EXHIBIT 10.1
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[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [*], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
EXCLUSIVE DISTRIBUTION AGREEMENT
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This EXCLUSIVE DISTRIBUTION AGREEMENT ("AGREEMENT") is made and entered
into effective as of November 9, 2006 (the "EFFECTIVE DATE") by and between
Inamed Medical Products Corporation ("ALLERGAN"), a wholly owned subsidiary of
Allergan, Inc., a Delaware corporation, whose principal office is at 0000 Xxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxx 00000, and Ivivi Technologies, Inc. ("IVIVI"), a New
Jersey corporation whose principal office is at 000-X Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxx Xxxxxx 00000.
RECITALS
A. Ivivi has developed a pulsed electromagnetic field generating device
commonly known as SofPulse(R).
B. Ivivi desires to grant Allergan the exclusive right to distribute
and sell SofPulse(R), and all Improvements, line extensions and future
generations of such device, worldwide in the Field (as defined below).
C. Ivivi and Allergan desire to enter into this Agreement in order to
set forth the terms and conditions of such distribution right and all other
rights and obligations of the parties relating thereto.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual representations, warranties, covenants and agreements contained herein,
the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "ACT" shall mean the United States Food, Drug and Cosmetic Act and
the regulations promulgated thereunder, as amended from time to time.
1.2 "AFFILIATES" shall mean, with respect to either party, those
entities controlled by, in control of, or under common control with such party.
A corporation or non-corporate business entity shall be regarded as in control
of another corporation or business entity (i) if it owns or directly or
indirectly controls a majority of the voting stock of the other corporation, or
(ii) in the absence of the ownership of a majority of the voting stock of a
corporation or in the case of a non-corporate business entity, if it possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such corporation or non-corporate business entity, as
applicable.
1.3 "AFFILIATED PARTIES" means, in respect of any specified party, all
Affiliates, directors, officers, employees, agents and representatives of such
party.
1.4 "APPLICABLE MARKET" shall mean the American Stock Exchange or any
other exchange or market on which Ivivi securities are then traded or listed.
1.5 "BANKRUPTCY CODE" shall mean the Federal Bankruptcy Act and the
regulations promulgated thereunder, as amended from time to time.
1.6 "CANADIAN MARKETING CLEARANCE" shall mean any and all approvals,
including but not limited to, clearances, licenses, certifications, exemptions,
labeling approvals, product and/or establishment licenses, registrations or
authorizations of any regulatory agency, department, bureau or other government
entity, necessary for the commercial use, storage, importation, exportation,
transport or sale of the Product in Canada. Pricing and reimbursement approvals
shall be deemed to be included in the foregoing definition to the extent
applicable, in which case Ivivi shall make commercially reasonable efforts to
obtain such approvals.
1.7 "EU" shall mean the European Union.
1.8 "EU MARKETING CLEARANCE" shall mean any and all approvals,
including but not limited to, clearances, licenses, certifications, exemptions,
labeling approvals, product and/or establishment licenses, registrations or
authorizations of any regulatory agency, department, bureau or other government
entity, necessary for the commercial use, storage, importation, exportation,
transport or sale of the Product in the EU. Pricing and reimbursement approvals
shall be deemed to be included in the foregoing definition to the extent
applicable, in which case Ivivi shall make commercially reasonable efforts to
obtain such approvals.
1.9 "FAILURE TO SUPPLY" shall have the meaning set forth in SECTION
4.3.
1.10 "FDA" shall mean the Food and Drug Administration of the U.S.
Department of Health and Human Services.
1.11 "FIELD" shall mean directly or indirectly to or through any third
party including, without limitation, consumers, patients, users or health care
professionals of any specialty, who may use, sell or purchase the Product in
conjunction with any aesthetic or bariatric procedure, including but not limited
to the following markets: plastic surgery, facial plastic surgery, ocular
plastic surgery, cosmetic surgery, reconstructive surgery, dermatologic surgery,
maxillofacial surgery, dermatology, oral surgery (cosmetic related), and
bariatric surgery.
1.12 "FISCAL QUARTER" shall mean any of the four periods defined as
follows: The first Fiscal Quarter commences on January 1. The second, third and
fourth Fiscal Quarters commence on the day following the end of the preceding
Fiscal Quarter. The first, second, and third Fiscal Quarters end on the last
Friday of the respective calendar quarters of each year. The fourth Fiscal
Quarter ends on December 31.
1.13 "FIRST COMMERCIAL SALE" shall have the meaning set forth in
SECTION 5.6
1.14 "FORECAST" shall have the meaning set forth in SECTION 4.2(a).
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1.15 "GMP/QSR REGULATIONS" shall mean the Good Manufacturing
Practices/Quality System Regulations set forth in 21 C.F.R. Part 820.
1.16 "GOVERNMENTAL HEALTH AUTHORITY" shall mean, with respect to any
country, any and all governmental or regulatory bodies or authorities having the
authority to approve the import, storage, export, transport, manufacture, sale
and use of the Product.
1.17 "IMPROVEMENT" shall mean any adaptation, change, redesign,
improvement, refinement or modification to the Product or the Specifications
therefor or the method or process of manufacture or production of the Product.
1.18 "INTELLECTUAL PROPERTY" shall mean all patents, trademarks, trade
names, service marks, trade dress, trade secrets, and copyrights, including,
without limitation, any renewal, extension or other rights therefor, and
applications, provisionals, divisionals, reexaminations, continuations in part,
divisions, continuations, reissues, additions, substitutions and registrations
for any of the foregoing and all corresponding foreign patents and patent
applications of each of the foregoing, technical information, devices,
processes, procedures, discoveries, techniques, formulae, software, designs,
drawings, data, trade secret, methods, protocols, products, apparatuses and
other materials, compositions, mask works, domain names, schematics,
manufacturing processes, know-how, moral rights, software programs or
applications, manufacturing and production processes and techniques, research
and development information, drawings, specifications, designs, plans,
proposals, technical data, financial and marketing plans, customer and supplier
lists and information, and all other intellectual property or proprietary
rights.
1.19 "IVIVI INTELLECTUAL PROPERTY" shall mean all Intellectual Property
and Patents related to or used in connection with or embodied in the Product
including, without limitation, the development, manufacture, processing,
packaging, use or sale of the Product.
1.20 "LICENSE" shall have the meaning set forth in SECTION 3.1.
1.21 "MANUFACTURING COST" shall mean [*]. Allergan is aware that ADM is
Ivivi's largest shareholder and is currently the exclusive manufacturer of
Ivivi's products, including the Product. Ivivi agrees that, commencing [*], it
will contact at least [*] reputable manufacturers (selected after reasonably
considering suggestions from Allergan) per year ("Bidders") to determine whether
Ivivi can obtain a better price for the Product from a different manufacturer.
[*]. Ivivi represents and warrants that its agreement with ADM allows Ivivi to
terminate exclusivity in the event that ADM refuses to match any such lower
price, and Ivivi agrees that it will not amend any agreement with ADM in any
way, without the prior written consent of Allergan, if such amendment may
adversely affect the timing of deliveries to Allergan or the price paid by
Allergan for the Product. Without limiting the generality of the foregoing,
Ivivi agrees that it shall not amend any terms affecting pricing including,
without limitation, the margin to be paid for the Product by Ivivi (I.E., the
percentage charged by ADM to Ivivi in excess of ADM's direct costs), which is
currently twenty percent (20%), without the prior written consent of Allergan.
1.22 "MANUFACTURING LICENSE PERIOD" shall have the meaning set forth in
SECTION 4.3.
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1.23 "NET SALES" means [*].
1.24 "PATENTS" shall mean the patents set forth on SCHEDULE E,
including, without limitation, any new or future patents relating to the Product
in the Field and any renewal, extension or other rights therefor and
applications, provisionals, divisionals, re-examinations, continuations in part,
divisions, continuations, reissues, additions, substitutions and registrations
for any of the foregoing and all corresponding foreign patents and patent
applications of each of the foregoing.
1.25 "PRODUCT" shall mean the SofPulse(R) product and the Torino(TM)
product and any other products that are useful for prevention or treatment of
[*] or with uses within the Field, including all Improvements, line extensions
and future generations of any of the foregoing.
1.26 "REGULATORY APPROVAL" shall mean EU Marketing Clearance, Canadian
Marketing Clearance or U.S. Marketing Clearance, as applicable, or with respect
to the Product in any other country or jurisdiction, all other registrations,
approvals (including, but not limited to, labeling approvals), licenses
(including, but not limited to, product and/or establishment licenses) and
authorizations by a Governmental Health Authority required for the marketing,
importation, exportation, transport, storage, manufacture, commercial use and
sale of the Product in such country. Pricing and reimbursement approvals shall
be deemed to be included in the foregoing definition to the extent applicable,
in which case Ivivi shall make commercially reasonable efforts to obtain such
approvals.
1.27 "REMEDIAL ACTION" shall have the meaning ascribed thereto in
SECTION 10.4.
1.28 "SPECIFICATIONS" shall mean the specifications for the Product,
including the design, composition, output, product safety assurance,
manufacture, packaging, and/or quality control of the Product, as set forth on
SCHEDULE B attached hereto and made a part hereof, as the same may hereafter be
modified or updated by mutual agreement in writing to address Improvements, line
extensions and future generations of the Product and any other products that are
useful for prevention or treatment of [*] or with uses within the Field.
1.29 "TERRITORY" shall mean the world.
1.30 "TRADEMARKS" shall mean the trademarks owned by Ivivi as set forth
on SCHEDULE F.
1.31 "TRANSFER PRICE" shall have the meaning ascribed thereto in
SECTION 5.1.
