In consideration of the foregoing, Vadex agrees to assume
and be bound by all the liabilities, obligations and duties of Interhealth under
the Purchase Agreement.
3. Vadex also agrees to be bound by all the provisions of the
Purchase Agreement relating to the foregoing assigned rights, interests and
obligations.
4. IOMED acknowledges and agrees to the assignment and
assumption on the terms set forth above.
IN WITNESS WHEREOF,, the Parties hereto have entered into this
Agreement as of this 12th day of March, 1993.
VADEX-PANAMA, S.A., a Panamanian corporation
By: /s/ Gustavo Nicolich
Title: President
VADEX-PANAMA, S.A.
INTERHEALTH LIMITED PARTNERSHIP,
a California limited partnership
By: /s/ Alejandro Zaffaroni Ph.D.
Title: General and Limited Partner
INTERHEALTH LIMITED
IOMED, INC., a Utah corporation
By: /s/ Ned M. Weinshenker
Title: CEO
THIS AGREEMENT CONTAINS CONFIDENTIAL TERMS WHICH HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
LICENSE AGREEMENT
between
IOMED, INC.
and
UNIVERSITY OF UTAH RESEARCH FOUNDATION
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TABLE OF CONTENTS
<S> <C>
Article No..................................................................................................Page No.
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
B. 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
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
</TABLE>
<PAGE>
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 2 granted to LICENSEE
pursuant to this Agreement, an infringement of any claim or claims of LICENSOR'S
PATENT RIGHTS.
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
Govermental Records Access and Management Act (GRAMA) and that pursuant to
GRAMA, confidential information of LICENSEE dis- closed to LICENSOR must be in
written or other tangible form and 4 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 5
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
Agree@.;,ient 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., LICEN- SEE shall
provide LICENSOR with a written inventory of all PRODUCTS in process of
manufacture, in use or in 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 usingfcounsel 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
(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 8 (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 with evidence of such infringement. LICENSOR and
LICENSEE shall cooperate and shall then attempt to terminate such in fringement.
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 TDluch
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 d-efin(@d 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 f ees 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
18.1 Any payment, notice or other communication required or permitted
to be given to either party hereto shall be deemed to have 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 re- quired 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.
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.
IOMED, INC. UNIVERSITY OF UTAH
RESEARCH FOUNDATION
By: /s/ Ned M. Weinshenker By: /s/ Richard K. Koehn
(Signature) (Signature)
Name: Ned M. Weinshenker Name: Richard K. Koehn
(Please Print)
Title President Title: President
Date: Date:
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDDED, 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 COUNSEI, 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
Initial Exercise Price: $__*__ per share *As determined by Appendix 3
-
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 Warranty 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 by
delivering in its entirety subject to provisions in Appendix 3, 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 Companv 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.
1.4 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.
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, 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.
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 an 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.
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 or indirectly, 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
transferees) (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 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 it in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought.
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"
By: /s/ Stephen J. Ober
Name: Stephen J. Ober
Title: President
By: /s/ Mary A. Crowther
Name: Mary A. Crowther
Title: Assistant Secretary
1988 STOCK OPTION PLAN
IOMED INC.
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1. Purpose. This 1988 Stock Option Plan (the "Plan") is intended as an
incentive to employees (whether or not officers) of IOMED, INC., a Utah
corporation (the "Corporation"), or its subsidiaries, and to others who perform
substantial services for the Corporation, by enabling them to acquire or
increase their proprietary interest in the Corporation through ownership of the
Corporation's common shares. The purposes of the Plan are to enable the
Corporation to retain valuable employees, to attract new employees, to obtain
the services of experts and consultants, to encourage the sense of
proprietorship of such persons in the Corporation, and to stimulate the active
interest of such persons in the development and financial success of the
Corporation.
