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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 2, 1999
INTEG INCORPORATED
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(Exact name of registrant as specified in its charter)
Minnesota 0-28420 41-1670176
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(State or other jurisdiction (Commission file (IRS employer
of incorporation) number) identification No.)
2800 Patton Road, St. Paul, Minnesota 55113
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(Address of principal executive offices)
Registrant's telephone number, including area code: (651) 639-8816
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Not Applicable
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(Former name or former address, if changed since last report)
Page 1 of 3 Pages
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Item 5. Other Events.
On April 2, 1999, Integ Incorporated, a Minnesota corporation ("Integ")
entered into a License and Development Agreement (the "License Agreement") with
Amira Medical, a Delaware corporation ("Amira") pursuant to which they formed a
strategic alliance to jointly develop a new generation of home glucose
monitoring tests utilizing interstitial fluid ("ISF"). Under the License
Agreement, products to be developed will combine Integ's ISF collection
technology with Amira's glucose measurement technologies. Both Integ and Amira
will contribute resources to the development of the product, which will be
manufactured by Integ and commercialized by Amira.
The foregoing summary of the License Agreement is qualified in its
entirety by reference to the text of the License Agreement, a copy of which is
filed as Exhibit 10.1 hereto and which is incorporated herein by reference.
In connection with the License Agreement, Integ and Amira entered into
an Option Agreement (the "Option Agreement"), dated as of April 2, 1999,
pursuant to which Amira granted to Integ, an option, exercisable at a future
date, to merge under certain circumstances with a wholly owned, newly formed
subsidiary of Amira for a total consideration of 2 million shares of Amira
common stock and $20 million cash, subject to certain conditions. The Option
Agreement was entered into as a condition and inducement to Integ's and Amira's
willingness to enter into the License Agreement.
The foregoing summary of the Option Agreement is qualified in its
entirety by reference to the text of the Option Agreement, a copy of which is
filed as Exhibit 10.2 hereto and which is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) - (b) Not applicable.
(c) Exhibits
Exhibit No. Description
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10.1 License and Development Agreement, dated April 2, 1999, by and
between Amira Medical. and Integ Incorporated
10.2 Option Agreement, dated April 2, 1999, by and between Amira
Medical and Integ Incorporated
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 8, 1999
INTEG INCORPORATED
By: /s/ Susan L. Critzer
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Susan L. Critzer
Interim President
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INDEX TO EXHIBITS
Exhibit
Number Item
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10.1 License and Development Agreement, dated April 2, 1999, by and
between Amira Medical. and Integ Incorporated
10.2 Option Agreement, dated April 2, 1999, by and between Amira Medical
and Integ Incorporated
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Exhibit 10.1
DEVELOPMENT AND LICENSE AGREEMENT
This DEVELOPMENT AND LICENSE AGREEMENT (the "Agreement"), effective as of
April 2, 1999 ("Effective Date"), is made by and between Amira Medical, a
Delaware corporation, with a principal place of business at 4742 Scotts Valley
Drive, Scotts Valley, CA 95066 ("Amira"), and Integ Incorporated, a Minnesota
corporation, with a principal place of business at 2800 Patton, St. Paul, MN
55113 ("Integ"). The parties agree as follows:
1. DEFINITIONS
"Acquired" shall have the meaning as set forth in Section 4.4.3.
"Affiliate(s)" shall mean all corporations or business entities which,
directly or indirectly, are controlled by a Party. The meaning of the word
"control" shall mean the ownership of 50% or more of the voting shares or
interests of such corporation or business entity so long as such ownership of
voting shares or interests continues.
"Agreement" shall have the meaning as set forth in the Preamble.
"Amira" shall have the meaning as set forth in the Preamble.
"Amira Know How" shall mean any unpatented and/or non-patentable technical
data, materials, samples and other information (A) which are owned or controlled
by Amira or its Affiliates during the term of the Agreement, or (B) which Amira
or its Affiliates has the right to license or sublicense (including information
or materials developed by Amira in the Development Program) and which in either
case (C) relate to Meters or Test Strips or their manufacture or use in the
Field. Amira Know-How shall not include the Amira Patent Rights.
"Amira Patent Rights" shall mean (i) the U.S. and foreign patent
applications and patents listed on Exhibit B; (ii) any U.S. or foreign patent or
patent application which claims an invention made or conceived and reduced to
practice by one or more employees, agents or consultants of Amira or of an Amira
Affiliate in the Development Program and related to Meters or Test Strips or
their manufacture or use in the Field; and (iii) any substitution, continuation,
continuation-in-part, or divisional application of any of the preceding, and any
patent issuing thereon, including any reissue, reexamination, renewal or
extension thereof.
"Amira Technology" shall mean the Amira Patent Rights and Amira Know How.
"Amira/Integ Invention" shall have the meaning as set forth in Section
7.1.3.
"Confidential Information" shall mean (i) any information related to Amira
Technology, Integ Technology or the Development Program; (ii) any proprietary or
confidential information or material in tangible form disclosed hereunder that
is marked as "Confidential" or "Proprietary" at the time it is delivered to the
receiving party, or (iii) proprietary or confidential
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information disclosed orally hereunder which is identified as confidential or
proprietary when disclosed and such disclosure of confidential information is
confirmed in writing within thirty (30) days by the disclosing party.
"Costs" shall mean all of a Party's direct and indirect costs related to
the manufacture of the Product(s), including without limitation, costs for
personnel, materials, quality control, regulatory compliance, third party
license royalties, administrative expenses, subcontractors, fixed and variable
manufacturing overhead costs reasonably allocable to the manufacture of the
Product(s), as determined in accordance with generally accepted accounting
principles applied by that party on a consistent basis.
"Development Plan" shall have the meaning as set forth in Section 3.1.
"Development Program" shall have the meaning as set forth in Section 3.1.
"Effective Date" shall have the meaning as set forth in the Preamble.
"FDA" means the U.S. Food and Drug Administration or any corresponding
foreign regulatory authority.
"Field" shall mean glucose monitoring utilizing Interstitial Fluid Samples.
"Integ" shall have the meaning as set forth in the Preamble.
"Integ Know How" shall mean any unpatented and/or non-patentable technical
data, materials, samples and other information other than technical data,
materials, samples and other information relating to infrared technology (A)
which are owned or controlled by Integ during the term of the Agreement, or (B)
which Integ has the right to license or sublicense, including information or
materials developed by Integ in the Development Program, and which in either
case (C) is useful in the Field. Integ Know-How shall not include the Integ
Patent Rights.
"Integ Patent Rights" shall mean (i) the U.S. and foreign patent
applications and patents listed on Exhibit C; (ii) any U.S. or foreign patent or
patent application which claims an invention (other than an invention relating
to infrared technology) made or conceived and reduced to practice by one or more
employees, agents or consultants of Integ or of a Integ Affiliate in the
Development Program and useful in the Field; and (iii) any substitution,
continuation, continuation-in-part, or divisional application of any of the
preceding, and any patent issuing thereon, including any reissue, reexamination,
renewal or extension thereof.
"Integ Technology" shall mean the Integ Patent Rights and Integ Know How.
"Interstitial Fluid Samples" means interstitial fluid samples containing,
at most, contaminating amounts of other substances, including without
limitation, blood.
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"Manufacturing Plan" shall have the meaning as set forth in Section 5.1
"Meters" shall mean any device for measuring glucose in Interstitial Fluid
Samples.
"Party" shall mean Integ or Amira, as the case may be.
"Parties" shall mean Integ and Amira.
"Product(s)" shall mean Meters, Samplers, and Test Strips.
"Sampler(s)" shall mean any device for extracting an Interstitial Fluid
Sample which incorporates a means for delivering such sample to a Test Strip,
and may include a component for incorporation into Meters.
"Territory" shall mean worldwide.
"Test Strip(s)" shall mean any device to which an Interstitial Fluid Sample
is applied, which incorporates a means for delivering such sample to a specific
area for analysis by a Meter.
"Third Party(ies)" shall mean any person or entity other than Amira, Integ
and their respective Affiliates.
2. OPTION
As a condition and inducement to Amira's and Integ's entering into this
Agreement and incurring the obligations set forth herein, concurrently with the
execution and delivery of this Agreement, Amira and Integ are entering into an
Option Agreement (the "Option Agreement") in the form of Exhibit A hereto.
3. DEVELOPMENT PROGRAM
3.1 Development Program Activities. Subject to the terms and conditions set
forth herein, the Parties shall perform research, conduct development, and
commercialize Products pursuant to the Development Plan. Such activities shall
comprise the "Development Program" and shall be conducted primarily at Integ's
facility. The Parties shall use reasonable efforts to conduct the Development
Program in accordance with the Development Plan set by the Development
Committee, and shall use reasonable efforts to comply with all submission
procedures to the appropriate regulatory authorities, to respond timely to
inquires of said regulatory authorities and to maintain submissions and support
new submissions. The Parties shall keep the Development Committee reasonably
informed of the progress of the Development Program and shall provide the
Development Committee a reasonable opportunity to review and comment on Product
research and development, study designs, clinical trials, submissions, launch
and other relevant factors.
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3.2 Development Plan. The Parties will conduct the Development Program in
accordance with a plan approved by the Development Committee (the "Development
Plan"). The Development Plan shall establish: (i) a budget for the Development
Plan and proposed funding, (ii) the scope of the development which will be
performed including any Product development specifications, (iii) objectives,
work plan activities and time schedules with respect to Product development,
clinical trials, FDA submission and commercial launch; and (iv) the number of
Integ and Amira employees necessary for the Development Plan, if different from
the requirements of Sections 3.5.1 and 3.5.2. The Development Committee shall
review the Development Plan on an ongoing basis and may make changes to the
Development Plan then in effect as it deems appropriate. Each year during the
Development Program prior to the end of the tenth month of such year, the
Development Committee shall agree on an annual Development Plan for the
following calendar year. During the term of the Development Program, the
Development Committee may agree to change the activities of the Development
Program. In such event, subject to the provisions of Section 3.5, the parties
shall discuss and agree on (i) the objectives of the redirected Development
Program, and (ii) additional funding, if any, which will be made by each Party
in support of the Development Program. The Parties shall meet and negotiate in
good faith, within ninety (90) days of the Effective Date, an initial
Development Plan that shall include at least the following:
3.2.1 Integ Development Responsibilities. Integ shall be responsible for:
(a) development of the Sampler;
(b) design and manufacturing development of a means to integrate the
Sampler and Test Strips;
(c) mechanical design of the interface of the Meter system with the
Sampler;
(d) manufacture of the packaged and sterile Sampler, including a Sampler
incorporating the Test Strip; and
(e) payment of all royalties due any Third Parties with respect to Integ
Technology in existence as of the Effective Date necessary for the
manufacture, use or sale of the Products.
3.2.2 Amira Development Responsibilities. Amira shall be responsible for:
(a) development and calibration of a sterilizable Test Strip;
(b) Test Strip manufacturing and scale-up and bulk shipping system
development;
(c) defining Test Strip environmental and packaging requirement inputs for
the Sampler;
(d) development of Meter electronics, optics, calibration and software;
(e) management of ongoing Meter contract manufacturing;
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(f) if required under Section 6.3, manufacture of the Sampler, including
Samplers which incorporate the Test Strip;
(g) filing and holding title to all regulatory submissions in its name in
connection with the Development Program;
(h) labeling and packaging the Products for final sale;
(i) marketing, sales, distribution and customer service of the Products;
and
(j) payment of all royalties due any Third Parties with respect to Amira
Technology, or Integ Technology developed after the Effective Date,
necessary for the manufacture, use or sale of the Products.