1.32 "UNIT" shall mean an individual item of Product. For the avoidance
of doubt, a Unit may be comprised of two items of the Product if packaged to be
sold or marketed as one SKU, such determination regarding the SKU to be made at
Ivivi's reasonable discretion. For example, currently, two items of the Product
are packaged together as one SKU for use in breast-related treatments and
therefore constitute one Unit.
1.33 "U.S. MARKETING CLEARANCE" shall mean any governmental approvals,
including but not limited to, FDA approval, clearances, certifications,
exemptions, labeling approvals, licenses (including, but not limited to, product
and/or establishment), registrations or authorizations of any regulatory agency,
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department, bureau or other government entity, necessary for the commercial use,
storage, importation, exportation, transport or sale of a Product in the United
States. Pricing and reimbursement approvals shall be deemed to be included in
the foregoing definition to the extent applicable, in which case Ivivi shall
make commercially reasonable efforts to obtain such approvals.
ARTICLE 2
APPOINTMENT AS EXCLUSIVE DISTRIBUTOR
2.1 SCOPE.
(a) Ivivi grants to Allergan and its Affiliates the exclusive
(even as to Ivivi) right to directly and indirectly through others, market, sell
and distribute the Product in the Field in the Territory. Notwithstanding the
foregoing, Allergan shall market, sell and distribute the Product only in the
"MARKETING TERRITORY" initially defined as those countries and jurisdictions set
forth in SCHEDULE C-1 hereto but also including additional countries and
jurisdictions as expanded in accordance with this Agreement.
(b) In the event that Allergan wishes to market, sell or
distribute the Product in any other country or jurisdiction, it shall so notify
Ivivi (the "ALLERGAN NOTIFICATION") at least forty-five (45) days prior to
commencing such activity in such country or jurisdiction. Unless Ivivi provides
Allergan a written opinion of mutually agreed upon counsel, during such
forty-five (45) day period after the Allergan Notification, that Regulatory
Approval of the Product must be obtained in such country or jurisdiction in
order to market, sell or distribute the Product, then such country or
jurisdiction shall be deemed to be expressly included in the Marketing
Territory. If Ivivi delivers such written opinion to Allergan with respect to
any country or jurisdiction, then Ivivi shall then use commercially reasonable
efforts to obtain all approvals necessary to market, sell and distribute the
Product in such country or jurisdiction as soon as possible, and in any event no
later than one hundred eighty (180) days from the date of the Allergan
Notification (a "DUE DATE"). If Ivivi has diligently pursued and made
commercially reasonable efforts to obtain the necessary approvals but such
approval is not obtained on or prior to the applicable Due Date through no
fault, action or inaction of Ivivi, then the parties shall negotiate in good
faith to determine a mutually acceptable extension of the Due Date. Each such
country or jurisdiction shall be deemed to be expressly included in the
Marketing Territory on the date the approvals have been obtained. For purposes
of this Agreement, if a party is required to obtain or provide a written opinion
of mutually agreed upon counsel, the other party shall not unreasonably withhold
consent or agreement with respect to the selection of such counsel.
(c) Within forty-five (45) days of the Effective Date, Ivivi
shall provide a written opinion of mutually agreed upon counsel if Regulatory
Approval of the Product must be obtained in the countries or jurisdictions set
forth in SCHEDULE C-2 in order to market, sell or distribute the Product. Unless
Ivivi provides Allergan a written opinion of mutually agreed upon counsel within
such forty-five (45) day period with respect to any such country or jurisdiction
set forth on SCHEDULE C-2, then such country or jurisdiction shall be deemed to
be expressly included in the Marketing Territory. If Ivivi delivers such written
opinion to Allergan within such forty-five (45) day period with respect to any
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country or jurisdiction set forth on SCHEDULE C-2, then Ivivi shall use
commercially reasonable efforts to obtain all necessary approvals to market,
sell and distribute the Product in such country or jurisdiction as soon as
possible, and in any event no later than one hundred eighty (180) days from the
Effective Date (the "C-2 DUE DATE"). If Ivivi has diligently pursued and made
commercially reasonable efforts to obtain the necessary approvals but such
approval is not obtained on or prior to such C-2 Due Date through no fault,
action or inaction of Ivivi, then the parties shall negotiate in good faith to
determine a mutually acceptable extension of the C-2 Due Date. Each such country
or jurisdiction shall be deemed to be expressly included in the Marketing
Territory on the date the approvals have been obtained.
(d) Ivivi shall keep Allergan informed and consult with
Allergan of all activities related to obtaining any and all such approvals and
reasonably cooperate and take such actions as Allergan may request with respect
thereto. Ivivi shall promptly notify Allergan upon attaining such approvals.
(e) If (i) Allergan is required by law to discontinue or, in
the written opinion of mutually agreed upon counsel retained by Allergan, should
discontinue the marketing, sale or distribution of the Product in any
jurisdiction because of a reason related to the Product or (ii) Ivivi provides
Allergan an opinion of mutually agreed upon counsel stating that Allergan should
discontinue the marketing, sale or distribution of the Product in any
jurisdiction because of problems with Regulatory Approvals (any such
jurisdiction pursuant to (i) or (ii), an "EXCLUDED JURISDICTION"), then
effective thirty (30) days after such determination by Allergan or the receipt
by Allergan of the written opinion referenced in clause (ii), as applicable, and
for such time as Allergan is required to discontinue or, in the written opinion
of mutually agreed upon counsel, should discontinue the marketing, sale or
distribution of the Product in the Excluded Jurisdiction, Allergan shall not
market, sell and distribute the Product in such Excluded Jurisdiction; provided,
however, that if Allergan engaged in marketing, sale of distribution activities
in the Excluded Jurisdictions at the time it discontinues such activities then
Allergan shall be permitted to continue such activities for a reasonable period
of time in order to wind down its activities and Ivivi shall compensate Allergan
for the loss of such territory and the costs associated with discontinuing its
operations. Without limiting the foregoing, in the event that the United States
or any country of the European Union becomes an Excluded Jurisdiction pursuant
hereto, then Ivivi shall promptly pay to Allergan, in the case of the inclusion
of [*] as an Excluded Jurisdiction, [*], and, in the case of the inclusion of
[*] as an Excluded Jurisdiction, [*]; provided however that, if the inclusion of
[*] as an Excluded Jurisdiction is (A) due to a change in the regulatory
requirements of such country and not due to any fault or action or inaction of
Ivivi or (B) due to the refusal of such country to adopt, or the de-adoption by
such country of, Council Directive 93-42-EEC (Medical Device Directive), then
Ivivi shall pay to Allergan, in lieu of the [*] referenced above, an amount
equal to [*]. The inclusion of a country as an Excluded Jurisdiction pursuant to
this section (because of problems with Regulatory Approvals), which inclusion is
not due to any fault involving action or inaction of Ivivi, shall not be deemed
to be a breach of this Agreement so long as Ivivi is continuing to make
commercially reasonable efforts to correct such inclusion if the country being
included as an Excluded Jurisdiction is [*].
(f) In the event that Allergan wishes to market, sell or
distribute the Product in any country or jurisdiction not set forth in SCHEDULES
C-1 and C-2 (provided, however that the countries indicated with an asterisks on
SCHEDULE C-2 shall be deemed not a part of SCHEDULE C-2 for purposes of this
SECTION 2.1(f)) and provides the Allergan Notification in accordance with
SECTION 2.1(b) above, if (i) during the forty-five (45) day period after the
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date of the Allergan Notification, Ivivi provides Allergan a written opinion of
mutually agreed upon counsel that the marketing, sale and distribution of the
Product in such country would infringe third-party intellectual property rights
in such country or jurisdiction and would result in a significant likelihood of
a lawsuit being brought against Ivivi or Allergan or the other persons who may
be indemnified pursuant to ARTICLE 14 hereof and (ii) Allergan still wishes to
market, sell and distribute the Product in that country or jurisdiction despite
such written opinion of mutually agreed upon counsel, then Ivivi shall use
reasonable commercial efforts to obtain a license for, or re-design the Product
to be sold in such country or jurisdiction so as not to infringe, such
intellectual property rights. If Ivivi cannot obtain an appropriate license or
re-design the Product as necessary and Allergan still elects to market, sell and
distribute the Product in such country or jurisdiction, then any indemnification
to be provided to Allergan by Ivivi pursuant to ARTICLE 14 with respect to any
lawsuit arising out of the marketing, sale and distribution of the Product by
Allergan in such country shall be borne equally by Ivivi and Allergan. If Ivivi
cannot obtain or maintain appropriate Intellectual Property protection for the
Product, or cannot obtain an appropriate license or re-design the Product as
necessary so as not to infringe third-party patents in such country or
jurisdiction, in any country or jurisdiction in the Marketing Territory or in
which Allergan has a good faith intention of marketing and selling the Product,
then the royalties that would otherwise be payable under this Agreement with
respect to such country or jurisdiction shall be reduced by [*].
2.2 EXCLUSIVITY. Ivivi represents and warrants to Allergan
that Ivivi is the sole and exclusive owner of all rights related to the Product
and that it has not entered into any other agreements, written or oral, with any
third party permitting the sale or distribution of Product in the Field in the
Territory, and covenants and agrees that during the term of this Agreement,
Ivivi will not enter into any such agreement or itself sell or distribute the
Product or any substantially similar product in the Field in the Territory.