2. Status of Options. Options granted under the Plan shall constitute
either incentive stock options ("Incentive Stock Options") within the meaning of
Section 422A of the Internal Revenue Code, as amended (the "Code"), or options
which are not incentive stock options ("Non-Incentive Stock Options"). The
Incentive Stock Options and the Non-Incentive Stock Options which may be granted
under the Plan are referred to herein collectively as "Options".
3. Administration. The Plan shall be administered by a committee (the
"Committee") appointed by the Board of Directors of the Corporation. The
Committee shall consist of at least three (3) members of the Board of Directors
and may include the entire Board of Directors; provided, that no member of the
Committee shall be eligible to receive Options under the Plan while serving as a
member of the Committee. The Board of Directors may from time to time, remove
members from, or add members to, the Committee. Vacancies on the Committee,
howsoever caused, shall be filled by the Board of Directors from the Board of
Directors. The Committee shall select one of its members as Chairman, and shall
hold meetings at such times and places as it shall select. Acts approved by a
majority of the Committee at meetings at which a quorum is present, or acts
reduced to and approved in writing by all of the members of the Committee, shall
be the valid acts of the Committee. The Committee shall have full and complete
power and authority, without further approval by the Board of Directors, to
designate those persons who shall receive Options pursuant to the Plan; to grant
Options pursuant to the Plan; to determine whether Option's granted pursuant to
the Plan shall be Incentive Stock Options or Non-Incentive Stock Options; to
establish the dates upon which Options granted pursuant to the Plan shall be
exercisable, the option purchase price of the Corporation's common shares which
are subject to Options granted under the Plan, and all other terms and
conditions concerning the Options or their exercise; to interpret the provisions
and supervise the administration of the Plan; and to otherwise further the
purposes of the Plan. The interpretation and construction by the Committee of
any provision of the Plan, or of any Option granted under it, shall be final,
conclusive and binding upon the Corporation and all persons who are granted
Options under the Plan. No member of the Board of Directors or the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan, or any Option granted under it.
4. Eligibility.
(a) The persons who shall be eligible to receive Incentive
Stock Options under the Plan shall be such full or part time employees
(including officers, whether or not they are directors) of the Corporation, or
of its subsidiaries, as the Committee shall select from time to time. Except as
otherwise specifically provided herein, no employee shall be eligible to receive
Incentive Stock Options under the Plan if, at the date such Options are granted,
such employee owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation, or of any
parent or subsidiary corporation, including stock attributable to the employee
pursuant to Section 425(d) of the Code; provided, however, that any employee who
would have been otherwise eligible to receive Incentive Stock Options under the
Plan, but for the fact that such employee owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock, as
provided above, shall be eligible to receive Incentive Stock Options under the
Plan if, at the time such Incentive Stock Options are granted, the option
purchase price for the Corporation's common shares subject to such Option is at
least 110% of the fair market value such common shares, and if the Incentive
Stock Option granted to such employee is not exercisable after the expiration of
five (5) year from the date such Option is granted.
(b) The persons who shall be eligible to receive Non-Incentive
Stock Options under the Plan shall be such persons (whether or not employees of
the Corporation) who perform substantial services for or on behalf of the
Corporation or any of its subsidiaries, affiliates or any entity in which the
Corporation has an interest, all as the Committee shall select from time to
time.
5. Common Shares Subject to the Plan. The shares which shall be subject
to Options granted pursuant to the Plan shall be the Corporation's authorized
but unissued or reacquired common shares, par value $.001 per share. The
aggregate number of common shares which may be issued pursuant to Options
granted under the Plan shall not exceed One Million (1,000,000) shares (the
"Shares"). The limitations established by each of the preceding sentences shall
be subject to adjustment as provided in paragraph 8 hereof. In the event that
any outstanding Option under the Plan for any reason expires or is terminated,
the Shares allocable to the unexercised portion of such Option may again be made
the subject of an Option under the Plan.