3.3 Development Committee.
3.3.1 Membership. The Development Committee shall be comprised of two
representatives from Amira and two representatives from Integ. Amira and Integ
may replace its Development Committee representatives at any time, with written
notice to the other party. Amira may also have one additional representative
with visitation rights to the Development Committee.
3.3.2 Decisions. Each representative of Amira and Integ shall have one vote
on the Development Committee, which vote may be cast by proxy. Decisions of the
Development Committee shall be made by majority vote. A unanimous vote of the
Development Committee shall be required for the following: (i) the selection of
milestones with respect to research regarding Product manufacture development;
and (ii) any redirection or expansion of the Development Program beyond those
activities and responsibilities described in the initial Development Plan, which
by their actions cause the Parties to spend unforeseen amounts. In the event
that the Development Committee fails to reach a majority (or, if applicable,
unanimous) consensus on a decision required pursuant to this Agreement, the
Development Committee shall notify the Chairman of the Board of Directors of
each of Integ and Amira in writing of such failure and of all information
relevant to such decision. The respective Chairmen shall then attempt in good
faith to reach a unanimous consensus on such decision. Failure of the
Development Committee or the parties' respective Chairmen to reach a consensus
on any such decision shall not be considered a breach of this Agreement.
3.3.3 Responsibilities. It will be the responsibility of the Development
Committee, among other things, to (i) oversee the conduct of the Development
Program, and (ii) prepare and approve the Development Plan and the detailed
working program (including timetables) to be carried out. The activities
conducted in connection with the Development Plan shall be monitored by the
Development Committee and periodically reviewed.
3.3.4 Meetings. During the term of this Agreement, the Development
Committee shall meet quarterly, or more often as may be necessary, to discharge
its
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responsibilities. Such meetings shall take place in St. Paul, Minnesota, or such
other locations as the parties agree, or by way of video or telephone conference
if practicable. Each Party will pay its own expenses in connection with these
meetings. Amira shall prepare minutes of the Development Committee meetings
covering all essential points discussed, which minutes shall be approved and
signed by a Development Committee representative of each Party.
3.4 Records; Exchange of Information.
3.4.1 Records. The Parties shall maintain (i) financial records in
sufficient detail to establish how the budgeted Development Program funds are
expended, and (ii) scientific records as will properly reflect all work done and
results achieved in the performance of the Development Plan (including all data
in the form required under any applicable governmental regulations). During the
term of this Agreement, the Parties shall provide each other access to such
records, upon reasonable prior request, during ordinary business hours.
3.4.2 Reports. The Development Committee shall periodically and not less
often than semiannually during the term of the Development Program, request and
the Parties shall have the obligation to prepare and provide to the Development
Committee written reports summarizing the progress of the research performed
pursuant to the Development Plan during the preceding half-year.
3.5 Development Program Contributions and Funding. Each Party shall
independently bear the costs and contribute the necessary resources for the
development activities for which each party is responsible, including (i) the
necessary resources to most efficiently execute clinical trials, and (ii) the
resources required for integration of their respective technologies into a
Product and (iii) the resources required to complete its requirements under the
Development Plan as set forth in Section 3.2.1 or 3.2.2 as the case may be. It
shall be agreed that in no event shall Integ's contribution exceed its capital
or resources existing as of the Effective Date. In the event that Integ exhausts
its resources on the development of Products, satisfaction of current financial
commitments, and maintenance of its public reporting responsibilities during the
Development Program, (a) Amira shall not be entitled to conduct Integ's
responsibilities under the Development Program primarily at Amira's facilities
and (b) Amira will lend Integ the minimum funding required for Integ to produce
annual audited and quarterly unaudited financial statements, file reports
required under the Securities Exchange Act of 1934, comply with annual meeting
requirements and comply with requirements of The Nasdaq Stock Market to retain a
listing on one of Nasdaq's markets. Any such loan will be unsecured, will bear
interest at the minimum rate necessary to avoid imposed interest and will be due
10 years after being loaned except that if Integ terminates this Agreement
pursuant to Section 11.2, no amounts shall be payable to Amira under this loan.
3.5.1 Integ Employees. Integ shall devote the number of full time employees
to work on the Development Program, primarily on-site at the Integ facility, as
the Development Committee determines is necessary to effect the Development
Plan. These employees will
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remain full time employees of Integ and shall be 100% dedicated to the
Development Program. Amira shall have the right, at its option and as approved
by the Development Committee, to pay bonuses directly to key Integ employees.
Such bonuses will be measured against development milestones to be defined in
the Development Plan for the purpose of effecting the most rapid Product
development.
3.5.2 Amira Employees. Amira shall devote the number of full time employees
to work on the Development Program, on-site at Amira's facilities, as the
Development Committee determines is necessary to effect the Development Plan.
Amira shall also devote two (2) full time employees to work on the Development
Program, primarily on-site at the Integ facility, for the purpose of completing
the Development Plan. If the Development Committee determines that the
Development Plan may proceed more expeditiously with the supply of additional
Amira employees at Integ's facilities to conduct the Research Program, Amira
shall devote more employees to work on the Development Program on-site at the
Integ facility for the purpose of completing the Development Plan. All such
employees will remain full time employees of Amira.
3.5.3 Non-solicitation. During the Development Program, Amira shall not,
without Integ's prior written consent, directly or indirectly solicit (or
attempt to solicit) Integ employees to leave their employment with Integ or hire
any Integ employees.
4. LICENSE GRANTS
4.1 Integ License Grants.
4.1.1 Integ License to Amira.
(a) Integ hereby grants to Amira a non-transferable, exclusive
license, to use the Integ Technology for commercialization (including the
right to import, have imported, use, offer for sale, and sell products
which incorporate the Integ Technology) in the Field in the Territory.
(b) Integ hereby grants to Amira a non-transferable exclusive license,
with right of sublicense, under the Integ Technology to make and have made
products which incorporate the Integ Technology, including the Products, in
the Field in the Territory. Amira agrees not to exercise its rights under
Section 4.1.1(b) with regard to Samplers and Samplers integrated with Test
Strips, unless and until Amira has given Integ written notice pursuant to
Section 6.3 below, that Amira wishes to manufacture the Sampler, and
Samplers integrated with the Test Strip.
(c) The licenses granted to Amira pursuant to this Section 4.1.1 shall
terminate upon the occurrence of the events set forth in Section 4.4.3
hereof.
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4.1.2 Sublicenses. Amira may sublicense the rights granted in Section 4.1.1
to its Affiliates and to Third Parties only in order to effectuate the
manufacture and distribution of the Products. Each such sublicense shall be
consistent with all the terms and conditions of this Agreement, and in
particular Amira shall cause each sublicensee to agree not to exercise its
rights under Section 4.1.1(b) unless and until Amira can exercise its rights
under Section 4.1.1(b). Amira shall remain responsible to Integ for all of each
such sublicensee's applicable financial and other obligations under the
sublicense.
4.2 Amira License Grant.
4.2.1 Amira hereby grants to Integ a license, which shall be co-exclusive
with Amira, with no right of sublicense, under the Amira Technology for research
and development in the Field.
4.2.2 Amira hereby grants to Integ a license, which shall be co-exclusive
with Amira, with no right of sublicense, under the Amira Technology to make,
have made, use, import, have imported, or otherwise transfer physical possession
of (but not to sell, lease, offer to sell or lease, or otherwise transfer title
to any person other than Amira and its Affiliates) products which incorporate
the Amira Technology in the Field.
4.3 Access. Integ shall provide access to the Integ Technology to any of
Amira's employees who are working on the Development Plan in pursuit of the
Development Plan. Amira shall provide access to the Amira Technology to any of
Integ's employees who are working on the Development Plan in pursuit of the
Development Plan.
4.4 Change in Ownership of Integ.
4.4.1 Integ hereby grants to Amira a perpetual, transferable, co-exclusive
with Integ and non-terminable (except as provided in Section 11.3.2(b)) license,
including the right to sublicense, under the Integ Technology existing before
the Effective Date, to make, have made, import, have imported, use, offer for
sale and sell products which incorporate such Integ Technology, including
without limitation Products, for use in the Field.
4.4.2 Integ hereby grants to Amira an exclusive, perpetual transferable and
non-terminable (except as provided in Section 11.3.2(b)) license, including the
right to sublicense, under any Integ Technology developed after the Effective
Date, to make, have made, import, have imported, use, offer for sale and sell
products which incorporate such Integ Technology, including without limitation
Products, for use in the Field.
4.4.3 Amira shall not exercise any of its rights under this Section 4.4
unless and until Integ is Acquired. "Acquired" means that a Third Party (or a
"group" as defined under Section 13(d) of the Securities Exchange Act of 1934)
has obtained (a) possession or control, directly or indirectly, of all or
substantially all of Integ's assets, through a purchase or other
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transfer, or (b) has obtained, directly or indirectly, the power to direct or
cause the direction of management and policies of Integ through a merger of
Integ with or into another entity, recapitalization of Integ or, issuance or
acquisition of voting securities of Integ. Integ shall be deemed to have been
Acquired if Integ or its Affiliate, directly or indirectly, enters into any
agreement with Abbott Laboratories, Bayer AG, Johnson & Johnson, or Roche, or
any person or entity controlling, controlled by or under common control with any
of those entities.
4.5 Retained Rights; No Further Rights. Only the licenses granted pursuant
to the express terms of this Agreement shall be of any legal force or effect. No
other license rights shall be granted or created by implication, estoppel, or
otherwise.
5. COMMERCIALIZATION
5.1 Reasonable Efforts. Amira shall use commercially reasonable efforts,
comparable to those efforts Amira makes with respect to other products of
comparable value, developmental stage and clinical indication, to obtain and
maintain all approvals, registrations and government authorizations necessary
for commercial sale of the Products worldwide. Amira will use commercially
reasonable efforts to actively pursue commercial sales of the Products in each
country in which regulatory approval is obtained.
5.2 Delivery of Know-How. During the term of this Agreement, each Party
shall deliver to the other Party such Know-How and other information relating to
the Integ Technology, Amira Technology, Amira/Integ Inventions and the
Product(s) as is necessary for the other Party's performance under this
Agreement.
6. PRODUCT MANUFACTURE
6.1 Manufacturing Plan. The Development Committee shall determine a
manufacturing plan that shall establish: (i) the first-year and five-year
production volumes of Products; (ii) manufacturing responsibilities; and (iii)
budget for corresponding plant and equipment required ("Manufacturing Plan").
The Development Committee shall review the Manufacturing Plan on an ongoing
basis and may make changes to the Manufacturing Plan then in effect. Amira will
fund the incremental plant and equipment costs associated with meeting the
Manufacturing Plan.
6.2 Manufacture of Products.
6.2.1 Manufacture of Products by Amira. Amira shall be responsible for the
manufacture of all Meters, any portion of the Sampler included in the Meters and
Test Strips. All Products manufactured by or on behalf of Amira will conform
with all FDA regulations relating to Good Manufacturing Practices and all
applicable comparable foreign laws and regulations.
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6.2.2 Supply of Products by Amira. Amira shall supply Test Strips for
integration with Samplers free of charge to Integ in quantities that
sufficiently meet production demand as set by the Manufacturing Plan. Amira
shall deliver the Products to Integ C.I.F. Integ.