Allergan represents and warrants to Ivivi that neither Allergan nor its
Affiliates presently manufactures, markets, sells, distributes, promotes,
exploits or licenses any pulsed electromagnetic field product for post-operative
use in the Field. Furthermore, Allergan agrees on behalf of itself and its
Affiliates that, in the event Allergan or any of its Affiliates wishes to market
or sell any pulsed electromagnetic field product for post-operative use in the
Field that directly competes with the Product for a particular indication or
therapeutic use in the Field in a particular jurisdiction, which product is
developed by a party other than Ivivi or its Affiliates (a "COMPETING PRODUCT"),
Allergan shall notify Ivivi (the "COMPETING PRODUCT NOTICE"). [*] In no event
shall Allergan be obligated to disclose nonpublic information regarding a
Competing Product to Ivivi.
2.3 SUBDISTRIBUTORS AND SUBAGENTS. Allergan may appoint
subdistributors or subagents for distribution of the Product in the Territory.
Such subdistributors or subagents may include Allergan Affiliates and Affiliated
Parties.
2.4 PRICING AND REIMBURSEMENT APPROVALS. Allergan acknowledges
and agrees that Ivivi makes no representation that Ivivi or the Product has any
approvals necessary for reimbursement by third-party payors (such as health
insurance carriers), [*].
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ARTICLE 3
LICENSE
3.1 LICENSE. Subject to the terms of this Agreement, Ivivi hereby
grants to Allergan and its Affiliates the following license (the "LICENSE"):
(a) an exclusive (even as to Ivivi), worldwide license, with
the right to grant sublicenses to market, use, sell, import (and have imported),
export (and have exported), and distribute (and have distributed) the Product in
the Territory for use in the Field;
(b) an exclusive (even as to Ivivi), worldwide right and
license, with the right to grant sublicenses, to the Ivivi Intellectual Property
and to make or have made (and to the extent necessary to address safety,
regulatory or manufacturing issues, research, develop, modify or have modified)
the Product solely for distribution and sale in the Territory for use in the
Field pursuant to the terms of this Agreement; provided, however, that
Allergan's right and license described in this SECTION 3.1(b) shall only be
exercisable as set forth in SECTION 4.3 and SECTION15.3(b) of this Agreement and
shall be subject to the terms and conditions of SECTION 4.3 and SECTION 15.3(b);
(c) a non-exclusive, royalty-free right and license, with the
right to grant sublicenses to the Trademarks in connection with the marketing,
distribution, sale, support and packaging of the Product for use in the Field;
provided, however, that Allergan shall be permitted, in its sole discretion, to
rebrand and rename the Product in connection with the marketing, distribution
and sale of the Product, and Allergan shall be the sole and exclusive owner of
any such brand or name and all intellectual property rights therein, unless such
brand or name includes a Trademark; and
(d) an exclusive (even as to Ivivi), royalty-free right and
license, with the right to grant sublicenses to use, perform, modify, create
derivative works of, copy, display, reproduce and distribute any and all
documentation, data, labels, inserts and other information on the Product in the
Territory for the purpose of the distribution, marketing or sale of the Product
in the Field.
3.2 SUBLICENSES. Allergan shall have the right to grant sublicenses
under the License to any third party.
3.3 GOODWILL. All goodwill accruing as a result of Allergan's use of
the Trademarks shall belong and accrue to Ivivi.
ARTICLE 4
SUPPLY AND ORDERS FOR PRODUCT
4.1 SUPPLY OF PRODUCT. Subject to the terms of this Agreement, Ivivi
agrees to manufacture and supply Allergan with quantities of the Product, as
requested by Allergan from time to time, for use in the Field in the Territory.
Ivivi may meet its obligations to supply the Product to Allergan hereunder
either directly, or indirectly by contracting with a manufacturer of its
choosing, provided that at all times Ivivi shall be fully responsible for the
actions and inactions of such contract manufacturer. Within ninety (90) days
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after Allergan has purchased more than [*] in the aggregate pursuant to this
Agreement, Ivivi agrees to (or will cause ADM to) obtain and qualify a
secondary, third-party source ("SECONDARY MANUFACTURER") for the manufacture of
the Product, and Ivivi agrees to continuously enable and maintain such Secondary
Manufacturer throughout the term of this Agreement and continuously update such
manufacturer with any alterations, modifications or changes in its process for
manufacturing the Product.
4.2 PURCHASE OF PRODUCT.
(a) FORECASTS. At the beginning of each calendar month during
the term of this Agreement, Allergan shall provide Ivivi with a non-binding,
good faith written forecast of Allergan's expected requirements for Product
during the following twelve (12) months (the "FORECAST"). In no event shall
Allergan be obligated to purchase or have any liability in respect of the
quantities of Product set forth in any such Forecast. In the event that
Allergan's orders in any month exceed the amount forecast for such month in the
most recent Forecast, Ivivi shall use commercially reasonable efforts to supply
such amounts, but shall not be in breach of this Agreement for failure to supply
such excess.
(b) ORDERS. Allergan shall place any binding orders for Units
by written or electronic purchase order (or by any other means agreed to by the
parties) to Ivivi. Ivivi shall acknowledge and accept any Allergan purchase
order in writing within ten (10) days of receipt; provided, however, that Ivivi
must accept any Allergan purchase order equal to or less than the amount set
forth in the leading three (3) months of the Forecast. Any order to which Ivivi
does not respond to within such ten (10) days shall be deemed to have been
accepted. All such purchase orders shall be irrevocable. Purchase orders shall
set forth the desired date of delivery with respect to the Units ordered and
shall be placed at least thirty (30) days prior to such desired date of
delivery. All Units ordered by Allergan under this Agreement shall be delivered
on or before the delivery date set forth in the purchase order. Ivivi will use
commercially reasonable efforts to accommodate any orders for the Products
exceeding the leading three (3) months of such Forecast, and if Ivivi expects to
be unable to fulfill the excess portion of any such order within the time frame
requested, then Ivivi shall so notify Allergan within ten (10) days of receipt
of such order and the parties will work together to agree upon an alternative
delivery schedule for such excess portion of such order. Upon delivery to
Allergan, the expiration dating on any Unit shall be no less than [*].
(c) ALLOCATION. In the event of a Supply Problem, Ivivi shall
allocate the resources available to it first to Allergan and all Product ordered
by Allergan prior to any allocation of its resources to products or services to
be delivered to any other person or entity. For purposes of this SECTION 4.2(c),
"SUPPLY PROBLEM" shall mean Ivivi's inability or failure to supply at least [*]
of the Units ordered by Allergan [*], which Units conform to the Specifications
and other terms and conditions of this Agreement, and in compliance with the
delivery periods set forth in the purchase orders submitted by Allergan in
accordance with SECTION 4.2(b). The operation of this provision shall not excuse
Ivivi in any way from the minimum supply requirements set forth in this
Agreement. Any supply by Ivivi of the Product pursuant to this provision shall
not excuse Ivivi for its Failure to Supply.
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(d) SHIPMENT. Ivivi shall ship the Product, in reasonable
commercial quantities, from Northvale, New Jersey to Allergan's designated
location (the "SHIPPING POINT"), and title and risk of loss shall pass to
Allergan upon delivery to the Shipping Point. [*]. The parties will cooperate to
obtain the best commercial rates for such shipping costs. All Product delivered
by Ivivi shall be suitably packed for surface or air shipment, in Allergan's
sole discretion, in Ivivi's standard shipping cartons, marked for shipment to
such Allergan location as Allergan may designate. Ivivi shall ship all Units in
accordance with the instructions specified in Allergan's purchase orders; in the
absence of such instructions, Ivivi will follow its standard protocol. A
Certificate of Analysis ("COA"), as exemplified in EXHIBIT A, specific to
testing of each lot/batch, must accompany each shipment. Ivivi shall maintain a
copy of each such COA in compliance with current good manufacturing practices
("CGMP"). Ivivi shall provide a duplicate copy of the COA to Allergan, upon
Allergan's request, within forty-eight (48) hours of such request.
(e) INSPECTION AND ACCEPTANCE. Allergan shall have the right,
at its sole discretion, to inspect each and every shipment of the Product.
Allergan shall have [*] days from receipt of a shipment of Units to inspect the
shipment. Allergan may reject a shipment (or portion thereof) of Units if any
Units contained therein exhibits any damage or fails to conform to the
Specifications by providing Ivivi written notice of such rejection. Allergan may
then return the Units to Ivivi, freight paid by Ivivi. Upon receipt of the
damaged or nonconforming Units, Ivivi will credit Allergan for the cost of
returning the Units, and Allergan, in its sole discretion, shall have the option
of (i) terminating the applicable portion of the applicable purchase order
thereof without penalty and any failure to meet a forecasted quantity shall be
excused for the corresponding time period; or (ii) require Ivivi to replace such
Units promptly at no additional cost to Allergan and pay for the transportation
costs. In no event shall the inspection and acceptance of any Unit pursuant to
this SECTION 4.2(e), or the payment for such Unit by Allergan, in any way impair
or reduce Allergan's rights by law or under this Agreement.
4.3 FAILURE TO SUPPLY. In the event that Ivivi shall be unable or
unwilling or shall otherwise fail to supply at least [*], of the Product
conforming to the Specifications and other terms and conditions of this
Agreement as Allergan shall order [*] and in compliance with the delivery
periods set forth in the purchase orders submitted by Allergan in accordance
with SECTION 4.2(b) hereof (any such failure hereinafter referred to as a
"FAILURE TO SUPPLY"), then Ivivi shall take prompt action to procure an
alternate Product manufacturer and shall take all necessary and reasonable steps
to enable such alternate Product manufacturer to produce the Product (and
provide Allergan written confirmation thereof) (such action and steps to be
collectively referred to herein as the "CORRECTIVE ACTION").