6. Terms and Conditions of Incentive Stock Options. Incentive Stock
Options granted pursuant to the Plan shall be authorized by the Committee and
shall be evidenced by agreements which shall be in such form and which shall
contain such provisions consistent with the Plan as the Committee shall deem
necessary and appropriate. Each Incentive Stock Option granted pursuant to the
Plan shall comply with and be subject to the following terms and conditions:
(a) Employment Arrangement. The granting of an Incentive Stock
Option to any employee shall not impose upon the Corporation any obligation to
retain the employee in its employ for any period.
(b) Number of Shares. Each Incentive Stock Option shall state
the number of Shares to which it pertains.
(c) Option Price. Each Incentive Stock Option shall state the
option purchase price of the Shares subject to such Options, which shall not be
less than 100% of the fair market value of the Shares on the date of the
granting of the Incentive Stock Option. The fair market value of the Shares
shall be determined by the Committee in good faith, by reference to market
quotations, appraisals by disinterested parties, or such other means as the
Committee shall deem appropriate. The option purchase price of Shares subject to
Incentive Stock Options granted to any employee who owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation, shall be determined in accordance with paragraph 4(a)
hereof.
(d) Medium and Time of Payment. The option purchase price of
Incentive Stock Options shall be payable upon the exercise of the Option and may
be paid by cash or check, or by the delivery to the Corporation of such other
form of consideration, including but not limited to common shares of the
Corporation or options to purchase common shares of the Corporation, provided
that no type of consideration which would disqualify the Option as an Incentive
Stock Option under Section 422A of the Code shall be approved by the Committee.
The Incentive Stock Option shall be exercised by written notice to the
Corporation, in the form attached hereto as Exhibit "All (or in such other form
as the Committee shall, in its sole discretion, deem acceptable) at its
principal office. Such notice shall state the optionee's election to exercise
the Option, shall state the exact number of Shares as to which exercise is being
made and shall be accompanied by payment of the full purchase price of such
Shares. The Incentive Stock Option shall be deemed exercised upon the date the
Corporation actually receives the notice and payment required by this paragraph
6(d). The Corporation shall deliver to the person exercising the Incentive Stock
Option a certificate or certificates representing the Shares covered by such
Option as soon as practical after the required notice and payment have been
received by the Corporation.
(e) Terms and Exercise. Each Incentive Stock Option granted
pursuant to the Plan may be exercised only as provided in the agreement executed
by the Corporation and the employee, which shall contain such provisions as to a
vesting schedule and other terms or conditions for exercise of the Incentive
Stock Options as the Committee may, in its sole discretion, determine and
approve. Unless otherwise provided in the Plan or the agreement between the
employee and the Corporation, any portion of the Incentive Stock Option not in
fact exercised in the year in which it vests shall not lapse and may be
exercised at any time during the remaining term of the Incentive Stock Option.
Notwithstanding anything in the Plan to the contrary, each Incentive Stock
Option granted under the Plan shall terminate and may not be exercised to any
extent after the expiration of ten (10) years from the date such Option is
granted. No Incentive Stock Option or installment thereof shall be exercisable
except as to whole shares, and fractional share interests shall be disregarded.
During the lifetime of the employee, the Incentive Stock Option shall be
exercisable only by the employee. No Incentive Stock Option shall be assignable
or transferable by the employee, other than by will or the laws of descent and
distribution, as provided in paragraph 6(g) hereof.
(f) Termination of Employment Except Disability or Death. If
the employee shall cease to be employed by the Corporation, or by one of its
subsidiaries, for any reason except disability or death, Incentive Stock Options
granted to such employee, to the extent vested upon the date such employee's
employment terminates and to the extent not theretofore exercised, shall be
exercisable at any time within three (3) months after such cessation of
employment. The transfer of the employee from the employ of the Corporation to a
subsidiary, or vice versa, or from one subsidiary to another, shall not be
deemed a cessation of employment; provided, however, that Incentive Stock
Options shall not be exercisable, under any condition, after the expiration of
ten (10) years from the date they are granted. Whether authorized leave of
absence or absence for military or governmental service shall constitute
termination of employment, for the purposes of the Plan, shall be determined by
the Committee, which determination shall be final and conclusive.