6.2.3 Manufacture of Products by Integ. Integ shall be responsible for the
manufacture of all Samplers (except for any portion of the Sampler included in a
Meter) and integrating Amira's Test Strips with Samplers (except for any portion
of the Sampler included in a Meter). All Products manufactured by or on behalf
of Integ will conform with all FDA regulations relating to Good Manufacturing
Practices and all applicable comparable foreign laws and regulations.
6.2.4 Supply of Products by Integ. Integ shall supply Samplers (except for
any portion of the Sampler included in a Meter) to Amira, including Samplers
integrating Amira's Test Strips, at *** , and in no event greater than *** per
unit (not including cost of Test Strip); provided however, that if the Option
has become exercisable and has not been exercised by Integ within the time
period set forth in the Option Agreement, Integ will supply Samplers integrating
Amira's Test Strip at *** , and in no event greater than *** per unit (not
including cost of Test Strip). Integ shall deliver the Products to Amira F.O.B.
Integ. If the Consumer Price Index has increased by more than 8% over the three
years after the Effective Date, the Parties will negotiate in good faith an
increase in the *** or *** per unit, respectively, to reflect increases in
Integ's manufacturing costs during that period.
6.3 Election of Product Manufacture.
6.3.1 Election of Product Manufacture by Amira. In the event Integ is
unable to meet set manufacturing minimums, Amira will be entitled to assume the
right to manufacture the Sampler, including Samplers integrated with Test
Strips, by providing written notice to Integ and subject to payment of a royalty
which will be equal to *** per Product (not including Test Strip) *** ; provided
however, that if the Option has become exercisable and has not been exercised by
Integ within the time period set forth in the Option Agreement, the royalty will
be *** per Product (not including Test Strip) *** .
6.3.2 Transfer of Manufacturing Know-How. Within 60 days of the election by
Amira to manufacture Samplers, Integ will deliver to Amira all Integ Know-How
relating to the manufacture of the Sampler, including Samplers integration with
the Test-Strip, existing as of the Effective Date and developed in connection
with the Development Program. In such event, the parties shall cooperate with
each other in order that Amira may initiate manufacture of the Sampler,
including Samplers integrated with the Test-Strip, as soon as practicable, and
shall take such actions as are appropriate to achieve such goal.
*** Confidential treatment requested pursuant to Rule 24b-2 of the Securites
Exchange Act of 1934, as amended.
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6.4 Records; Reports; Inspection. Integ and Amira shall each keep complete,
true and accurate books of account and records for the purpose of determining
Integ's Costs and Amira's Costs, respectively, under this Agreement. Such books
and records shall be kept at the principal place of business of Integ or Amira,
as the case may be, for at least two years following the end of the calendar
quarter to which they pertain. Such records will be open for inspection during
such two year period by a representative of Amira or Integ, as the case may be,
for the purpose of verifying Integ's Cost or Amira's Costs, as the case may be.
Such inspections may be made no more than once each calendar year, at reasonable
times mutually agreed. The representative will be obliged to execute a
reasonable confidentiality agreement prior to commencing any such inspection.
Inspections conducted under this Section 6.4 shall be at the expense of the
party requesting such inspection.
7. INTELLECTUAL PROPERTY
7.1 Ownership of Inventions.
7.1.1 Integ Ownership. Integ shall own (and Amira hereby assigns to Integ)
all right, title and interest in and to all inventions, discoveries and other
intellectual property conceived, developed or reduced to practice by Integ or
Amira, and which is derived from the Integ Technology alone. Integ shall own all
right, title and interest in and to all inventions, discoveries and other
intellectual property conceived, developed or reduced to practice by Integ alone
which is not derived from the Integ Technology or the Amira Technology.
7.1.2 Amira Ownership. Amira (or to the extent required by licenses granted
to Amira, Amira's licensor) shall own (and Integ hereby assigns to Amira or such
licensor) all right, title and interest in and to all inventions, discoveries,
and other intellectual property conceived, developed or reduced to practice, and
which is derived from the Amira Technology alone. Amira shall own all right,
title and interest in and to all inventions, discoveries and other intellectual
property conceived, developed or reduced to practice by Amira alone which is not
derived from the Integ Technology or the Amira Technology.
7.1.3 Joint Ownership. Subject to Sections 7.1.1 and 7.1.2, all right,
title and interest in and to all inventions and other intellectual property made
jointly by employees of Integ and Amira, and either (a) derived from both the
Integ Technology and the Amira Technology, or (b) derived from neither the Integ
Technology or the Amira Technology, shall be jointly owned by Integ and Amira
(each an "Amira/Integ Invention").
7.1.4 Future Actions. Each Party agrees to sign and deliver the
applications, instruments of assignment and other documents reasonably requested
by the other Party to perfect the requesting Party's (or, if applicable, its
licensor's) ownership of intellectual property assigned to it under Sections
7.1.1, 7.1.2 or 7.1.3.
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7.2 Patent Prosecution.
7.2.1 Patent Rights. Amira shall be responsible, at its expense, for the
preparation, filing, prosecution and maintenance of the patent applications and
patents of all inventions and other intellectual property rights arising out of
or in connection with the Development Program in countries selected by Amira,
and for conducting any interferences, reexaminations, reissues, oppositions, or
request for patent term extension relating thereto. Any Patents shall be
assigned to Integ, Amira or Integ and Amira in accordance with the provisions of
Section 7.1 hereof.
7.2.2 Failure to Prosecute. In the event that Amira declines to file or,
having filed, declines to further prosecute and maintain any patent applications
or patents for any invention owned by Integ subject to Section 7.2.1 above,
Amira shall provide Integ notice thereof prior to the expiration of any deadline
relating to such activities, but in any event at least 30 days prior notice, and
Integ shall have the right, but not the obligation, to file, prosecute and
maintain such patent applications or patents, at Integ's expense, using counsel
of its choice.
7.2.3 Cooperation. Each party shall be given an opportunity to review the
other party's activities relating to joint inventions and Integ inventions or
Amira inventions pursuant to Section 7.2.1 and provide input thereto. Amira
shall include in such patent applications such claims as Integ may reasonably
request. Amira shall keep Integ fully informed as to the status of such patent
matters, including, without limitation, by providing Integ the opportunity, at
Integ's expense, to review and comment on any documents relating to Integ
Technology which will be filed in any patent office at least 30 days before such
filing, and promptly providing Integ copies of any documents relating to Integ
Technology which Amira receives from such patent offices, including notice of
all interferences, reissues, reexaminations, oppositions or requests for patent
term extensions.
7.3 Enforcement.
7.3.1 In the event that any Integ Technology necessary for manufacture, use
and sale of a Product is infringed or misappropriated by a Third Party in any
country or is subject to a declaratory judgment action arising from such
infringement or misappropriation in such country, or is the subject of an
interference, re-examination, reissue or opposition proceeding, the party
becoming aware thereof shall promptly notify the other party hereto. Integ shall
have the initial right (but not the obligation), at its expense, to bring suit
to abate any infringement or misappropriation of Integ Technology, using counsel
of its choice. In the event that Integ fails to initiate a suit to enforce such
Integ Technology against a commercially significant infringement in the Field by
a Third Party within 30 days, Amira may initiate such suit to abate such
infringement or misappropriation, and Amira shall bear the expenses associated
therewith; provided, Amira may not enter into any settlement without the prior
consent of Integ, which shall not be unreasonably withheld, and may not make any
statement which admits that any of the Integ Patent Rights or other intellectual
property licensed to Amira pursuant to this Agreement
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are invalid or unenforceable. The party involved in any such claim, suit or
proceeding, shall keep the other party hereto reasonably informed of the
progress of any such claim, suit or proceeding and each party shall cooperate
reasonably in connection with the pursuit of any such action, at the request and
expense of the party requesting such cooperation. Any recovery by such party
received as a result of any such claim, suit or proceeding shall be used first
to reimburse the parties hereto for all expenses (including court costs,
attorneys and professional fees and other expenses of all kinds) incurred in
connection with such claim, suit or proceeding. 75% of the remainder shall be
retained by the party initiating the suit and 25% of the remainder shall be paid
to the other party.
7.3.2 In the event that any Amira Technology necessary for manufacture, use
and sale of a Product is infringed or misappropriated by a Third Party in any
country or is subject to a declaratory judgment action arising from such
infringement or misappropriation in such country, or is the subject of an
interference, re-examination, reissue or opposition proceeding, the party
becoming aware thereof shall promptly notify the other party hereto. Amira shall
have the initial right (but not the obligation), at its expense, to bring suit
to abate any infringement or misappropriation of Amira Technology, using counsel
of its choice. In the event that Amira fails to initiate a suit to enforce such
Amira Technology against a commercially significant infringement in the Field by
a Third Party within 30 days, Integ may initiate such suit to abate such
infringement or misappropriation, and Integ shall bear the expenses associated
therewith; provided, Integ may not enter into any settlement without the prior
consent of Amira, which shall not be unreasonably withheld, and may not make any
statement which admits that any of the Amira Patent Rights or other intellectual
property licensed to Integ pursuant to this Agreement are invalid or
unenforceable. The party involved in any such claim, suit or proceeding, shall
keep the other party hereto reasonably informed of the progress of any such
claim, suit or proceeding and each party shall cooperate reasonably in
connection with the pursuit of any such action, at the request and expense of
the party requesting such cooperation. Any recovery by such party received as a
result of any such claim, suit or proceeding shall be used first to reimburse
the parties hereto for all expenses (including court costs, attorneys and
professional fees and other expenses of all kinds) incurred in connection with
such claim, suit or proceeding. 75% of the remainder shall be retained by the
party initiating the suit and 25% of the remainder shall be paid to the other
party.
7.4 Infringement Claims. If the manufacture, sale or use of the Product(s)
pursuant to this Agreement results in any claim, suit or proceeding alleging
patent infringement against Amira or Integ, such party shall promptly notify the
other party hereto. If Integ is not named as a party in such a suit or
proceeding, Integ may, at its own expense and through counsel of its own choice,
seek leave to intervene in such suit or proceeding. Amira agrees not to oppose
such intervention. If Integ, and not Amira, is named as a party to such suit or
proceeding, Integ shall have the right to control the defense and settlement of
such suit or proceeding, at its own expense, using counsel of its own choice,
however Amira, at its own expense and through counsel of its own choice, may
seek to intervene if the suit or proceeding relates to the commercialization of
the Product(s) in the Field. Integ agrees not to oppose such intervention. If
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both Integ and Amira are named as parties in such suit or proceeding, or become
parties through intervention, each shall have the right, at its own expense and
through counsel of its own choice, to present its own defense and to determine
its own terms for settlement. If Integ shall, at any time, tender its defense to
Amira, then Amira shall defend Integ in such suit or proceeding, at Amira's own
expense and through counsel of its own choice, and Integ shall then have the
right to determine the terms for settlement. The parties shall cooperate with
each other in connection with any such claim, suit or proceeding and shall keep
each other reasonably informed of all material developments in connection with
any such claim, suit or proceeding.
8. REPRESENTATIONS AND WARRANTIES
8.1 Integ hereby makes to Amira the representations and warranties
contained in Section 10 of the Option Agreement as if fully set forth herein.
Amira hereby makes to Integ the representations and warranties contained in
Section 9 of the Option Agreement as if fully set forth herein.