In the event that the Failure to Supply is based on Ivivi's failure to
meet (a) [*] and Ivivi (i) fails to take the Corrective Action or is unable to
procure and enable an alternate Product manufacturer to produce the Product such
that the alternate Product manufacturer shall have begun production of the
Product no later than the date which is [*] after written notice from Allergan
(and provide Allergan written confirmation thereof) and (ii) has not provided
written notice to Allergan within [*] days of the Failure to Supply of its
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intent to deliver all Units that had been ordered but not supplied, and actually
delivers all such ordered but not supplied Units within [*] days of such Failure
to Supply, or (b) [*] and Ivivi fails to take the Corrective Action or is unable
to procure and enable an alternate Product manufacturer to produce the Product
within [*] of written notice from Allergan (and provide Allergan written
confirmation thereof), then Allergan shall have the right to exercise the
license rights granted in SECTION 3.1(b) of this Agreement (the date such right
becomes exercisable, the "ALLERGAN MANUFACTURING LICENSE COMMENCEMENT DATE") and
to use the information described in SECTION 4.4, and, at Allergan's sole
discretion, Allergan may continue to use its rights thereunder until such time
as (x) Ivivi demonstrates to Allergan's reasonable satisfaction that Ivivi is
able to fully resume its supply obligations hereunder, (y) Ivivi pays all costs
and expenses associated with resuming such manufacture, including, without
limitation, paying all costs and expenses associated with the termination of and
transition from Allergan's then existing supplier, and (z) Ivivi actually fully
resumes its supply obligations hereunder (such time period from the Allergan
Manufacturing License Commencement Date to the end date described in the
immediately preceding clauses (x) through (z), a "MANUFACTURING LICENSE
PERIOD"), in which case, the Manufacturing License Period shall be suspended and
Allergan shall thereafter purchase Product exclusively from Ivivi in accordance
with the terms of this Agreement.
If Allergan engages a third party to produce or manufacture the Product
during the Manufacturing License Period, then, in negotiating a reasonable
commercial agreement with such third-party supplier, Allergan shall make a
reasonable good faith effort to provide for reasonable termination costs so long
as obtaining such termination provisions does not cause the price Allergan pays
for the Product to exceed the Transfer Price Allergan would have otherwise paid
Ivivi hereunder. If the price Allergan pays for a Unit of Product or Allergan's
cost to produce a Unit of Product (the "PRODUCT UNIT REPLACEMENT COST") is
greater than the then applicable Transfer Price, which Allergan would otherwise
have paid Ivivi hereunder for such Unit of Product (the "PRODUCT PRICE
DIFFERENCE"), then Allergan shall deduct such Product Price Difference from the
royalties required by SECTION 5.4 during the Manufacturing License Period (the
royalties, less such deduction if applicable, are the "MANUFACTURING LICENSE
COMPENSATION").
Ivivi agrees to provide reasonable assistance to enable such
third-party manufacturer to produce Units, including but not limited to,
providing technical and regulatory assistance and to the extent reasonably
required or requested by Allergan, transferring to Allergan any approvals,
licenses, intellectual property or any other rights or information. Furthermore,
Ivivi agrees to take reasonable actions to (i) provide or have provided by its
suppliers or otherwise all components used in the Product, such as raw
materials, and, if possible, make available equipment to enable the production
of Units (as used herein and in SECTION 4.4 below, "PRODUCE" or "PRODUCTION"
shall include all aspects of creating the Product for commercial distribution
and sale, including, but not limited to, manufacture, fill, test and package),
and (ii) upon the written request of Allergan, provide reasonable assistance to
Allergan to locate a suitable manufacturing facility for production of the
Product.
In the event Allergan exercises the license rights granted in SECTION
3.1(b) of this Agreement during the period commencing on the Effective Date and
ending on the third anniversary of the First Commercial Sale, then Ivivi shall
promptly repay to Allergan a portion of all amounts paid by Allergan pursuant to
SECTION 5.6 as follows: [*]; and no additional amounts shall be due or payable
to Ivivi pursuant to such SECTION 5.6.
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Any resumption by Ivivi will be subject to the then existing
obligations, if any, to the alternate supplier, including, but not limited to,
binding orders and minimum quantities. Allergan agrees that the occurrence of
and failure to correct a Failure to Supply shall not be deemed a breach of this
Agreement so long as Ivivi is continuing to make reasonable commercial efforts
to correct such Failure to Supply and such failure is not the result of reckless
or intentional action or inaction by Ivivi.
4.4 ESCROW OF PRODUCTION INFORMATION. Within ninety (90) days after
execution of this Agreement and during the term of this Agreement (after such
ninety (90) day period), Ivivi shall, at its expense, place and maintain with an
escrow agent mutually acceptable to Ivivi and Allergan (the "ESCROW AGENT"),
pursuant to an agreement acceptable to Ivivi and Allergan, all information
related to the manufacture or production of the Product including, without
limitation, a description of Ivivi's (or the Product manufacturer's) process,
raw materials and equipment for the manufacture or production of the Product in
sufficiently clear and detailed terms that it can be readily followed and
carried out by a trained scientist or engineer to make the Product in the manner
Ivivi reasonably considers most efficient (the "ESCROW DEPOSIT"). The Escrow
Deposit shall provide for the appropriate treatment of the Confidential
Information of Ivivi. In the event Ivivi (or the Product manufacturer) alters,
modifies or changes its process for manufacturing the Product, Ivivi shall amend
the description in escrow to include such alteration, modification or change.
The information held in escrow pursuant to this SECTION 4.4, shall be available:
(i) to Allergan or its designee only during Manufacturing License Periods and
(ii) to any independent consultant engaged by Allergan who is reasonably
acceptable to Ivivi (who shall be bound under a written confidentiality
agreement reasonably acceptable to Ivivi) to audit compliance with the
foregoing. Ivivi represents and warrants that the information it places into
escrow in connection with this Agreement and the Escrow Agreement describes the
manner of production which is most current and further is accurate, complete and
sufficiently clear and detailed to enable a trained scientist or engineer to
commercially produce the applicable Product.
4.5 PRODUCT, PACKAGING AND LABELING. Ivivi shall be responsible for
Product packaging, labeling, instructions for use, and any necessary
sterilization of Product purchased under this Agreement. Subject to SECTION
6.1(c), Allergan shall have the right to determine the appearance of the Product
and the appearance and text of all package labeling used in connection with the
Product. Ivivi shall deliver the text of the proposed packaging, labeling and
instructions for use to Allergan for its review and comment prior to printing.
In the event Allergan requests changes to the appearance of the Product or the
appearance or text of the package or labeling, which changes are not required
pursuant to any regulatory or legal requirements, and the per unit cost of the
Product, packaging and labeling the Product increases as a direct result of the
changes requested by Allergan by more than [*] of the then current unit cost of
packaging and labeling the Product, then Ivivi shall notify Allergan of such
additional costs, and Allergan shall pay such increase in costs if it notifies
Ivivi in writing that it still wants the changes to be made. Notwithstanding the
foregoing, Ivivi shall prepare packaging, labeling and instructions for use in
all foreign languages that Allergan reasonably requests at Ivivi's sole cost and
expense. Allergan shall, with the assistance of Ivivi as described herein,
develop and use its own sales and promotional literature in connection with its
distribution of the Product.
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ARTICLE 5
PRICES AND PAYMENTS
5.1 PRICE. The transfer price (the "TRANSFER PRICE") of all Product
shipped by Ivivi to Allergan during the term of this Agreement shall be as set
forth on SCHEDULE A hereto. Such prices do not include any sales, excise, use,
value added or other government taxes that may be applicable to the purchase of
the Product, which will be the responsibility of Allergan (except for taxes
based on Ivivi's income, including federal, state and local taxes). When Ivivi
has the legal obligation to collect and/or pay such taxes, the appropriate
amount shall be added to Allergan's invoice and paid by Allergan to Ivivi unless
Allergan provides Ivivi with a valid tax exemption certificate authorized by the
appropriate governmental taxing authority. [*].
5.2 INVOICING; PAYMENT. Ivivi shall submit an invoice to Allergan for
each shipment of Product ordered by Allergan under this Agreement. Each invoice
shall be due and payable net [*] days from the later of the date of invoice or
receipt of the invoice by Allergan. All invoices shall be sent to Allergan's
address for notice purposes, without regard to the actual shipping address for
the Product. Each such invoice shall state Allergan's aggregate and unit
purchase price for the Product in the relevant shipment, plus any freight,
incident to the purchase or shipment initially paid by Ivivi and to be borne by
Allergan hereunder.
5.3 RESALE PRICES. Allergan may resell the Product at such prices, as
Allergan in its sole discretion, shall determine.
5.4 ROYALTIES. No later than [*] days after the end of each Fiscal
Quarter, Allergan shall provide Ivivi a report summarizing sales activity for
the Product for the previous Fiscal Quarter and pay Ivivi a royalty equal to the
greater of (a) [*] of (i) Net Sales of the Product during such Fiscal Quarter
minus (ii) all out-of-pocket costs (as multiplied by the Factor, if applicable)
specifically set forth in this Agreement as deductible from Net Sales, including
costs of approvals obtained by Allergan and other fees and expenses set forth in
SECTION 5.11, or (b) the product of [*] multiplied by the number of Units sold
and included in the determination of Net Sales of the Product during such Fiscal
Quarter.
5.5 MINIMUM SALES AND ROYALTIES. Allergan will provide orders totaling
[*]. In addition, Allergan will pay minimum royalties as set forth in SCHEDULE
D. Notwithstanding any other provisions hereof, the sole remedy of Ivivi for the
inability or failure of Allergan to meet the minimum requirements set forth in
this section (or determined as described in SCHEDULE D) shall be termination of
this Agreement pursuant to SECTION 15.2(d) hereof.