(g) Death or Disability of Employee or Transfer of Incentive
Stock Options. If the employee shall die or become disabled (within the meaning
of Section 422A(c)(7) of the Code) while in the employ of the Corporation, or a
subsidiary, and shall not have theretofore fully exercised Incentive Stock
Options granted under the Plan, such Incentive Stock Options may be exercised,
to the extent that the employee's right to exercise such Incentive Stock Option
had accrued and become vested upon the date of his death or disability, at any
time within twelve (12) months after the employee's death or disability, by the
employee or his legal representative, in the case of disability, or by the
personal representatives, executors or administrators of the employee's estate,
in the case of death, or by any person or persons who shall have acquired the
Incentive Stock Option directly from the employee by bequest or inheritance,
provided, that under no circumstances may an Incentive Stock Option granted
under the Plan be exercisable after the expiration of ten (10) years from the
date upon which such Option was granted.
(h) Value of Shares Issued. Notwithstanding anything to the
contrary provided herein, the aggregate fair market value, as determined at the
time an Incentive Stock Option is granted, of the Shares with respect to which
Incentive Stock Options granted under this Plan are exercisable for the first
time by the optionee during any calendar year (under all incentive stock option
plans of the Corporation and its parent and subsidiary corporations) shall not
exceed $100,000.
7. Terms and Conditions of Non-Incentive Stock Options. Non-Incentive
Stock Options granted pursuant to the Plan shall be authorized by the Committee
and shall be evidenced by agreements which shall be in such form and which shall
contain such provisions consistent with the Plan as the Committee shall deem
necessary and appropriate. Each Non-Incentive Stock Option granted pursuant to
the Plan shall comply with and be subject to the following terms and conditions:
(a) Number of Shares. Each Non-incentive Stock Option shall
state the number of shares to which it pertains.
(b) Option Price. Each Non-Incentive Stock Option shall state
the option purchase price for the shares covered by such Option, which shall not
be less than the par value of the shares.
(c) Medium and Time of Payment. The option purchase price of
Non-Incentive Stock Options shall be paid by the delivery to the Corporation of
such consideration as the Committee shall determine. The Non-Incentive Stock
Options shall be exercised by written notice to the Corporation, in the form
attached hereto as Exhibit "B" (or in such other form as the Committee shall, in
its sole discretion, deem acceptable) at its principal office. Such notice shall
state the optionee's election to exercise the Non-Incentive Stock Option, shall
state the exact number of Shares as to which exercise is being made and shall be
accompanied by payment of the full option purchase price of such shares. The
Non-incentive Stock Option shall be deemed exercised upon the date the
Corporation actually receives the notice and payment required by this paragraph
7(c). The Corporation shall deliver to the person exercising the Non-Incentive
Stock Option a certificate or certificates representing the shares covered by
such option as soon as practical after the required notice and payment have been
received by the Corporation.
(d) Expiration of Non-Incentive Stock Options. No
Non-Incentive Stock Option granted pursuant to the Plan shall be exercisable by
the optionee, in whole or in part, at any time after the expiration of ten (10)
years from the date such option is granted.
(e) Terms and Exercise. Each Non-Incentive Stock Option
granted pursuant to the Plan may be exercised only as provided in the agreement
executed by the Corporation and the optionee, which shall contain such
provisions as to a vesting schedule and other terms or conditions for exercise
of the Non-Incentive Stock Option as the Committee may, in its sole discretion,
determine and approve. Unless otherwise provided in the Plan or in the agreement
between the optionee and the Corporation, any portion of a Non-Incentive Stock
Option not in fact exercised in the year in which it vests shall not lapse and
may be exercised at any time during the remaining term of such Non-Incentive
Stock Option. No Incentive Stock Option or installment thereof shall be
exercisable except as to whole shares, and fractional share interests shall be
disregarded.