8.2 Disclaimer of Warranties. Integ and Amira specifically disclaim that
the Development Program will be successful in whole or part. EXCEPT AS OTHERWISE
EXPRESSLY SET FORTH IN THIS AGREEMENT AND SUBJECT TO THE INDEMNITY PROVISIONS OF
ARTICLE 10, INTEG AND AMIRA AND THEIR RESPECTIVE AFFILIATES MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OR CONDITIONS OF ANY KIND, EITHER
EXPRESS OR IMPLIED, WITH RESPECT TO THE PATENT RIGHTS AND KNOW-HOW, OR PRODUCTS
INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, VALIDITY OF THE PATENT RIGHTS OR KNOW-HOW LICENSED
HEREUNDER, OR NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES.
9. CONFIDENTIALITY
9.1 Confidential Information. Except as expressly provided herein or in the
Option Agreement, the parties agree that, for the term of this Agreement and for
five years thereafter, the receiving party shall keep completely confidential
and shall not publish or otherwise disclose and shall not use for any purpose
except for the purposes contemplated by this Agreement any Confidential
Information furnished to it by the disclosing party hereto pursuant to this
Agreement or the Option Agreement, except that to the extent that it can be
established by the receiving party by competent proof that such Confidential
Information:
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving party;
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(c) became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement;
(d) was independently developed by the receiving party as demonstrated
by documented evidence prepared contemporaneously with such independent
development; or
(e) was subsequently lawfully disclosed to the receiving party by a
person other than a party.
9.2 Permitted Use and Disclosures. Each party hereto may use or disclose
information disclosed to it by the other party to the extent such use or
disclosure is reasonably necessary to comply with the rules of any applicable
securities exchange, the Nasdaq National Market or other self regulatory
organization, in filing or prosecuting patent applications, prosecuting or
defending litigation, complying with applicable governmental regulations, law,
legal process or otherwise submitting information to tax or other governmental
authorities, conducting clinical trials, or making a permitted sublicense or
otherwise exercising its rights hereunder, provided that if a party is required
to make any such disclosure of another party's confidential information, other
than pursuant to a confidentiality agreement, it will give reasonable advance
notice to the latter party of such disclosure and, save to the extent
inappropriate in the case of patent applications will use its best efforts to
secure confidential treatment of such information (including the significant
financial terms of this Agreement) prior to its disclosure (whether through
protective orders or otherwise) and disclose such information only to the
minimum extent necessary to comply with such requirements.
9.3 Public Disclosure. Except as otherwise required by law, legal process,
or the rules of any applicable securities exchange, the Nasdaq National Market
or other self-regulatory organization, neither party shall issue a press release
or make any other public disclosure of the terms of this Agreement or regarding
the results of the Development Program without the prior approval of the other
party of such press release or public disclosure. Each party shall submit any
such press release or public disclosure to the other party, and the receiving
party shall have five days to review and approve any such press release or
public disclosure, which approval shall not be unreasonably withheld. If the
receiving party does not respond within such five day period, the press release
or public disclosure shall be deemed approved. In addition, if a public
disclosure is required by law, including without limitation in a filing with the
Securities and Exchange Commission, the disclosing party shall provide copies of
the disclosure reasonably in advance of such filing or other disclosure for the
nondisclosing party's prior review and comment, will disclose such information
only to the minimum extent necessary to comply with such requirements and, if
reasonably requested by the nondisclosing party, will seek confidential
treatment of such information prior to making such public disclosure.
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9.4 Injunctive Relief. Notwithstanding Section 12.2 (Arbitration), Integ
and Amira hereby acknowledge that damages at law may be an inadequate remedy for
the breach of any of the covenants, promises and agreements contained in this
Article 9, and accordingly, Integ or Amira, as the case may be, may be entitled
to injunctive relief with respect to any such breach, including specific
performance of such covenants, promises or agreements or an order enjoining
Integ or Amira from any threatened, or from the continuation of any actual,
breach of covenants, promises or agreements. The rights set forth in this
Section 9.4 shall be in addition to any other rights which Integ or Amira may
have at law or in equity.
10. INDEMNIFICATION
10.1 Indemnification of Amira. Integ shall indemnify Amira and its
Affiliates and the directors, officers, employees, agents and counsel of Amira
and such Affiliates and the successors and assigns of any of the foregoing (the
"Amira Indemnitees"), harmless from and against any and all liabilities,
damages, losses, costs or expenses (including reasonable attorneys' and
professional fees and other expenses of litigation and/or arbitration) resulting
from a claim, suit or proceeding brought by a Third Party against an Amira
Indemnitee, arising from or occurring as a result of activities performed by or
on behalf of Integ in connection with the Development Program, or as the result
of activities performed in connection with the use, development, manufacture,
and commercialization of the Products, except to the extent caused by the
negligence or willful misconduct of Amira. In no event shall any indemnification
that Integ is required to provide under this Section 10.1 reduce the amount of
the Merger Consideration payable pursuant to the Option Agreement. To the extent
that insurance proceeds and Integ's resources are not sufficient to provide the
indemnification required by Integ hereunder, then in lieu of such additional
indemnification Amira shall be entitled to terminate this Agreement and to hold
the licenses granted in Section 11.3.2 hereof, but the Option shall not be
terminated.
10.2 Indemnification of Integ. Amira shall indemnify Integ and its
Affiliates and the directors, officers, employees, agents and counsel of Integ
and such Affiliates and the successors and assigns of any of the foregoing (the
"Integ Indemnitees"), from and against any and all liabilities, damages, losses,
costs or expenses (including reasonable attorneys' and professional fees and
other expenses of litigation and/or arbitration) resulting from a claim, suit or
proceeding brought by a Third Party against a Integ Indemnitee, arising from or
occurring as a result of activities performed by or on behalf of Amira in
connection with the Development Program, or as the result of activities
performed by or on behalf of Amira in connection with the use, development,
manufacture, commercialization, or sale the Products, except to the extent
caused by the negligence or willful misconduct of Integ.
10.3 Procedure. A party (the "Indemnitee") that intends to claim
indemnification under this Article 10 shall promptly notify the other party (the
"Indemnitor") in writing of any loss, claim, damage, liability or action in
respect of which the Indemnitee or any of its Affiliates, or their directors,
officers, employees or agents intend to claim such indemnification, and the
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Indemnitor shall have the right to participate in, and, to the extent the
Indemnitor so desires, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an Indemnitee shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the Indemnitor, if representation of such Indemnitee by the counsel retained by
the Indemnitor would be inappropriate due to actual or potential differing
interests between such Indemnitee and any other party represented by such
counsel in such proceeding. The Indemnitor shall control the defense and/or
settlement of any such action claim or liability, and the indemnity agreement in
this Article 10 shall not apply to amounts paid in connection with any loss,
claim, damage, liability or action if such payments are made without the consent
of the Indemnitor, which consent shall not be withheld unreasonably. The failure
to deliver written notice to the Indemnitor within a reasonable time after the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such Indemnitor of any liability to the Indemnitee under
this Article 10 At the Indemnitor's request, the Indemnitee under this Article
10, and its employees and agents, shall cooperate fully with the Indemnitor and
its legal representatives in the investigation of any action, claim or liability
covered by this indemnification and provide full information with respect
thereto.
11. TERM AND TERMINATION
11.1 Term. This Agreement shall be effective as of the Effective Date and
shall continue unless otherwise terminated earlier pursuant to this Article 11.
11.2 Termination for Cause. Either party may terminate this Agreement in
the event the other party has materially breached or defaulted in the
performance of any of its material obligations hereunder or under the Option
Agreement, and such default has continued for 60 days after written notice
thereof was provided to the breaching party by the nonbreaching party. Upon
provision of a written notice of termination to the breaching party at the end
of such 60 day period, the termination shall become effective unless the
breaching party has cured any such breach or default prior to the expiration of
the 60 day period. No waiver of a breach is implied by a Party's failure to give
notice of breach to the other.
11.3 Effect of Breach or Termination.
11.3.1 Accrued Obligations. 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. For the
avoidance of doubt, it is agreed that following the termination of the
Agreement Amira shall have no obligation to provide any funding to Integ
under Section 3.5 after such date.
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11.3.2 Licenses.
(a) In the event that Amira terminates this Agreement pursuant to
Section 11.2, (i) Integ shall be deemed to have granted on the Effective
Date to Amira a royalty-free co-exclusive, worldwide, non-terminable
license, including the right to sublicense, under the Integ Technology
existing before the Effective Date, to make, have made, import, have
imported, use, offer for sale and sell products incorporating the Integ
Technology in the Field, (ii) Integ shall be deemed to have granted to
Amira on the Effective Date an exclusive, perpetual, worldwide and
non-terminable license, including the right to sublicense, under the Integ
Technology developed after the Effective Date, to make, have made, import,
have imported, use, offer for sale and sell products incorporating the
Integ Technology in the Field; (iii) the licenses and rights granted by
Amira to Integ hereunder shall terminate .
(b) In the event that Integ terminates this Agreement pursuant to
Section 11.2, (i) Amira shall be deemed to have granted on the Effective
Date to Integ a royalty-free non-exclusive, worldwide, non-terminable
license, including the right to sublicense with respect to manufacturing
and distribution only, under the Amira Technology, to make, have made,
import, have imported, use, offer for sale and sell Products incorporating
both the Amira Technology, and a Sampler, in the Field; and (ii) the
licenses granted to Amira hereunder shall terminate.
11.3.3 Bankruptcy. All licenses granted under or pursuant to this Agreement
by a Party (a "Licensor") to the other Party (a "Licensee") are, and shall
otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy
Code, licenses of rights to "intellectual property" as defined under Section 101
of the Bankruptcy Code. If the trustee in bankruptcy for the Licensor rejects
this Agreement (i) the Licensee may retain its rights (including a right to
enforce any exclusivity provision of this Agreement, but excluding any other
right under applicable nonbankruptcy law to specific performance of this
Agreement) under this Agreement and under any agreement supplementary to this
Agreement to the Licensor's Technology as such rights existed immediately before
the Licensor filed or became the subject of a petition in bankruptcy, for the
duration of this Agreement and on the other terms of Section 365(n), including
its right to receive from the trustee in bankruptcy such Technology held by the
trustee. These rights of Licensee shall continue notwithstanding any rejection
or attempted rejection of the Licensor's other executory obligations under this
Agreement.
11.4 Survival. Sections 1, 4.4, 7, 9, 10 11 and 12 shall survive the
expiration or termination of this Agreement for any reason. Section 8 shall
survive until March 31, 2000 except that the representatives and warranties of
each Party concerning intellectual property shall survive until consummation of
the Merger.
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12. MISCELLANEOUS
12.1 Governing Law. This Agreement and any dispute, including without
limitation any arbitration, arising from the performance or breach hereof shall
be governed by and construed and enforced in accordance with the laws of the
state of New York, without reference to conflicts of laws principles.