5.6 INITIAL AND MILESTONE PAYMENTS. In addition to the foregoing,
Allergan shall pay to Ivivi: (a) $500,000 within five (5) days following the
execution of this Agreement, (b) [*] within thirty (30) days after the First
Commercial Sale of the Product by Allergan in the U.S. to a person who is not an
Affiliate or subcontractor or sublicensee of Allergan and (c) [*] within thirty
(30) days after the First Commercial Sale of the Product by Allergan in the EU
to a person who is not an Affiliate or subcontractor or sublicensee of Allergan.
"FIRST COMMERCIAL SALE" means the first time Allergan sells at least [*] in the
aggregate to third parties (which sales must include sales of at least [*]) and
delivers the Product to such third parties. The amounts payable pursuant to this
SECTION 5.6 shall not be counted against the royalty payments required by
SECTION 5.4.
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5.7 NEW INDICATION. Ivivi shall, at its own expense, conduct studies of
the Product in [*] to determine the safety and effectiveness of the Product in
treating [*] ("NEW INDICATION STUDIES"). Ivivi shall consult with Allergan
regarding the protocols, investigators, investigator sites, case report forms,
data captured, publications, rights to publications and information gathering
requirements for the New Indication Studies. Ivivi shall promptly provide to
Allergan all results of the New Indication Studies, including without limitation
any and all preliminary results, adverse event reports and the like. Upon
completion of such study, Ivivi shall prepare a written report of the results of
the New Indication Studies which shall be in a form and contain such information
as reasonably requested by Allergan regarding the use of the Product for the
treatment and prevention of [*] (the "NEW INDICATION"). Allergan shall have
royalty-free, unlimited use in the Field of the New Indication Studies and any
data collected thereunder. Thereafter, upon Allergan's request, Ivivi shall, at
its own expense (other than the filing fees referenced below), make commercially
reasonable efforts to obtain FDA Approval for the New Indication in the United
States. For purposes of this SECTION 5.7, "FDA APPROVAL" shall mean FDA
premarket approval to commercially distribute a product in the United States for
use in humans, unless Allergan has, at its reasonable discretion, requested that
Ivivi pursue 510(k) clearance from the FDA rather than premarket approval, in
which case the term "FDA Approval" shall mean such 510(k) clearance. Allergan
shall pay the filing fees directly related to obtaining FDA Approval for the New
Indication. All matters, actions and activities related to the FDA Approval of
the New Indication including, without limitation, the specifications and design
of the Product shall be reviewed, decided and approved by the New Indication
Steering Committee (as defined below). The New Indication Steering Committee,
consisting of two (2) representatives from Allergan and two (2) representatives
from Ivivi, shall meet periodically and at least quarterly at Allergan's offices
in Irvine, California (or such other location as the parties may mutually agree)
to review progress and to resolve issues. Ivivi shall provide Allergan with all
information related to the FDA Approval of the New Indication including, without
limitation, prior notice of any communications, applications or other activities
and any other types of information requested by Allergan. The New Indication
Steering Committee may take action only by the unanimous written consent of all
members. If an issue remains unresolved after consideration by the New
Indication Steering Committee, any New Indication Steering Committee member may
escalate it to the Chief Executive Officer of Ivivi and a Vice President of
Allergan's breast aesthetics business for resolution. If the issue remains
unresolved thirty (30) days thereafter, then the dispute shall be settled by
arbitration (which arbitration shall be binding and enforceable in any court of
competent jurisdiction for the purposes of the Agreement only) as follows: (a)
the parties shall jointly select one (1) independent arbitrator with expertise
in medical device development within ten (10) days, (b) the parties shall
cooperate in good faith in the selection of the arbitrator but, if they fail to
do so within the ten (10) day period, either party may request appointment of
the arbitrator by the American Arbitration Association ("AAA"), (c) each party
will have five (5) day(s) to present its case (presentation shall be made on a
date selected by the arbitrator which shall be at least ten (10) and no more
than thirty (30) days after selection of the arbitrator), (d) the arbitrator
shall have twenty (20) days from completion of such presentation to render its
decision, and (e) such arbitration shall be informal and need not conform to AAA
or other established procedures. Unless otherwise agreed to by the parties,
arbitration shall take place in Irvine, California and arbitrator fees will be
shared equally by the parties.
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5.8 CURRENCY OF PAYMENTS. All payments under this Agreement will be
made in U.S. Dollars by electronic funds transfer to such bank account as the
party receiving such funds may designate from time to time, or by check.
5.9 BOOKS, RECORDS AND AUDIT RIGHTS. Each party and its respective
Affiliates shall maintain accurate books and records in accordance with GAAP
regarding sales or production of the Product by such party (or the Product
manufacturer) and its Affiliates in sufficient detail to enable Net Sales or
Manufacturing Costs of the Product to be determined and to otherwise enable each
party to monitor compliance by the other with the terms of this Agreement. Each
party shall maintain such books and records for a period of three (3) years
following the applicable activity. Each party shall have the right to inspect
such books and records for the purpose of compliance with this Agreement,
including verification of Net Sales and Manufacturing Costs, at reasonable
intervals (but no more frequently than once in any twelve (12) month period) and
upon reasonable prior notice. Such inspections shall be performed by an
independent certified public accountant, recognized nationally in the United
States, selected by the inspecting party and approved by the party being
inspected, which approval shall not be unreasonably withheld. All expenses of
such inspection shall be borne by the inspecting party; provided, however, that
if such inspection shall reveal an discrepancy (an underpayment in the case of
Net Sales and an overcharging in the case of Manufacturing Costs) of more than
[*], then the party being inspected shall pay the reasonable fees charged by
such independent auditor in connection with such inspection. Any deficiencies
(in the case of Net Sales) or overpayment (in the case of Manufacturing Costs)
shall be immediately due and payable together with interest at the rate of the
lesser of, [*] per annum, or the maximum rate permitted by law, from the date or
dates such amounts should have been paid (in the case of Net Sales) or were paid
(in the case of Manufacturing Costs). Any independent certified public
accountant engaged by a party shall sign a confidentiality agreement reasonably
acceptable to the other party prior to any audit and shall then have the right
to examine the records kept pursuant to this Agreement and report findings (but
not the underlying data) of the examination to the inspecting party as is
necessary to evidence that records were or were not maintained and used in
accordance with this Agreement.
5.10 WITHHOLDING. Allergan shall be entitled to withhold from any
payment due to Ivivi under this Agreement any amounts assessed against Ivivi
that Allergan by law is required to pay to any government. Such withholding
shall decrease by an equivalent amount the payment due to Ivivi. In the event of
any withholding under this section, Allergan shall provide receipts of payment
of any withheld amounts or other documents reasonably available to Allergan.
Ivivi shall provide to Allergan any information or documents requested by
Allergan in conjunction with the subject matter noted above.
5.11 DEDUCTIBLE COSTS. Allergan shall deduct from Net Sales (in
connection with the calculation of any royalties as provided in SECTION 5.4(a))
[*] (the "FACTOR") of [*].
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5.12 LATE PAYMENTS. Any amounts payable pursuant to this Agreement that
are not paid when due shall bear interest at the lesser of (i) [*] per annum or
(ii) the maximum rate permitted by law, from the date or dates such amounts
should have been paid.
ARTICLE 6
ADDITIONAL RIGHTS AND OBLIGATIONS OF ALLERGAN
6.1 SALES AND MARKETING.
(a) Allergan will make commercially reasonable efforts to
further the promotion, marketing, sale and other distribution of the Product in
the Marketing Territory in the Field.
(b) Allergan shall exclusively and in its sole discretion
determine the manner in which the Product is marketed, sold and distributed,
including without limitation, the methods of pricing, packaging, labeling and
identification, advertising, promoting, and collection and ownership of
customers' names. Except as set forth in SECTION 4.5, Allergan shall be
responsible for the preparation of sale and marketing materials for the
marketing and sale of the Product, including the adaptation and/or modification
of Ivivi's sales and marketing materials, as deemed appropriate by Allergan, to
reflect local culture or business practices and languages, and to reflect
Allergan as the exclusive distributor of the Product. However, Allergan and
Ivivi will meet no less than annually to review commercialization-related plans
and materials and Ivivi will cooperate with Allergan in the preparation of
Allergan's sales and marketing materials and may provide suggestions with
respect to such plans.
(c) Notwithstanding the foregoing, Ivivi shall have final
approval over all labels, labeling, indications and claims regarding the Product
and other matters that affect, or could reasonably affect, its Regulatory
Approvals for the Product and its rights in the Trademarks.
6.2 PACKAGE LABELING AND OTHER PRODUCT RELATED MATERIALS. Subject to
SECTION 6.1(c), Allergan shall have the right to determine the appearance and
text of all package labeling used in connection with the Product. Allergan
shall, with the assistance of Ivivi, develop and use its own sales and
promotional literature in connection with its distribution of the Product.
Allergan may, at its own cost and expense, conduct any additional studies that
Allergan deems necessary to support the marketing of the Product. Ivivi shall
provide to Allergan any and all information and knowledge in Ivivi's possession
concerning Product, their qualities and uses, and techniques and methods of
marketing them, as will aid Allergan in improving the sales of the Product.