8. Recapitalization of the Corporation. Subject to any required action
by the shareholders of the Corporation, the number of Shares covered by an
Option, and the option purchase price of Shares subject to Options, shall be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding common shares of the Corporation resulting from a subdivision or
consolidation of such shares or the payment of a share dividend or any other
increase or decrease in the number of such shares effected without receipt of
consideration by the Corporation.
If the Corporation shall be the surviving corporation in any
merger or consolidation, each outstanding Option shall pertain and apply to the
number of securities to which the owner of the number of Shares subject to an
Option would have been entitled had the optionee been the owner of such Shares
on the date of the merger or consolidation. In the event of a dissolution or
liquidation of the Corporation, or the sale of all or substantial all of the
assets of the Corporation, or a merger or consolidation in which the Corporation
is not the surviving corporation (collectively "Terminating Events"), the
optionee shall have the right, for a period of thirty (30) days after the date
upon which the Corporation shall, at its sole election, send to the optionee (by
certified United States mail, with postage prepaid and return receipt requested)
written notice of such Terminating Event, to exercise his Option in whole or in
part without regard to any vesting schedule otherwise applicable to the Option.
If the optionee shall fail to exercise his Option within such thirty (30) day
period, the Option (or any unexercised portion thereof) shall terminate and
shall be of no further force or effect. If the Corporation elects not to give
the optionees written notice of the Terminating Event, then each outstanding
Option shall pertain and apply to the number of securities or other property to
which the owner of the number of Shares subject to an Option would have been
entitled had the optionee been the owner of such Shares on the date of the
Terminating Event.
In the event of a change in the Shares as presently
constituted, the securities resulting from any such change shall be deemed to be
Shares within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock
or securities of the Corporation, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive.
Except as hereinbefore expressly provided in this paragraph 8,
the optionee shall have no rights by reason of any subdivision or consolidation
of shares of stock of any class or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class or by
reason of any dissolution, liquidation, merger, consolidation or spin-off of
assets or stock of another corporation, and any issue by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of the Shares subject to the Option.
The grant of an Option pursuant to the Plan shall not affect
in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or
any part of its business or assets.
9. Rights as a Shareholder. An optionee or an authorized transferee of
an Option shall have no rights as a shareholder of the Corporation with respect
to any Shares covered by an Option until the date of the issuance of a
certificate representing such Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such certificate is issued, except as provided in paragraph 8 hereof.
10. Modification, Extension and Renewal of Options. The Committee may
modify, extend or renew outstanding Options granted under the Plan, or accept
the surrender of outstanding Options (to the extent not theretofore exercised);
provided, however, that in regard to Incentive Stock Options such actions shall
be taken subject to the terms and conditions and strictly in accordance with the
statutorily imposed limitations of Section 422A of the Code. Notwithstanding the
foregoing, however, without the consent of the optionee, no modification of an
Option shall materially alter or impair-any rights or obligations under any
Option theretofore granted under the Plan.
11. Restrictive Legends. Each certificate representing Shares issued
pursuant to the exercise of an Option may have impressed thereupon such
restrictive legends as the Committee shall deem appropriate.
12. Right of First Refusal. Until the date which shall occur 120 days
after the effective date of the first registration statement relating to the
common shares of the Corporation which is filed by the Corporation on a form of
general applicability with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended, no optionee who acquires Shares pursuant
to the exercise of an Option granted under the Plan shall sell, transfer,
pledge, encumber or otherwise hypothecate (collectively a "Sale") any of such
Shares except in accordance with the provisions of this paragraph 12.
(i) Any optionee who desires to engage in a Sale of any Shares
acquired pursuant to the exercise of an Option granted under the Plan shall give
the Corporation written notice of the proposed Sale, which written notice shall
set forth, in detail, all of the terms and conditions of the proposed Sale.