12.2 Arbitration. Any dispute under this Agreement which is not settled by
mutual consent shall be finally settled by binding arbitration, conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association by three arbitrators appointed in accordance with said rules. The
arbitration shall be held in Denver, Colorado and at least one of the
arbitrators shall be an independent expert in medical devices. The arbitrators
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 arbitrators shall permit such discovery as they deem necessary to permit an
equitable resolution of the dispute. The costs of the arbitration, including
administrative and arbitrators' 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. A disputed performance or suspended
performances pending the resolution of the arbitration must be completed within
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 Section 12.2 shall be completed within one 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 otherwise permitted by the other party. Any decision which requires a
monetary payment shall require such payment to be payable in United States
dollars, free of any tax or other deduction. The parties agree that the decision
shall be the sole, exclusive and binding remedy between them regarding any and
all disputes, controversies, claims and counterclaims presented to the
arbitrators. Application may be made to any court having jurisdiction over the
party (or its assets) against whom the decision is rendered for a judicial
recognition of the decision and an order of enforcement.
12.3 Waiver. Neither party may waive or release any of its rights or
interests in this Agreement except in writing. 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.
12.4 Assignment. This Agreement shall not be assignable by either party to
any Third Party hereto without the prior written consent of the other party
hereto, which may be withheld for any or no reason; provided that Amira shall
not need the prior written consent of Integ to the assignment of this Agreement
in connection with a Sale (as such term is defined in the Option Agreement). An
acquisition of control of Integ by a Third Party shall be deemed to be an
assignment of this Agreement requiring the consent of Amira.
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12.5 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be personally delivered or sent by telecopy or
other electronic facsimile transmission, by registered or certified mail, return
receipt requested, postage prepaid, or by a nationally recognized courier
service, prepaid (for example, Federal Express) in each case to the respective
address specified below, or such other address as may be specified in writing to
the other parties hereto:
AMIRA: Amira Medical
4742 Scotts Valley Drive
Scotts Valley, CA 95066
Attn: Chief Financial Officer
INTEG: Integ Incorporated
2800 Patton Road
St. Paul, MN 55113
Attn: President
12.6 Force Majeure. Neither party shall be liable to the other for failure
or delay in the performance of any of its obligations under this Agreement for
the time and to the extent such failure or delay is caused by riots, civil
commotions, wars, hostilities between nations, governmental laws, orders or
regulations, embargoes, actions by the government or any agency thereof, acts of
God, storms, earthquakes, fires, floods, accidents, labor disputes or strikes,
sabotage, explosions or other similar or different contingencies, in each case,
beyond the reasonable control for the respective parties. The party affected by
Force Majeure shall provide the other party with full particulars thereof as
soon as it becomes aware of the same (including its best estimate of the likely
extent and duration of the interference with its activities), and will use its
best endeavors to overcome the difficulties created thereby and to resume
performance of its obligations as soon as practicable.
12.7 Independent Contractors. Both parties are independent contractors
under this Agreement. Nothing contained in this Agreement is intended nor is to
be construed so as to constitute Integ or Amira as partners or joint venturers
with respect to this Agreement. Neither party 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 other contract,
agreement, or undertaking with any Third Party.
12.8 Advice of Counsel. Integ and Amira have each consulted counsel of
their choice regarding this Agreement, and each acknowledges and agrees that
this Agreement shall not be deemed to have been drafted by one party or another
and will be construed accordingly.
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12.9 Trademarks. Amira shall have the right to market Products in the Field
under Amira's or Integ's labels and trademarks subject to Integ's approval as to
quality.
12.10 Other Obligations. Except as expressly provided in this Agreement or
as separately agreed upon in writing between Integ and Amira, each party shall
bear its own costs incurred in connection with the implementation of the
obligations under this Agreement.
12.11 No Implied Licenses. No rights or licenses with respect to the Amira
Technology or the Integ Technology are granted or deemed granted hereunder or in
connection herewith, other than those rights expressly granted in this
Agreement.
12.12 Patent Marking. The Parties agree to mark and have their Affiliates
mark all Products they sell or distribute pursuant to this Agreement in
accordance with the applicable statute or regulations in the country or
countries of manufacture and sale thereof.
12.13 Compliance with Laws. Each party shall furnish to the other party any
information requested or required by that party during the term of this
Agreement or any extensions hereof to enable that party to comply with the
requirements of any U.S. or foreign federal, state and/or government agency.
12.14 Complete Agreement. This Agreement with its Exhibits, together with
the Option Agreement dated the Effective Date, constitutes the entire agreement,
both written and oral, between the parties with respect to the subject matter
hereof, and that all prior agreements respecting the subject matter hereof,
either written or oral, expressed or implied, are merged and canceled, and are
null and void and of no effect. No amendment or change hereof or addition hereto
shall be effective or binding on either of the parties hereto unless reduced to
writing and duly executed on behalf of both parties.
12.15 Headings. The captions to the several Sections and Articles hereof
are not a part of this Agreement, but are included merely for convenience of
reference only and shall not affect its meaning or interpretation.
12.16 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, and both together shall be deemed to be
one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their authorized representatives as of the Effective Date.
Amira Medical Integ Incorporated
By: /s/ Karen R. Drexler By: /s/ Susan L. Critzer
- --------------------------- ----------------------------
Name: Karen R. Drexler Name: Susan L. Critzer
Title: President Title: Interim President
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Exhibit 10.2
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Agreement") is made as of April 2, 1999, by
and between Amira Medical, a Delaware corporation located at 4742 Scotts Valley
Drive, Scotts Valley, CA 95066 ("Amira"), and Integ Incorporated, a Minnesota
corporation located at 2800 Patton Road, St. Paul, Minnesota 55113 ("Integ").
Terms used but not defined herein shall have the meaning assigned to them in the
Development and License Agreement, by and between Amira and Integ, dated the
date hereof (the "License Agreement").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Option. As partial consideration for and an inducement for entering
into the License Agreement, Amira hereby grants to Integ an irrevocable option
(the "Option") to merge Integ with and into a newly formed, wholly owned
subsidiary of Amira (the "Merger") upon the terms and subject to the conditions,
including the conditions to closing of the Merger, set forth in this Agreement
pursuant to a merger agreement and related documents (the "Merger Agreement") in
exchange for the Merger Consideration (as defined in Section 5).
1.1 Conditions to Exercising the Option. Prior to, and as a
condition of, the exercise of the Option, the Board of Directors of
Integ shall (i) adopt resolutions authorizing the exercise of the
Option and the Merger on the terms and subject to the conditions set
forth in this Agreement; (ii) adopt resolutions necessary to prevent
any state anti-takeover laws from preventing the execution of the
Merger Agreement or the closing of the Merger; and (iii) adopt
resolutions determining that the Merger shall occur pursuant to a
Permitted Offer as that term is defined in Integ's Right Agreement,
dated November 26, 1996 (the "Rights Agreement") and that Section 13 of
the Rights Agreement shall not be applicable to the Merger (any of the
specified resolutions described in clauses (i), (ii) or (iii) of this
sentence shall be referred to herein as the "Board Resolutions").
1.2 Mechanics of Exercising the Option. The Option shall be
exercised upon a written notice to Amira from Integ stating Integ's
irrevocable exercise of the Option (the "Exercise Notice"). The
Exercise Notice shall include the Board Resolutions as an exhibit.
2. Exercise of the Option. Integ may exercise the Option at its sole
discretion upon the earliest to occur of the following:
2.1 IPO.
(a) Amira Notice. Amira shall provide Integ with written
notice (the "Initial IPO Notice"), which notice shall include the
proposed range of the public offering price if known to Amira, of its
intention to file with the Securities and Exchange Commission ("SEC") a
registration statement in connection with a firm commitment
underwritten public offering
<PAGE>
covering the offer and sale of Common Stock for the account of Amira to the
public (an "IPO") at least 5 days prior to the initial filing of such
registration statement. Upon such filing, Amira shall promptly provide Integ
with a copy of such registration statement. Amira shall provide Integ with a
second written notice (the "Second IPO Notice") within 2 business days following
the receipt by Amira of initial comments from the SEC in connection with such
registration statement.
(b) Option Exercise.
(i) The Option may be exercised by Integ beginning on the date
the Initial IPO Notice is received by Integ and the Option shall be
exercisable until 3 business days following the receipt by Integ of the
Second IPO Notice (the "IPO Notice Period"). An exercise pursuant to
this subsection (i) shall become effective upon the effective date of
the IPO.
(ii) If the Option is not exercised during the IPO Notice
Period, the Option may be exercised beginning 25 days following the
effective date of the IPO and shall be exercisable until 6 months and
25 days following the effective date of the IPO.
2.2 Sale.
(a) Amira Notice. Amira shall provide Integ with written
notice ( the "Sale Notice") within 5 business days after the public
announcement of any acquisition of Amira by means of a merger or other
form of corporate reorganization in which at least 20% of the
outstanding shares of Amira are exchanged for securities or other
consideration issued, or caused to be issued, by the acquiring
corporation or its subsidiary, or a sale of all or substantially all of
the assets of Amira ("Sale") and shall promptly provide Integ with a
copy of all agreements relating to such Sale except for agreements
relating to individual compensatory arrangements such as employment,
severance or noncompetition agreements. The acquiring company in the
Sale shall have the option to request that the Merger occur prior to,
or simultaneous with, the Sale. In such case, the Sale Notice shall
indicate that an early exercise request (an "Early Exercise Request")
has been made.
(b) Option Exercise.
(i) If an Early Exercise Request has been made, the
Option may be exercised beginning on the date the Sale Notice
is received by Integ and the Option shall be exercisable until
10 days following the receipt of the Sale Notice and related
documents referred to in Section 2.2(a) (the "Sale Notice
Period"). An exercise pursuant to this subsection (i) shall
become effective upon the effective date of the Sale.
(ii) In the event that no Early Exercise Request has
been made or an Early Exercise Request has been made but the
Option has not been exercised in the Sale
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Notice Period, the Option may be exercised beginning on the effective date of
the Sale and shall be exercisable until 6 months following the effective date of
the Sale.
2.3 36 Months. The Option may be exercised 36 months from the date of
this Agreement and shall be exercisable until 42 months from the date of this
Agreement (the "Exercise Period"). If during the Exercise Period Amira shall
provide notice to Integ pursuant to this Section 2 that it intends to engage in
an IPO or Sale, the Option shall thereafter be exercisable in accordance with
the terms of Section 2.1, in the case of an IPO, or Section 2.2, in the case of
a Sale.
3. Registration Rights.
3.1 IPO. If Integ exercises the Option in connection with an IPO
pursuant to Section 2.1 of this Agreement, as soon as practicable following
execution of the Merger Agreement, Amira and Integ shall prepare and Integ shall
file with the SEC a Proxy Statement and Amira shall prepare and file with the
SEC a Form S-4, in which the Proxy Statement will be included as part of the
prospectus. Each of Integ and Amira shall use all reasonable efforts to have the
Form S-4 declared effective under the Securities Act as promptly as practicable
after such filing. To the extent consistent with applicable law, Integ will use
its reasonable efforts to cause the Proxy Statement to be mailed to Integ's
shareholders as promptly as practicable after the Form S-4 is declared effective
under the Securities Act. Amira shall also take any action required to be taken
under any applicable state securities laws in connection with the issuance of
Amira Common Stock in the Merger and under Integ's stock option plans. Each of
Amira and Integ shall furnish all information concerning itself to the other as
may be reasonably requested in connection with any such action and the
preparation, filing and distribution of the Proxy Statement. Each of Amira and
Integ will provide the other with copies of SEC correspondence, including
comment letters, relating to the Form S-4 and Proxy Statement and will allow the
other a reasonable opportunity to review and comment upon the form and substance
of such documents prior to filing with the SEC. Freely tradable Amira shares
shall be issued to Integ stockholders pursuant to the Merger at the latter of
the closing of the Merger or 6 months following the effective date of the IPO.