Allergan shall provide to Ivivi copies of all sales and promotional literature
(or an English translation thereof for those in other languages) and study
protocols it develops to Ivivi for review at least fourteen (14) days prior to
the first use thereof, and shall not use such materials if Ivivi raises a
reasonable objection based on the accuracy of such materials or the compliance
of such materials with the Regulatory Approvals, including the approved
instructions for use of such Product. Notwithstanding the foregoing, (i)
Allergan shall comply with Ivivi's reasonable requests regarding marking of the
packaging and other literature for all Product sold under this Agreement with
the patent and copyright marking and, if Allergan uses any of the Trademarks,
designation of such Trademarks as owned by Ivivi, and (ii) Allergan shall
designate in a manner as reasonably requested by Ivivi, so long as such request
is consistent with any applicable regulatory requirements, that "Ivivi" is the
designer of the Product. None of the foregoing shall relieve or limit Ivivi's
obligation to ensure that package labeling complies with applicable law.
16
6.3 IMPORT APPROVALS. Allergan shall be responsible for obtaining all
import licenses and permits (other than regulatory approvals described in
ARTICLE 10) as may be required to import the Product into such countries as are
selected by Allergan in accordance with then prevailing laws and regulations of
such countries. All such filings and registrations of the Product shall be in
the name of Allergan, whenever feasible in accordance with prevailing laws and
regulations. Ivivi shall cooperate fully with Allergan in its efforts to obtain
any such approvals.
ARTICLE 7
ADDITIONAL RIGHTS AND OBLIGATIONS OF IVIVI
7.1 COMPLIANCE WITH LAWS; MANUFACTURING. Ivivi (and all third-party
manufacturers of the Product) shall comply in all material respects with all
laws, rules and regulations applicable to the manufacture, labeling and
packaging of the Product in the Marketing Territory, including maintaining
qualified manufacturing and quality facilities and/or procedures. Without
limiting the generality of the foregoing, Ivivi (and all third-party
manufacturers of the Product) shall implement such quality control systems and
procedures as shall be appropriate to (a) ensure compliance with the
requirements of the International Standards Organization ("ISO") and Quality
Systems Regulations ("QSR"), as applicable to Ivivi or such third-party
manufacturer as the manufacturer and supplier of the Product, and (b) place the
XX xxxxx on the Product in accordance with applicable law. Furthermore, Ivivi
(and its third-party manufacturers of the Product) shall comply with all
processes dictated by approval processes and regulations in any country in which
the Product is approved for sale, including, but not limited to, FDA
manufacturing, storage and handling requirements, and other government
requirements. In addition, Ivivi shall allow reasonable access to its records,
manufacturing facilities, and its third-party manufacturers' manufacturing
facilities and records (if applicable) to allow any Government Heath Authority
to conduct full compliance audits or inspections relating to the Product.
Further, the parties shall make reasonable commercial efforts to, within sixty
(60) days following the Effective Date but in any event prior to the sale of any
Product to third parties, enter into a Quality Agreement in accordance with QSR
regulations which shall include, without limitation, a joint complaint
management process; storage and shipment conditions and controls; environmental,
temperature and humidity conditions and controls, as applicable; a requirement
to provide Allergan written documentation of Product compliance and monitoring
records demonstrating continuous compliance with Product storage and shipment in
accordance with Product labeling; and such other provisions as requested by
Allergan or required or suggested by regulatory guidance or Allergan World Wide
Quality Assurance requirements.
7.2 TRAINING AND SUPPORT. Ivivi shall (a) assist, at no charge, in the
training of Allergan's sales personnel representing the Product with respect to
the promotion and use of the Product, which training shall take place during
normal business hours (i) once every [*] during the period commencing on the
Effective Date and ending on the [*] of the First Commercial Sale and (ii) once
every [*] thereafter; and (b) travel, at Allergan's sole cost and expense, with
Allergan's sales personnel to assist in problem solving, market needs
identification and general market development, in each case as may be reasonably
requested by Allergan.
17
7.3 TECHNICAL SUPPORT. Ivivi shall be responsible for providing all
technical support for the Product at its sole expense. During the term of this
Agreement and any renewal terms, and for one (1) year thereafter, Ivivi shall,
at Ivivi's cost, be responsible for providing technical support to Allergan
technical support staff and users of the Product. During the term of this
Agreement and for one (1) year thereafter, Ivivi shall also provide technical
support training to Allergan technical support staff upon request, which
training shall take place during normal business hours (i) once every [*] during
the period commencing on the Effective Date and ending on the [*] of the First
Commercial Sale and (ii) once every [*] thereafter. In addition, Ivivi will
perform any technical programming or technical research and all other actions
related to correcting identified defects in the Product, which Allergan may
reasonably request from time to time, within a reasonable time free of charge to
Allergan.
7.4 RESEARCH AND DEVELOPMENT. Ivivi will continue its product
development programs, at its own cost and expense, including providing on-going
research and development of the Product and Improvements of the Product.
Allergan will provide Ivivi feedback from Allergan's sales force with regard to
market needs and Ivivi will use commercially reasonable efforts to develop
product enhancements to meet these needs.
7.5 PROSECUTION OF PATENTS. Ivivi agrees to, at its expense, prosecute,
or cause to be prosecuted to allowance or final rejection, and reasonably
maintain, in the Marketing Territory and such other countries as Allergan may
request from time to time, all Ivivi Intellectual Property related to the Field
for which a patent would be desirable. Ivivi shall pay all government fees
required to keep in force patents and applications therefor relating to the
Ivivi Intellectual Property and shall submit evidence to Allergan, upon request,
that said government fees have been timely paid. In the event that Ivivi decides
not to prosecute, not to pay a government fee due on, or otherwise to abandon, a
patent or application therefor relating to the Ivivi Intellectual Property in a
country in which it is required to do so, Ivivi shall send Allergan written
notice of said decision at least ninety (90) days in advance of the action or
payment due date. Allergan shall thereupon have the option to take over the
patent or application if such patent or application is in a country in which
Allergan has a good faith intention to market, sell or distribute the Product,
and Ivivi shall assign to Allergan all rights in such patent or application in
such jurisdiction. Whereupon Allergan shall pay the government fees, in which
event it may deduct the costs thereof from the amounts payable to Ivivi with
respect to sales of the Product in such country (or the EU, as a whole, in the
case of a member country in the EU).
7.6 MARKETING SAMPLES. Ivivi will provide to Allergan, at no charge,
upon thirty (30) days prior notice, samples of the Product as may be requested
by Allergan, which shall not exceed [*] Units in any consecutive twelve (12)
month period. Allergan will provide such samples to its sales force and
customers at no charge.
7.7 SALES LEADS. Ivivi shall forward to Allergan all leads for sales of
Product in the Territory.
7.8 MANUFACTURING. In the event that Ivivi is not manufacturing the
Product and is using a third party to manufacture the Product (including without
limitation a related party or Affiliated Party), Ivivi shall obtain all rights
necessary from such third party to enable Allergan to exercise all of its rights
under this Agreement.
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ARTICLE 8
PRODUCT WARRANTIES
8.1 WARRANTY. Ivivi warrants that all Product (a) are provided free and
clear of any liens and encumbrances of any kind, are of good material and
workmanship and will be free of defects in material and workmanship and conform
to the Specifications therefor, (b) comply with all applicable safety, health
and other laws, rules and regulations applicable to the Product in the United
States or EU, and the applicable laws, rules and regulations of any Marketing
Territory outside the U.S. and EU, (c) are safe and effective for all reasonably
foreseeable uses in the Field, and (d) not adulterated or misbranded as defined
in the Act.
8.2 NON-CONFORMING PRODUCT. In the event that any Product purchased
hereunder fails to conform to the warranties set forth in SECTION 8.1, Ivivi
will be responsible for all damages, and, in addition to Allergan's other
remedies at law or in equity, Ivivi, at its option, must replace the defective
or non-conforming Product at its expense or fully refund the purchase price (and
related expenses, including, without limitation, shipping, insurance and other
transportation charges) incurred by Allergan.
8.3 PRODUCT LIABILITY. Ivivi shall be responsible for all claims
related to the Product including, without limitation, all health related claims
from users of the Product; except to the extent that liability for such claims
is due to: (a) the gross negligence or willful misconduct of Allergan, (b)
material breach of this Agreement by Allergan, or (c) material breach of or
substantial noncompliance with any law or regulation (that Allergan is required
to comply with hereunder) by Allergan.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
9.1 IVIVI'S REPRESENTATIONS AND WARRANTIES. Ivivi hereby represents and
warrants to Allergan that as of the Effective Date and during the term of this
Agreement:
(a) Ivivi is a corporation duly organized, validly existing
and in good standing under the laws of New Jersey, and this Agreement has been
duly authorized by all necessary corporate action.
(b) Ivivi has all necessary corporate power and authority to
enter into this Agreement and to perform all of its obligations hereunder.
(c) This Agreement has been duly authorized, executed and
delivered by Ivivi and is the legal, valid and binding obligation of Ivivi,
enforceable against Ivivi in accordance with its terms.
(d) Neither the execution, delivery and performance by Ivivi
of this Agreement nor the consummation of the transactions contemplated hereby
violate or conflict with the charter documents of Ivivi, any material contract,
agreement or instrument to which Ivivi is a party or by which it or its
properties are bound, or any judgment, decree, order or award of any court,
governmental body or arbitrator by which Ivivi is bound, or any law, rule or
regulation applicable to Ivivi.
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(e) Ivivi is the sole and exclusive owner of the Ivivi
Intellectual Property, including the Patents, the Trademarks and its
Confidential Information, free and clear of any security interests, claims,
encumbrances or charges of any kind, and has full right, power and authority to
enter into this Agreement and to grant to Allergan the rights granted and to be
granted hereunder.