(ii) For a period of 30 days from and after the date upon
which the Corporation actually receives the written notice required by paragraph
12(i) hereof, the Corporation, or its designee(s), shall have the right to
purchase all (but not less than all) of the Shares described in such written
notice for a purchase price which shall be equal to either the cash purchase
price specified in such notice or, in the event that the proposed Sale provides
for noncash consideration, an amount of cash which shall be equal to the fair
market value (as determined in good faith by the Committee) of such noncash
consideration.
(iii) If the Corporation, or its designee(s) shall fail to
exercise its right to purchase the Shares described in the written notice within
such 30 day period, the optionee shall be free to engage in and carry out the
Sale, but only upon the exact terms and conditions specified in the written
notice.
13. Loans. The Corporation shall have the right, but not the
obligation, to loan to any optionee an amount equal to all or a portion of the
option purchase price for Shares subject to Options granted under the Plan in
order to enable the optionee to exercise all or a portion of an Option. All
loans made to optionees pursuant to this paragraph 13 shall be made upon such
terms and conditions as the Committee shall recommend, shall provide for
adequate security for the repayment of such loan and shall be made only upon the
specific approval of the Board of Directors of the Corporation. The Corporation
shall not make loans to any officer, director or control person of the
Corporation who is an optionee unless each such loan is approved by the
shareholders of the Corporation.
14. Other Provisions. Options granted under the Plan shall contain such
other provisions, including, without limitation, restrictions upon the exercise
of the Option, as the Committee shall deem advisable.
15. Term of Plan. Options may be granted pursuant to the Plan from time
to time within a period of ten (10) years from the date this Plan is adopted by
the Board of Directors, or the date upon which this Plan is approved by the
shareholders of the Corporation, whichever shall first occur.
16. Indemnification of Committee. The members of the Committee shall be
indemnified by the Corporation, to the full extent permitted by the Articles of
Incorporation and Bylaws of the Corporation and the laws of the State of Utah,
against the reasonable expense, including attorneys' fees, actually or
necessarily incurred by them in connection with the defense or settlement of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be made a party by reason of any action taken or failure
to act under or in connection with the Plan or any Option granted thereunder.
17. Amendment of the Plan. The Board of Directors may, from time to
time, insofar as permitted by law suspend or discontinue the Plan or revise or
amend it in any respect whatsoever with respect to any Shares not at the time
subject to Options at the time of such action; provided, however, that, without
approval of the shareholders of the Corporation, no such revision or amendment
shall change the number of Shares subject to the Plan, change the designation of
the class of persons eligible to receive Options, decrease the price at which
Options may be granted, or remove the administration of the Plan from the
Committee.
18. Application of Funds. The proceeds received by the Corporation from
the sale of Shares pursuant to Options will be used for general corporate
purposes.
19. No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon the optionee to exercise such Option.
20. Approval of Shareholders. The Plan shall be approved by the holders
of a majority of the outstanding shares of each class of stock of the
Corporation, which approval must occur within the period beginning twelve months
before and ending twelve months after the date the Plan is adopted by the Board
of Directors.
21. Severability. It is the intent of the Board of Directors that
Incentive Stock Options granted pursuant to the terms of this Plan shall qualify
for treatment under Section 422A of the Code as incentive stock options. To that
end, should any provision of this Plan be determined to invalidate such
incentive stock option treatment, such provision shall not be a part of -this
Plan, and shall be severable from and shall not affect the remaining provisions
of this Plan.
CERTIFICATE OF CORPORATE SECRETARY
I hereby certify that the foregoing 1988 Stock Option Plan was
approved and adopted by the Board of Directors of lomed, Inc. on April 15, 1988.
/s/ Joel D. Kell
Secretary
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 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.
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
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 hot 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.
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. 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 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 con- ducted 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. 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 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
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 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 heir 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 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 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:
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.
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, 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-an, 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:
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 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.
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:
7.1 Definitions. For purposes of this Section 7:
(a) The terms "register", "registered," and of
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 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 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 Hulders, 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.
(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 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.
(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.
(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 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 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 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, 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;
(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
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.
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:
(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.
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 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.