3.2 Sale for Public Stock. Amira shall not enter into an agreement for
a Sale with a publicly traded company (a "Public Acquirer") in which the
consideration to be paid to the Amira stockholders is Public Acquirer stock
unless (i) the Public Acquirer agrees in the merger agreement entered into in
connection with the Sale to provide Integ shareholders with the same type of
consideration that was paid to the Amira stockholders in the Sale for that
portion of the Merger Consideration payable in Shares (as defined in Section 5)
(assuming, for purposes of calculating the per-share consideration paid to Amira
stockholders, that prior to such Sale the Shares had been issued to Integ's
shareholders) and to provide the Integ shareholders with the Cash Consideration
(as defined in Section 5) and (ii) the Public Acquirer agrees to enter into a
Merger Agreement with Integ as soon as practicable following the exercise of the
Option in which the Public Acquirer and Integ agree to substantially the
following provisions: As soon as
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practicable following the date of the Merger Agreement between the Public
Acquirer and Integ, the Public Acquirer and Integ shall prepare and Integ shall
file with the SEC a Proxy Statement and the Public Acquirer shall prepare and
file with the SEC the Form S-4, in which the Proxy Statement will be included as
a prospectus. Each of Integ and the Public Acquirer shall use all reasonable
efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. To the extent consistent with
applicable law, Integ will use its reasonable efforts to cause the Proxy
Statement to be mailed to Integ's shareholders as promptly as practicable after
the Form S-4 is declared effective under the Securities Act. The Public Acquirer
shall also take any action required to be taken under any applicable state
securities laws in connection with the issuance of the Public Acquirer Common
Stock in the Merger and under Integ's stock option plans. Each of the Public
Acquirer and Integ shall furnish all information concerning itself to the other
as may be reasonably requested in connection with any such action and the
preparation, filing and distribution of the Proxy Statement. Each of the Public
Acquirer and Integ will provide the other with copies of SEC correspondence,
including comment letters, relating to the Form S-4 and Proxy Statement and will
allow the other a reasonable opportunity to review and comment upon the form and
substance of such documents prior to filing with the SEC.
3.3 Sale for Private Stock. Amira shall not enter into an agreement for
a Sale with a private company (a "Private Acquirer") in which the consideration
to be paid to the Amira stockholders is Private Acquirer stock unless the
Private Acquirer agrees in the merger documents entered into in connection with
the Sale to provide Integ shareholders, upon the exercise of the Option, at
Integ's sole discretion and election, to pay the Integ shareholders either (a)
the same consideration that was paid to the Amira stockholders in the Sale for
that portion of the Merger Consideration payable in Shares (as defined in
Section 5) (assuming, for purposes of calculating the per-share consideration
paid to Amira stockholders, that prior to such Sale the Shares had been issued
to Integ's shareholders) and to pay the Integ shareholders the Cash
Consideration (as defined in Section 5) in a transaction consistent with Rule
13(e)(3), or (b) $31,000,000 in cash.
3.4 36 Months. If the Option has been exercised during the Exercise
Period pursuant to Section 2.3 of this Agreement, as soon as practicable
following the execution of the Merger Agreement, Amira shall prepare and file
with the SEC a Registration Statement on Form S-1 covering the shares to be
issued to the Integ shareholders and shall use all reasonable efforts to have
the Form S-1 declared effective under the Securities Act as promptly as
practicable after such filing. Amira shall also take any action required to be
taken under any applicable state securities laws in connection with the issuance
of Amira Common Stock in the Merger and under Integ's stock option plans. Integ
shall furnish to Amira all information concerning itself as may be reasonably
requested in connection with any such action. Amira will provide Integ with
copies of SEC correspondence, including comment letters, relating to the Form
S-1 and will allow Integ a reasonable opportunity to review and comment upon the
form and substance of such documents prior to filing with the SEC. In addition,
Amira shall file Form 8-A with the SEC and an application to list the shares for
trading on the Nasdaq Stock Market (if it qualifies)
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and take any other action reasonably necessary in order to issue that portion of
the Merger Consideration payable in Shares.
3.5 Indemnification. In the event any registration statement is filed
with the Securities and Exchange Commission under the Securities Act pursuant to
this Section 3:
(a) To the extent permitted by law, Amira will indemnify
Integ, each of its officers, directors and legal counsel, and each
person controlling Integ within the meaning of Section 15 of the
Securities Act, and each underwriter, if any, and each person who
controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages or
liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or any
violation by Amira of the Securities Act or any rule or regulation
promulgated under the Securities Act applicable to Amira in connection
with any such registration, qualification or compliance, and Amira will
reimburse Integ, each of its officers, directors and legal counsel and
each person controlling Integ, each such underwriter and each person
who controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, provided
that Amira will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission or alleged untrue statement
or omission, made in reliance upon and in conformity with written
information furnished to Amira by an instrument duly executed by Integ,
a controlling person or underwriter and stated to be specifically for
use therein.
(b) To the extent permitted by law, Integ will indemnify
Amira, each of its directors, officers, and legal counsel, each
underwriter, if any, of Amira's securities covered by such a
registration statement, each person who controls Amira or such
underwriter within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement
of any litigation, commenced or threatened, arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact
furnished by Integ for use in any such registration statement,
prospectus, offering circular or other document, or any amendment or
supplement thereto, incident to any registration, qualification or
compliance, or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, or any violation by Integ of the
Securities Act or any rule or regulation promulgated under the
Securities Act applicable to Integ in connection with any such
registration, qualification or compliance, and Integ will reimburse
Amira, such directors, officers, persons, underwriters or
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control persons for any legal or any other expenses reasonably incurred
in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that Integ will not
be liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to
Integ by an instrument duly executed by Amira, a controlling person or
underwriter and stated to be specifically for use therein.
(c) Each party entitled to indemnification under this Section
3 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting
therefrom; provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be approved by
the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at
such party's expense; and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under this Section 3 unless
the failure to give such notice is materially prejudicial to an
Indemnifying Party's ability to defend such action; and provided
further, that the Indemnifying Party shall not assume the defense for
matters as to which there is a conflict of interest or separate and
different defenses but shall bear the expense of such defense
nevertheless. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent 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 such Indemnified Party a release from all
liability in respect to such claim or litigation.
3.6 Information by Integ. It shall be a condition precedent to the
obligations of Amira to take any action pursuant to this Section 3 that Integ
shall furnish to Amira such information regarding itself and its shareholders,
and the securities held by them, and the intended method of disposition of such
securities as shall be reasonably required to effect the registration.
4. Sale For Cash. Amira shall not enter into a Sale in which the
consideration to be paid to the Amira stockholders is cash unless the acquiring
company agrees in the merger documents entered into in connection with the Sale,
as soon as practicable following the exercise of the Option, to effect a tender
offer to the shareholders of Integ. In such case, the Merger Consideration (as
defined in Section 5) shall consist of the sum of (i) the Cash Consideration (as
defined in Section 5) and (ii) 2,000,000 multiplied by the per share
consideration paid to Amira stockholders in the Sale.
5. Terms of the Merger. Upon the exercise of the Option by Integ, Amira
shall promptly, but in no event less than 15 business days after receipt of the
Exercise Notice, provide
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a draft Merger Agreement providing for the Merger of Integ with and into a newly
formed, wholly owned subsidiary of Amira on the terms and subject to the
conditions set forth in this Section 5. Amira and Integ shall use all
commercially reasonable efforts to execute the Merger Agreement promptly.
5.1 Merger Consideration. The total consideration (the "Merger
Consideration") upon consummation of the Merger shall total 2,000,000 shares of
Amira Common Stock (the "Shares") and $20,000,000 (the "Cash Consideration" and
together with the Shares, the "Merger Consideration") and shall be payable as
more fully set forth in the Merger Agreement in exchange for all outstanding
shares of Common Stock, options and warrants of Integ. If Amira is recapitalized
through the subdivision or combination of, or a stock dividend on, its
outstanding Common Stock, the Shares shall be adjusted in the same proportion.
5.2 Warrants and Stock Options. Integ will advise Amira of the
allocation of proceeds among its security holders. Amira will not assume any
Integ stock options. Options will be treated on a net issuance basis and
proceeds to such option holders will be allocated on that basis so long as such
treatment does not result in a materially adverse accounting treatment to Amira.
Integ will advise Amira at or before the closing of the Merger as to which
warrants will be terminated and which will be assumed by Amira. In no event will
the total consideration received by all of Integ's security holders exceed
2,000,000 shares of Amira stock and $20,000,000.
5.3 Integ Shareholder Approval. Integ will, as soon as practicable
following the execution of the Merger Agreement, establish a record date (which
will be as soon as practicable following the date of the Merger Agreement) for,
duly call, give notice of, convene and hold a meeting of its shareholders (the
"Shareholders Meeting") for the purpose of approving and adopting the Merger
Agreement. Integ will, subject to the fiduciary duties of Integ's Board of
Directors under applicable law, through its Board of Directors, recommend to its
shareholders approval and adoption of the Merger Agreement. Without limiting the
generality of the foregoing, Integ agrees that its obligations pursuant to the
first sentence of this Section 5.3 shall not be affected by the commencement,
public proposal, public disclosure or communication to Integ of any takeover
proposal. If the shareholders of Integ do not approve the Merger at the
Shareholder Meeting (including any adjournments of such Shareholder Meeting
which do not exceed one year in length), the Option shall terminate immediately.
5.4 Regulatory Approval. If applicable, the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 shall have expired or been
terminated.
5.5 Representations and Warranties of Integ.
(a) Integ's Representations and Warranties. The Merger
Agreement will contain customary public company representations,
warranties and covenants by Integ.
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(b) Representations and Warranties of Amira.
(i) IPO. If Integ exercises the Option after an IPO
pursuant to Section 2.1 of this Agreement, Amira shall make
substantially the same representations and warranties in the
Merger Agreement that Amira made in the underwriting agreement
with the underwriters in connection with the IPO.
(ii) Sale. Amira shall not be acquired in a
transaction unless the acquiring company provides, in the
acquisition agreement entered into in connection with the
Sale, the same representations and warranties to Integ or its
shareholders in the Merger Agreement as are being given to
Amira or its stockholders in the Sale.
(iii) 36 Months. If Integ exercises the Option after
the 36th month following the date of this Agreement pursuant
to Section 2.3 of this Agreement, Amira shall make customary
representations, warranties and covenants in the Merger
Agreement.
5.6 Access and Review. Each corporation shall be permitted to make a
full and complete investigation of the other's business affairs upon reasonable
advance notice to the other party. All information acquired from such
investigation by either party concerning the business of the other will be kept
confidential pursuant to the terms of a confidentiality agreement.
5.7 Expenses. Whether or not the Merger is consummated, all expenses
incurred in connection with this matter shall be the obligation of the party
incurring such expenses; provided, however, that the fees and expenses of
auditors and counsel and other reasonable expenses associated with negotiating
the Merger Agreement and complying with federal and state antitrust and
securities laws, shall not be considered Indebtedness pursuant to the provisions
of Section 6.1 hereof. Any other Merger expenses of Integ, including fees or
expenses of financial or other advisors, shall be considered Indebtedness for
purposes of Section 6.1 to the extent, but only to the extent that Integ does
not have sufficient resources to pay for such expenses.