(f) The rights and licenses granted under this Agreement do
not infringe any issued or published patent, copyright, trademark, license or
other intellectual property right of any third party and do not misappropriate
any trade secret of any third party.
(g) As of the Effective Date, there is no legal,
administrative, arbitration, or other proceeding, suit, claim or action of any
nature, judgment, decree, decision, injunction, writ or order pending or, to the
knowledge of Ivivi, threatened or contemplated by or against or involving Ivivi
or its shareholders, directors or officers (but only in their capacity as such),
Ivivi Intellectual Property, Ivivi Confidential Information or this Agreement,
whether at law or in equity, before or by any person, entity or governmental or
quasi-governmental, administrative or regulatory agency or any court. Ivivi
shall provide notice of any of the foregoing to the extent they involve the
Product, the Ivivi Intellectual Property, Ivivi Confidential Information or this
Agreement.
(h) All proprietary technical information and Ivivi
Intellectual Property that has not been patented has been kept confidential.
(i) Except for the Patents, Ivivi has not patented or applied
for patent protection on any of the technology it has used or proposes to use in
developing the Product.
(j) With respect to all regulatory filings to obtain
Regulatory Approvals, (i) the data and information in Ivivi's submissions were,
are and shall be free from fraud or material falsity; (ii) the Regulatory
Approvals have not been and will not be obtained either through bribery or the
payment of illegal gratuities, (iii) the data and information in Ivivi's
submissions were, are and shall be accurate and reliable for purposes of
supporting approval of the submissions, and (iv) the Regulatory Approvals shall
be obtained without illegal or unethical behavior of any kind.
(k) Ivivi is not under any obligations inconsistent with the
provisions of this Agreement.
(l) Ivivi's agreement with ADM allows Ivivi to terminate
exclusivity in the event that ADM refuses to match any such lower price, and
Ivivi agrees that it will not amend any agreement with ADM in any way, without
the prior written consent of Allergan, if such amendment may adversely affect
the timing of deliveries to Allergan or the price paid by Allergan for the
Product.
9.2 ALLERGAN'S REPRESENTATIONS AND WARRANTIES. Allergan hereby
represents and warrants to Ivivi that as of the Effective Date and during the
term of this Agreement:
(a) Allergan is duly organized, validly existing and in good
standing under the laws of Delaware and this Agreement has been duly authorized
by all necessary corporate action.
20
(b) Allergan has all necessary corporate power and authority
to enter into this Agreement and to perform all of its obligations hereunder.
(c) This Agreement has been duly authorized, executed and
delivered by Allergan and is the legal, valid and binding obligation of
Allergan, enforceable against Allergan in accordance with its terms.
(d) Neither the execution, delivery and performance by
Allergan of this Agreement nor the consummation of the transactions contemplated
hereby violate or conflict with the charter documents of Allergan, any material
contract, agreement or instrument to which Allergan is a party or by which it or
its properties are bound, or any judgment, decree, order or award of any court,
governmental body or arbitrator by which Allergan is bound, or any law, rule or
regulation applicable to Allergan.
ARTICLE 10
REGULATORY SUBMISSIONS
10.1 MEDICAL DEVICE ESTABLISHMENT REGISTRATION. Ivivi shall maintain a
Medical Device Establishment Registration (as defined under the Act) as
manufacturer and Specifications developer for the Product, as required by law,
including without limitation those defined by 21 CFR Part 807. If Ivivi is not
the manufacturer of the Product and is using a third party to manufacture the
Product, then such third-party manufacturer shall maintain the Medical Device
Establishment Registration as required by law and the foregoing sentence and
Ivivi shall ensure compliance with such requirement. In any event, Ivivi shall
keep Allergan informed of, and obtain Allergan's prior written approval (which
shall not be unreasonably withheld) prior to, any modifications to the
manufacturing process and/or the specifications for the Product.
10.2 REGULATORY APPROVALS. Ivivi shall be responsible, at its sole
expense, for all regulatory activities relating to the Product, including
obtaining and maintaining Regulatory Approvals and authorizations in the U.S.,
Canada, the EU (and any country therein) and in all other jurisdictions within
the Marketing Territory. Allergan shall have the right to consult with Ivivi on
the planning and development of all documentation provided with respect thereto.
Ivivi shall provide to Allergan for review and approval copies of any proposed
submission at least fourteen (14) days prior to such submission. All such
approvals shall be obtained in the name of Ivivi unless legally required
otherwise or if the parties agree that it is appropriate, in which case,
Allergan or its designee may hold such approval in trust for Ivivi, and on
termination of this Agreement shall transfer such approval to Ivivi or its
designee.
10.3 MANUFACTURING COMPLIANCE. Ivivi represents and warrants to
Allergan that all Product manufactured and sold under this Agreement will have
been manufactured, labeled, packaged and sold to Allergan in accordance with the
Specifications and all applicable international federal, state and local laws
and regulations pertaining to medical devices including, but not limited to, the
Act and GMP/QSR Regulations. Ivivi represents and warrants to Allergan that
Ivivi's manufacturing facility is in compliance with all GMP/QSR Regulations.
Immediately upon execution of this Agreement, Ivivi shall make commercially
reasonable efforts to comply with all applicable ISO requirements, including ISO
13486:2003, 13495:2004 and 14971.A1:2003. In addition, in connection with
obtaining Canadian Marketing Approval, or immediately after obtaining such
21
approval, Ivivi shall make commercially reasonable efforts to comply with
Canadian medical device regulations (CMDR) and shall obtain all approvals and
consents required to xxxx the Product with a valid CMDCAS certificate. Ivivi
shall make commercially reasonable efforts to obtain all approvals and consents
required to xxxx the Product with the XX xxxxx in connection with obtaining EU
Marketing Approval, or immediately after obtaining such approval.
10.4 REMEDIAL ACTIONS. Each party will notify the other immediately,
and promptly confirm such notice in writing, if it obtains information
indicating that any of the Product may be subject to any recall, corrective
action or other regulatory action (other than a corrective and preventive action
("CAPA") under the Act) taken either by virtue of applicable federal, state,
foreign or other law or regulation or good business judgment (a "REMEDIAL
ACTION"). The parties will assist each other in gathering and evaluating such
information as is necessary to determine the necessity of conducting Remedial
Action; provided that Allergan shall have sole responsibility for collecting
information from its customers, including customer complaints. Allergan will
determine whether to commence any Remedial Action with respect to the Product.
Each party will maintain adequate records to permit the parties to trace the
manufacture of the Product and the distribution and use of the Product. In the
event Allergan determines that any Remedial Action with respect to the Product
should be commenced, or Remedial Action is required by any governmental
authority having jurisdiction over the matter, Allergan will control and
coordinate all efforts necessary to conduct such Remedial Action. If Allergan
conducts any Remedial Action related to the Product, Ivivi, at Allergan's
option, will either issue a credit to Allergan or reimburse Allergan for the
Transfer Prices of all Units recalled in such Remedial Action and the other
reasonable costs of conducting such Remedial Action. Ivivi shall have sole
responsibility for handling any CAPAs in a manner reasonably requested by
Allergan. Allergan shall cooperate with Ivivi to the extent reasonably requested
by Ivivi in handling any CAPA.
10.5 COSTS OF REMEDIAL ACTION. The cost and expense of a Remedial
Action shall be borne and paid solely by Ivivi.
10.6 ADVERSE EVENT REPORTING. The parties shall report to each other
all information necessary to make timely reports as required by any governmental
regulatory agency throughout the world regarding the Product. Further, the
parties shall, make reasonable commercial efforts to, within sixty (60) days
following the Effective Date but in any event prior to the sale of any Product
to third parties, enter into a written agreement regarding adverse event
reporting and procedures acceptable to Allergan.
10.7 NOTIFICATION OF COMPLAINTS. Each party shall (i) notify the other
party within one business day of any information concerning any complaint
involving the possible failure of the Product to meet any requirement of
applicable law or regulation, and any serious or unexpected side effect, injury,
toxicity or sensitivity reaction or any unexpected incidents associated with the
distribution of the Product, whether or not determined to be attributable to the
Product and (ii) with respect to adverse events, comply with the provisions of
SECTION 10.6 above. Ivivi shall have responsibility and pay all costs and
expenses associated with investigating such complaint, with reasonable
assistance from Allergan for investigating such complaints.
22
10.8 NOTIFICATION OF THREATENED ACTION. Each party shall immediately
notify the other party of any information it receives regarding any threatened
or pending action, inspection or communication by or from any party, including,
without limitation, a Governmental Health Authority which may affect the safety
or efficacy claims of the Product or the continued marketing of the Product.
Upon receipt of such information, the parties shall consult with each other in
an effort to arrive at a mutually acceptable procedure for taking appropriate
action. Ivivi shall bear all costs and expenses associated with taking such
action.