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 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 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 supersedes 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: /s/ Steven A. Orth By: /s/ Peter J. Wardle
Print Name: Steven A. Orth Print Name: Peter J. Wardle
Title: President Title:General Partner
"MCI" MBW VENTURE PARTNERS
PARTNERSHIP
MOTION CONTROL, INC. By: MBW VENTURES, INC.
By: /s/ Stephen C. Jackson By: /s/ Robert J. Harrington
Print Name: Stephen C. Jackson Print Name: Robert J. Harrington
Title: Title:VIce President
MICHIGAN INVESTMENT FUND L.P.
By: MBW VENTURES, INC.
By: /s/ Robert J. Harrington
Print Name: Robert J. Harrington
Title: Vice President
UTAH TECHNOLOGY VENTURE FUND I
By: Impetus, Inc.
By: /s/ Richard Shanama
Print Name: Richard Shanama
Title: President
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, Trustee of
Ned M. Weinshenker Profit
Sharing Plan
<TABLE>
<CAPTION>
EXHIBIT 11.1
IOMED, Inc.
Statement Re Computation of Earnings Per Share
<S> <C> <C> <C>
Year ended June 30,
1995 1996 1997
----------------------------------------------------
Average shares outstanding 9,780,843 12,622,167 14,925,234
Dilutive common stock equivalents:
Conversion of preferred stock - 1,079,132 -
Conversion of convertible debt - 1,147,541 -
Exercise of options and warrants - 367,945 -
------------- ----------- -----------
Total shares 9,780,843 15,216,785 14,925,234
============= =========== ===========
Net income (loss) $(659,000) $1,743,000 $(14,038,000)
============= =========== ===========
Earnings (loss) per share $(.07) $.11 $(.94)
============= =========== ===========
</TABLE>
List of Subsidiaries of Iomed, Inc.
Name of Subsidiary State of Incorporation
- ------------------ ----------------------
Dermion, Inc. Delaware
Consent of Counsel
The undersigned hereby consents to the refernece to the firm of Parsons
Behle & Latimer under the caption "Legal Matters" in the Registration Statemnt
on Form S-1 of Iomed, Inc.
/s/ Parsons Behle & Latimer
---------------------------
Parsons Behle & Latimer
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference of our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
August 4, 1997, with respect to the consolidated financial statements included
in the Registration Statement (Form S-1) and related prospectus of IOMED, Inc.
for the registration of its common stock.
/s/ Ernst & Young LLP
Salt Lake City, Utah
October 2, 1997
Consent of Counsel
The undersigned hereby consents to the refernece to the firm of Workman
Nydegger & Seeley under the caption "Experts" in the Registration Statemnt on
Form S-1 of Iomed, Inc.
/s/ Workman Nydegger & Seeley
---------------------------
Workman Nydegger & Seeley
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001041652
<NAME> IOMED, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1.000
<CASH> 6,346,000
<SECURITIES> 0
<RECEIVABLES> 1,217,000
<ALLOWANCES> (28,000)
<INVENTORY> 714,000
<CURRENT-ASSETS> 8,261,000
<PP&E> 3,885,000
<DEPRECIATION> 3,500,000
<TOTAL-ASSETS> 8,664,000
<CURRENT-LIABILITIES> 1,117,000
<BONDS> 15,240,000
900,000
0
<COMMON> 15,000
<OTHER-SE> (9,491,000)
<TOTAL-LIABILITY-AND-EQUITY> 8,664,000
<SALES> 7,483,000
<TOTAL-REVENUES> 9,283,000
<CGS> 3,338,000
<TOTAL-COSTS> 8,327,000
<OTHER-EXPENSES> 15,059,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 242,000
<INCOME-PRETAX> (14,077,000)
<INCOME-TAX> 5,000
<INCOME-CONTINUING> (14,082,000)
<DISCONTINUED> 44,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,038,000)
<EPS-PRIMARY> (.94)
<EPS-DILUTED> (.94)
</TABLE>