5.8 Conditions to the Obligations of the Parties to Effect the Merger.
(a) Conditions to Obligation of Amira to Effect the Merger. If
at any time after Integ exercises the Option until the close of the
Merger there is any suit, action or proceeding pending against Integ or
any of its subsidiaries that individually or in the aggregate could
reasonably be expected to have a material adverse effect on Integ and
to which Amira is not a party, Amira shall at its sole discretion have
the option to not effect the Merger. In such case, Amira also shall
have the option to pay the Merger Consideration to Integ and to receive
an assignment of any of Integ's intellectual property or other assets
identified by Amira.
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(b) Conditions to Obligations of Integ to Effect the Merger.
Integ's obligation to effect the Merger is subject to the satisfaction
or waiver on or prior to the closing of the following conditions:
(i) Shareholder Approval. The Merger Agreement shall
have been approved and adopted by the shareholders of Integ.
(ii) Compliance with Regulatory Authorities. The
Merger and the issuance of securities in connection with the
Merger shall be in compliance with all state and federal
regulatory authorities.
(iii) Litigation. There shall not be any suit, action
or proceeding pending against Amira or any of its subsidiaries
to which Integ is not a party that individually or in the
aggregate could reasonably be expected to have a material
adverse effect on Amira.
5.9 Conduct of Integ Prior to Close. The Merger Agreement shall require
that, until the earlier of the termination of the Merger Agreement or the
effective time, Integ shall carry on its business diligently and in accordance
with good commercial practice and in the usual, regular and ordinary course. The
Merger Agreement also shall require that, until the earlier of the termination
of the Merger Agreement or the effective time, Integ shall not do any of the
following: (i) change any of the terms of outstanding stock options; (ii) grant
any severance pay to any officer or employee, except under limited
circumstances; (iii) transfer or license to anyone or otherwise materially
change any rights to its intellectual property, other than in the ordinary
course of business; (iv) declare or pay any dividends; (v) repurchase or
otherwise acquire any shares of capital stock, except under outstanding rights
of repurchase; (vi) issue, deliver, sell, authorize or propose the issuance,
delivery or sale of, any shares of capital stock or any securities convertible
into or exercisable for shares of capital stock, or enter into other agreements
or commitments obligating it to issue any such shares or convertible securities,
other than in those circumstances to be specifically described in the Merger
Agreement; (vii) make or propose any amendments to any charter document or
bylaw; (viii) consummate or enter into a contract for a material business
acquisition; (ix) sell, lease, license, encumber or otherwise dispose of any
material properties or assets, except in the ordinary course of business; (x)
incur or guarantee any debt (other than ordinary course trade payables or
pursuant to existing credit facilities in the ordinary course of business); (xi)
adopt or amend any employee benefit plan, or enter into any employment contract,
pay any special bonus to any director or employee, or increase the salaries of
its officers or employees, except under certain limited circumstances; (xii)
pay, discharge or satisfy any claim, liability or obligation, other than in the
ordinary course of business; (xiii) grant exclusive rights to any third party;
or agree to take any of the actions described in (i) through (xiii) above.
5.10 No Shop Provision. The Merger Agreement shall provide that Integ,
its directors, officers and affiliates will refrain from any effort, directly or
indirectly, to sell all or
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substantially all of Integ's assets to any other party by way of merger,
reorganization, sale of assets, stock exchange or otherwise.
5.11 Resignation of Integ Directors and Officers. The directors and
executive officers of Integ shall resign their positions as directors and
executive officers prior to, or simultaneously with, the closing of the Merger.
New officers and directors shall be designated by Amira. This provision shall
not require any director or executive officer to resign his or her employment
with Integ.
6. Conduct of Integ Prior to Exercise. From the date of this Agreement
until the expiration of the Option, the following shall apply:
6.1 If Integ takes any actions outside of the ordinary course of
business consistent with past practice which would result in a liability or the
obligation of Integ to make payments, or the issuance of any debt or debt
securities (whether or not convertible) by Integ ( "Indebtedness") without prior
written consent of Amira, the amount of any such Indebtedness shall be deducted
from the Cash Consideration at the close of the Merger. In no event shall Integ
incur any Indebtedness in excess of $5 million.
6.2 In no event shall Integ take any actions in the ordinary course of
business consistent with past practice which would result in a liability or the
obligation of Integ to make payments which total at any one time more than $1
million, without the prior written consent of Amira.
6.3 Except to the extent expressly required under the terms of the
License Agreement, Amira has no obligation under this or any other agreement to
provide funding to Integ. However, if Amira should provide Integ with any
funding to support Integ's activities under the Development Plan prior to the
expiration of the Option, such funding will not reduce the Cash Consideration
pursuant to Section 6.1.
7. Notice of Another Transaction. From the date of this Agreement until
the expiration of the Option, Integ will give Amira written notice if it
receives a bona fide written offer to acquire control of Integ, establish a
strategic alliance with Integ, or effect a similar transaction (a "Competing
Transaction") (but Integ shall not include the terms of and identity of the
party making such Competing Transaction). Integ will not sign a binding
agreement for a Competing Transaction or any agreement which would inhibit
Integ's ability to effect any transaction with Amira until 10 business days
after the date of such notice of a Competing Transaction has been received by
Amira.
8. Information.
8.1 Integ shall use its best efforts to file all required reports,
schedules, forms, statements and other documents (the "SEC Filings") with the
SEC from the date of this
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Agreement until the completion of the Merger. In the event that Integ becomes
financially unable to make the required SEC Filings, Amira shall provide Integ
with the funds necessary to make such filings. Such funds shall not be deducted
from the Cash Consideration.
8.2 Integ will provide Amira with a copy of Integ's internal monthly
and quarterly financial reports at the same time as Integ provides them to its
Board of Directors. Integ will notify Amira as soon as practicable of any event
materially affecting Integ's financial condition or results of operations, or
any material legal or administrative proceeding involving Integ or its assets.
However, Integ need not notify Amira of patent office actions relating to Integ
technology which Integ has not licensed to Amira. Integ will notify Amira as
soon as practicable of any event which, if unchanged, would require Integ to
file with the SEC information concerning the event under the Securities Exchange
Act of 1934 or Nasdaq rules. If Integ has an obligation to notify Amira, then as
promptly as practicable after the notice, Integ will provide Amira with
information requested by Amira and which is readily available to Integ
concerning the event. In both notifying Amira and providing information to
Amira, Integ may obscure the identity of other parties or limit Amira's access
to confidential information of third parties to the extent required by Integ's
confidentiality obligations to the other party (but only to the extent such
information, if provided in SEC filings, would receive confidential treatment by
the SEC).
9. Representations and Warranties of Amira. Amira hereby represents and
warrants to Integ that, as of the date of this agreement and except as set forth
on a Schedule of Exceptions delivered by Amira to Integ on the date hereof (the
"Amira Schedule of Exceptions"), which exceptions shall be deemed to be
representations and warranties as if made hereunder:
9.1 Organization, Good Standing and Qualification. Amira is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted. Amira is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure so to
qualify would have a material adverse effect on its business or properties.
9.2 Capitalization. The authorized capital stock of Amira consists, as
of the date of this Agreement, of:
(a) 18,500,000 shares of Preferred Stock, 4,490,000 of which
shares have been designated Series A Preferred Stock, 7,000,000 of
which shares have been designated Series B Preferred Stock, 4,500,000
of which have been designated Series C Preferred Stock and 2,500,000 of
which have been designated Series D Preferred Stock. 4,490,000 shares
of Series A Preferred Stock, 6,324,087 shares of Series B Preferred
Stock and 4,174,200 shares of Series C Preferred Stock are issued and
outstanding. The rights, preferences, privileges and restrictions of
these shares will be as stated in Amira's Amended and Restated
Certificate of Incorporation delivered to Integ.
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(b) 32,500,000 shares of Common Stock, of which approximately
6,600,000 shares are issued and outstanding.
(c) The Amira Schedule of Exceptions lists all outstanding
options, warrants, rights (including conversion or preemptive rights),
plans or agreements for the purchase or acquisition from Amira of any
shares of its capital stock.
9.3 Subsidiaries. Amira does not presently own or control, directly or
indirectly, any interest in any other corporation, association, or other
business entity.
9.4 Authorization. All corporate action on the part of Amira, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement, and the performance of all obligations of Amira
hereunder has been taken and the authorization and issuance (or reservation for
issuance) of the Shares to be issued in connection with the Merger has been
taken or will be taken prior to the effective date of the Merger, and this
Agreement constitutes a valid and legally binding obligation of Amira,
enforceable in accordance with its terms.
9.5 Valid Issuance of Common Stock.
(a) The Shares which are being issued in connection with the
Merger, 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 and will be issued in compliance
with all applicable federal and state securities laws, and will be free
of restrictions on transfer other than restrictions on transfer under
this Agreement and under applicable state and federal securities laws.
(b) The outstanding shares of Common Stock are all duly and
validly authorized and issued, fully paid and nonassessable, and were
issued in compliance with all applicable federal and state securities
laws.
9.6 Litigation. There is no action, suit, proceeding or investigation
pending or currently threatened against Amira or its directors and officers
which questions the validity of this Agreement or the right of Amira to enter
into it, or to consummate the transactions contemplated hereby, or which might
result, either individually or in the aggregate, in any material adverse changes
in the assets, condition, affairs or prospects of Amira, financially or
otherwise, or any change in the current equity ownership of Amira, nor is Amira
aware that there is any basis for the foregoing. None of Amira or its directors
and officers is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by Amira
currently pending or which Amira intends to initiate.
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9.7 Proprietary Information. Each employee and officer of Amira has
executed a Proprietary Information Agreement (the "Amira Proprietary Information
Agreement") in the form attached as Exhibit E to the Series A Preferred Stock
Purchase Agreement dated May 24, 1996, and no exceptions have been taken by any
such employee or officer to the terms of such agreement. Amira, after reasonable
investigation, is not aware that any of its employees are in violation of an
Amira Proprietary Information Agreement. To the best of Amira's knowledge, none
of its employees is obligated under any contract, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
the use of the employee's best efforts to promote the interests of Amira. Amira
does not believe it is or will be necessary to utilize any inventions of any of
its employees made prior to their employment by Amira.
9.8 Patents and Trademarks. Amira has not previously granted and will
not grant any rights in conflict with the rights and license granted to Integ in
the License Agreement, and is the owner or licensee of the Amira Technology,
with the right to license the Amira Technology to Integ. The Amira Technology
owned by Amira is free and clear of any lien, encumbrance, security interest and
restriction on transfer and license, and to the best of Amira's knowledge as of
the Effective Date, the Amira Technology licensed from Third Parties is free and
clear of any lien, encumbrance, security interest and restriction on transfer
and license. Amira expressly disclaims any representation or warranty that the
activities of Amira or of Integ pursuant to the License Agreement will not
infringe any adversely owned patent; however, to the best of Amira's knowledge,
information and belief, as of the Effective Date, no adversely owned patents
will be infringed by activities of Amira pursuant to the License Agreement.
9.9 Compliance with Other Instruments. Amira is not in violation or
default of any provisions of its Amended and Restated Certificate of
Incorporation or Bylaws or of any (i) judgment, order, writ or decree to which
it is a party or by which it is bound, (ii) any Amira Material Contract (as
defined below) or, to its knowledge, of any provision of federal or state
statute, rule or regulation applicable to Amira. The execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby and thereby will not result in any such violation or be in
conflict with or constitute, with or without the passage of time and giving of
notice, either a default under any such provision, judgment, order, writ, decree
or Amira Material Contract or an event which results in the creation of any
lien, charge or encumbrance upon any assets of Amira.
9.10 Agreements. There are no agreements, understandings, instruments,
contracts or proposed transactions to which Amira is a party or by which it is
bound which involve (i) obligations of, or payments to, Amira in excess of
$75,000 which are not in the ordinary course of business, (ii) the license of
any Amira intellectual property to or from Amira, or (iii) provisions
restricting or affecting the development, manufacture or distribution of Amira's
products or services, or (iv) indemnification by Amira with respect to
infringements of Amira intellectual property rights ("Amira Material
Contracts").
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<PAGE>
9.11 Disclosure. Neither this Agreement nor any other statements or
certificates made or delivered in connection herewith 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. Amira has disclosed orally or
in writing to Integ any fact actually known by Amira which in Amira's judgement
materially adversely affects, or currently threatens to materially adversely
affect in the future, Amira's business, financial condition or results of
operations.
9.12 Registration Rights. Except as provided in the Stockholder Rights
Agreement provided to Integ and as set forth in this Agreement, Amira has not
granted or agreed to grant any registration rights to any person or entity.
9.13 Title to Property and Assets. Amira owns its property and assets
free and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair Amira's ownership or use of such property or assets. With
respect to the property and assets it leases, Amira is in compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances.
10. Representations and Warranties of Integ. Integ hereby represents
and warrants to Amira that, as of the date of this agreement and except as
disclosed in Integ's SEC Documents (as defined below) or except as set forth on
a Schedule of Exceptions delivered by Integ to Amira on the date hereof (the
"Integ Schedule of Exceptions"), which exceptions shall be deemed to be
representations and warranties as if made hereunder:
10.1 Organization, Good Standing and Qualification. Integ is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota and has all requisite corporate power and authority to
carry on its business as now conducted. Integ is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure so to
qualify would have a material adverse effect on its business or properties.
10.2 Capitalization. The authorized capital stock of Integ consists, as
of the date of this Agreement, of:
(a) 20,000,000 shares of Common Stock, of which approximately
9,656,618 shares are issued and outstanding as of March 30, 1999, and
5,000,000 shares of Preferred Stock, of which no shares are issued and
outstanding. The outstanding shares of Common Stock are all duly and
validly authorized and issued, fully paid and nonassessable, and were
issued in compliance with all applicable federal and state securities
laws.
(b) The Integ Schedule of Exceptions lists all outstanding
options, warrants, rights (including conversion or preemptive rights),
plans or agreements for the purchase or acquisition from Integ of any
shares of its capital stock.
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<PAGE>
10.3 Subsidiaries. Integ does not presently own or control, directly or
indirectly, any interest in any other corporation, association, or other
business entity.
10.4 Authorization. All corporate action on the part of Integ, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement, and the performance of all obligations of Integ
hereunder has been taken, and this Agreement constitutes a valid and legally
binding obligation of Integ, enforceable in accordance with its terms.
10.5 Litigation. There is no action, suit, proceeding or investigation
pending or currently threatened against Integ or its directors and officers
which questions the validity of this Agreement or the right of Integ to enter
into it, or to consummate the transactions contemplated hereby, or which might
result, either individually or in the aggregate, in any material adverse changes
in the assets, condition, affairs or prospects of Integ, financially or
otherwise, or any change in the current equity ownership of Integ, nor is Integ
aware that there is any basis for the foregoing. None of Integ or its directors
and officers is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by Integ
currently pending or which Integ intends to initiate.
10.6 Proprietary Information. Each employee and officer of Integ has
executed a Proprietary Information Agreement (the "Integ Proprietary Information
Agreement") in the form delivered to Integ, and no exceptions have been taken by
any such employee or officer to the terms of such agreement. Integ, is not aware
that any of its employees are in violation of an Integ Proprietary Information
Agreement. To the best of Integ's knowledge, none of its employees is obligated
under any contract, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of the employee's best
efforts to promote the interests of Integ. Integ does not believe it is or will
be necessary to utilize any inventions of any of its employees made prior to
their employment by Integ.
10.7 Patents and Trademarks. Integ has not previously granted and will
not grant any rights in conflict with the rights and license granted to Amira in
the License Agreement, and is the owner or licensee of the Integ Technology,
with the right to license the Integ Technology to Amira. The Integ Technology
owned by Integ is free and clear of any lien, encumbrance, security interest and
restriction on transfer and license, and to the best of Integ's knowledge as of
the Effective Date, the Integ Technology licensed from Third Parties is free and
clear of any lien, encumbrance, security interest and restriction on transfer
and license. Integ expressly disclaims any representation or warranty that the
activities of Integ or of Amira pursuant to the License Agreement will not
infringe any adversely owned patent; however, to the best of Integ's knowledge,
information and belief, as of the Effective Date, no adversely owned patents
will be infringed by activities of Integ pursuant to the License Agreement.
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<PAGE>
10.8 Compliance with Other Instruments. Integ is not in violation or
default of any provisions of its Articles of Incorporation or Bylaws or of any
(i) judgment, order, writ or decree to which it is a party or by which it is
bound, (ii) any Integ Material Contract (as defined below) or, to its knowledge,
of any provision of federal or state statute, rule or regulation applicable to
Integ. The execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby and thereby will not result
in any such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision,
judgment, order, writ, decree or Integ Material Contract or an event which
results in the creation of any lien, charge or encumbrance upon any assets of
Integ.
10.9 Disclosure. Neither this Agreement nor any other statements or
certificates made or delivered in connection herewith 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. Integ has disclosed orally or
in writing to Amira any fact actually known by Integ which in Integ's judgement
materially adversely affects, or currently threatens to materially adversely
affect in the future, Integ's business, financial condition or results of
operations.
10.10 Agreements. There are no agreements, understandings, instruments,
contracts or proposed transactions to which Integ is a party or by which it is
bound which involve (i) obligations of, or payments to, Integ in excess of
$75,000 which are not in the ordinary course of business, (ii) the license of
any Integ intellectual property to or from Integ, or (iii) provisions
restricting or affecting the development, manufacture or distribution of Integ's
products or services, or (iv) indemnification by Integ with respect to
infringements of Integ intellectual property rights ("Integ Material
Contracts").
10.11 Registration Rights. Integ has not granted or agreed to grant any
registration rights to any person or entity.
10.12 Title to Property and Assets. Integ owns its property and assets
free and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair Integ's ownership or use of such property or assets. With
respect to the property and assets it leases, Integ is in compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances.
10.13 SEC Documents. Integ has filed all required reports, schedules,
forms, statements and other documents with the SEC since May 2, 1996 (the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, or the
Securities Act of 1934, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements
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<PAGE>
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Integ included in the SEC Documents
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited financial statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of Integ as of the dates thereof and the
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited financial statements, to normal year-end audit
adjustments).
11. Miscellaneous.
11.1 Term and Termination.
(a) Term. This Agreement shall be effective as of the
Effective Date and shall continue unless otherwise terminated pursuant
to this Section 11.
(b) Termination for Cause. Either party may terminate this
Agreement in the event the other party has materially breached its
representations or materially defaulted in the performance of any of
its material obligations hereunder or under the License Agreement, and
such breach or default has continued for 60 days after written notice
thereof was provided to the breaching party by the nonbreaching party.
Upon provision of a written notice of termination to the breaching
party at the end of such 60 day period, the termination shall become
effective unless the breaching party has cured any such breach or
default prior to the expiration of the 60 day period. No waiver of a
breach is implied by a Party's failure to give notice of breach to the
other. 11.2 Effect of Breach or Termination. If Integ terminates this
Agreement under Section 11.1(b), it will continue to have its rights
under Sections 1, 2, 3, 4 and 5. If Amira terminates this Agreement
under Section 11.1(b), Integ's rights under Sections 1, 2, 3, 4 and 5
will terminate automatically, and if the Option has been exercised
Amira will no longer be obligated to continue or commence any action
called for by those sections. Subject to the foregoing, 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.
11.3 Survival. Sections 3.5 and 11 shall survive the expiration or
termination of this Agreement for any reason.
11.4 Arbitration. Any dispute under this Agreement which is not settled
by mutual consent shall be finally settled by binding arbitration, conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association by three arbitrators
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appointed in accordance with said rules. The arbitration shall be held in
Denver, Colorado and at least one of the arbitrators shall be an independent
expert in securities law. The arbitrators 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 arbitrators shall permit such
discovery as they deem necessary to permit an equitable resolution of the
dispute. The costs of the arbitration, including administrative and arbitrators'
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. A disputed performance or suspended performances pending the
resolution of the arbitration must be completed within 30 days following the
final decision of the arbitrators or such other reasonable period as the
arbitrators determine in a written opinion. Any arbitration shall be completed
within one 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 otherwise permitted by the other party.
Any decision which requires a monetary payment shall require such payment to be
payable in United States dollars, free of any tax or other deduction. The
parties agree that the decision shall be the sole, exclusive and binding remedy
between them regarding any and all disputes, controversies, claims and
counterclaims presented to the arbitrators. Application may be made to any court
having jurisdiction over the party (or its assets) against whom the decision is
rendered for a judicial recognition of the decision and an order of enforcement.
11.5 Assignment. This Agreement shall not be assignable by either party
without the prior written consent of the other party hereto, which may be
withheld for any or no reason; provided, that this Agreement shall be assigned
to either a Public Acquirer or a Private Acquirer, as the case may be, by Amira
in the case of a Sale without the consent of Integ. An acquisition of control of
Integ by a Third Party shall be deemed to be an assignment of this Agreement
requiring the consent of Amira.
11.6 Complete Agreement. This Agreement with its Exhibits, together
with the License Agreement and its Exhibits, constitutes the entire agreement,
both written and oral, between the parties with respect to the subject matter
hereof, and that all prior agreements respecting the subject matter hereof,
either written or oral, expressed or implied, are merged and canceled, and are
null and void and of no effect. No amendment or change hereof or addition hereto
shall be effective or binding on either of the parties hereto unless reduced to
writing and duly executed on behalf of both parties.
11.7 Survival of Warranties. The warranties, representations and
covenants of Amira and Integ contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and shall in no way
be affected by any investigation of the subject matter thereof made by or on
behalf of the Integ or Amira.
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11.8 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware as applied to agreements among Delaware
residents entered into and to be performed entirely within Delaware.
11.9 Counterparts and Facsimiles. 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. Facsimile
signatures shall be considered original signatures for purposes of this
Agreement.
11.10 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
11.11 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given and received upon personal delivery to the party to be
notified or upon the second day following deposit of such written notice with
Federal Express or another nationally recognized courier service prior to any
applicable deadlines as established by such courier for guaranteed delivery on
the next business day, with instructions for delivery on the next business day,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the first page of this Agreement, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties.
11.12 Expenses. Except as provided in Section 5.7, Amira and Integ
shall each pay their own costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement.
11.13 Amendments and Waivers. 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 Amira and Integ.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first set forth above.
AMIRA MEDICAL
By: /s/ Karen R. Drexler
---------------------------
Karen R. Drexler, President
INTEG INCORPORATED
By: /s/ Susan L. Critzer
---------------------------
Susan L. Critzer, Interim President
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