10.9 ALLERGAN AUDITS. Ivivi will give Allergan reasonable access to its
records and manufacturing facilities (and will obtain sufficient rights to give
Allergan reasonable access to the records and manufacturing facilities of any
manufacturer of the Product), to allow Allergan to conduct full compliance
audits relating to the Product (including with respect to its manufacture and
packaging), at Allergan's expense, as reasonably deemed necessary by Allergan,
but no more frequently than once in any twelve (12) month period unless any such
audits reveal material compliance problems in which case there shall be no
limitation of the frequency of such compliance audits and the next two (2) such
audits shall be at Ivivi's expense. In furtherance of this right, Ivivi agrees
that it shall specifically obtain from any and all third-party manufacturers of
the Product a right of Allergan to conduct audits of such manufacturer's records
and facilities. The audit may include, without limitation, records relating to
manufacturing compliance with the Specifications, compliance with quality
control and inspection reports procedures, compliance with GMP/QSR Regulations,
CE xxxx certification records and procedures, regulatory compliance, and after
the following certifications have been obtained compliance with ISO 13485:2003
and Council Directive 93/42/EEC (Medical Device Directive) requirements. Such
audits will be conducted during Ivivi's normal business hours, after two (2)
weeks prior written notice to Ivivi by Allergan, and at times mutually agreeable
to the parties. Ivivi will make its regulatory compliance and quality assurance
personnel (and such personnel of any sub-contractors, if applicable) reasonably
available to Allergan in connection with such audits. If Allergan recommends any
corrective actions to Ivivi in connection with such audits, Ivivi will take any
corrective action recommended by Allergan within thirty (30) days of receipt of
any corrective action recommendations, if possible, or will inform Allergan in
writing of the reasons why Ivivi believes such corrective action is not required
or cannot be completed within such thirty (30) day period. Allergan will be
given access to audit any corrective action. In the event that Ivivi is not
manufacturing the Product and is using a third party to manufacture the Product,
Ivivi shall obtain all rights necessary from such third party to enable Allergan
to exercise all of its rights under this Agreement.
10.10 REGULATORY INSPECTIONS. Ivivi will promptly notify Allergan of
any inspection of its facilities manufacturing the Product or any component part
of a Product by the FDA, ISO, CE xxxx certification organization or other
federal, state, or local regulatory agency which relates to the manufacture,
assembly, or packaging of the Product and provide Allergan with information
about the progress and outcome of such inspection, including, without
limitation, copies of any notice of observations or warnings, requests for
Remedial Action, CAPA's or other adverse findings.
23
ARTICLE 11
INTELLECTUAL PROPERTY
11.1 IVIVI PROPERTY. The Product, the Patents and the Ivivi
Intellectual Property, including all derivatives, Improvements and documentation
thereof, that are solely conceived, fixed in a tangible medium of expression or
otherwise developed, invented or reduced to practice by Ivivi or its Affiliates
are the proprietary property of Ivivi or its licensors, and exclusive title to
such property shall remain with Ivivi or its licensors, both during and after
termination of this Agreement. Allergan agrees to promptly notify Ivivi in the
event that the senior management of Allergan obtains actual and specific
knowledge of an infringement of the Patents and the Ivivi Intellectual Property.
Ivivi shall be responsible for filing and prosecuting all U.S. and foreign
patent, copyright and mask work applications it deems necessary or appropriate
to protect the Ivivi Intellectual Property. In the event Ivivi fails to take
action to protect or enable the Ivivi Intellectual Property in the Marketing
Territory, Ivivi shall indemnify Allergan from damages, liabilities and costs,
and Allergan shall have the right to take all actions necessary to protect the
Ivivi Intellectual Property.
11.2 ALLERGAN PROPERTY. Allergan retains sole title to, and ownership
of, all Allergan products, Allergan's Intellectual Property and improvements
thereon, all derivative works of Allergan products, Allergan's Intellectual
Property and improvements and all proprietary rights therein, that are solely
conceived, fixed in a tangible medium of expression or otherwise developed,
invented or reduced to practice by Allergan or its Affiliates both during and
after termination of this Agreement. The parties agree that Allergan shall
retain sole ownership of information regarding customers, distributors,
sublicensees and subdistributors of the Product acquired under this Agreement,
which information shall be treated as confidential pursuant to ARTICLE 12 of
this Agreement. Works that may be created, marketed or bundled with the Product
by Allergan, which works do not infringe the Patents, are the proprietary
property of Allergan or its licensors, and exclusive title to such property
shall remain with Allergan or its licensors, both during and after termination
of this Agreement.
ARTICLE 12
CONFIDENTIAL INFORMATION
12.1 CONFIDENTIALITY. Each party acknowledges that, in the course of
performing its duties and obligations under this Agreement, certain information
that is confidential or proprietary to such party ("CONFIDENTIAL INFORMATION")
will be furnished by the other party or such other party's representatives. Each
party agrees that any Confidential Information furnished by the other party or
such other party's representatives will not be used by it or its representatives
except in connection with, and for the purposes of, the promotion, marketing,
distribution and sale of Product and for any other purpose permitted under this
Agreement (including for the purposes of manufacturing the Product pursuant to
SECTION 4.3 during the Manufacturing License Period) and, except as provided
herein, will not be disclosed by it or its representatives without the prior
written consent of the other party. Notwithstanding the foregoing, Confidential
Information furnished by a party may be disclosed by a receiving party to such
receiving party's professional advisors or such receiving party's bona fide
24
potential purchasers, acquirers, investors, bankers and lenders, and the
professional advisors of the foregoing; provided that such persons need to know
the disclosed information and agree to be bound by the receiving party's
obligation of confidentiality with respect to such information. The parties
further agree that all Confidential Information shall be clearly marked
"CONFIDENTIAL" or, if furnished in oral form, shall be stated to be confidential
by the party disclosing such information at the time of such disclosure and
reduced to a writing by the party disclosing such information which is furnished
to the other party or such other party's representatives within forty-five (45)
days after such disclosure.
12.2 EXCEPTIONS. The confidentiality obligations of each party under
SECTION 12.1 do not extend to any Confidential Information furnished by the
other party or such other party's representatives that (a) is or becomes
generally available to the public other than as a result of a disclosure by the
recipient party or its representatives, (b) is or becomes generally available to
the public as a result of a disclosure specifically permitted under SECTION 12.3
and SECTION 12.5, (c) was available to the recipient party or its
representatives on a non-confidential basis prior to its disclosure thereto by
the other party or such other party's representatives, (d) can be demonstrated
by the recipient party that it was independently developed by the recipient
party without reference to any Confidential Information of the other party, or
(e) becomes available to such party or its representatives on a non-confidential
basis from a source other than the other party or such other party's
representatives; provided, however, that such source is not bound by a
confidentiality agreement with the other party or such other party's
representatives.
12.3 TERMS OF AGREEMENT. The terms of this Agreement, and the
transactions contemplated hereby, that are not required to be disclosed by
applicable laws or the rules and regulations of the Applicable Market and are
not disclosed in accordance with the terms of SECTION 12.4, 12.5, or 16.13 shall
be deemed to be Confidential Information subject to the provisions of SECTION
12.1.
12.4 COMPELLED DISCLOSURE. Other than with respect to filings required
by applicable laws or the rules and regulations of the Applicable Market (both
of which shall be subject to SECTIONS 12.3 and 12.5), in the event that either
party or its representatives are requested or become legally compelled (by oral
questions, interrogatories, requests for information or document subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information furnished by the other party or such other party's representatives
or the fact that such Confidential Information has been made available to it,
such party agrees that it or its representatives, as the case may be, will
provide the other party with prompt written notice of such request(s) so that
the other party may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement. In the event that such
protective order or other remedy will not be obtained, or that the other party
waives compliance with the provisions of this Agreement, such party agrees that
it will furnish only that portion of such Confidential Information that is
legally compelled and will exercise commercially reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded to that portion
of such Confidential Information and other information being disclosed.
12.5 SECURITIES FILINGS. The parties acknowledge that Ivivi is required
to disclose the existence of this Agreement, including certain of the terms
hereof, and to file this Agreement with the Securities and Exchange Commission
(the "SEC") pursuant to applicable securities laws, rules and regulations. In
connection with any required filings of the Agreement, Ivivi agrees to seek
25
confidential treatment of such portions of the Agreement that Allergan
reasonably requests (in addition to any portions for which Ivivi wishes to seek
confidential treatment), and to provide copies to Allergan of any proposed
request for confidentiality, including all amendments thereof and all
correspondence relating thereto, at least five (5) business days prior to
submitting such request (or amendment or correspondence) to the SEC, the
Applicable Market or any similar entity or authority, as applicable, and will
include and incorporate Allergan's comments to such submission to the extent
reasonable. Any termination of this Agreement by Allergan for material breach by
Ivivi of this SECTION 12.5 or of SECTION 16.13 shall be subject to SECTION
15.3(c) and not to SECTION 15.3(b).
12.6 SURVIVAL. The obligations of the parties under this ARTICLE 12 and
SECTION 16.13 shall survive the expiration or earlier termination of this
Agreement for a period of five (5) years.
12.7 INDEPENDENT DEVELOPMENT; RESIDUALS. Ivivi acknowledges that
Allergan may currently or in the future be developing information internally, or
receiving information from other parties, that is similar to the Confidential
Information. Accordingly, nothing in this Agreement will be construed as a
representation or agreement that Allergan will not develop or have developed for
it products, concepts, systems or techniques that are similar to or compete with
the products, concepts, systems or techniques contemplated by or embodied in the
Confidential Information, provided that Allergan does not violate any of its
obligations under this Agreement in connection with such development.
Additionally, Allergan shall be free to use the residuals resulting from access
to or work with Ivivi's Confidential Information for any purpose, provided that
Allergan shall not disclose Ivivi's Confidential Information except as permitted
pursuant to the terms of this Agreement. The term "residuals" means information
in intangible form, retained in the unaided memory (without the aid of notes or
other memory aids and without any conscious attempt to memorize or refresh
recollections) of persons employed or retained by Allergan who have had access
to or worked with the Confidential Information, including ideas, concepts,
know-how or techniques contained therein. Allergan shall not have any obligation
to limit or restrict the assignment of such persons or to pay royalties for any
work resulting from the use of residuals. Nothing in this SECTION 12.7 shall be
construed as a license or the grant of a license to the Patents.
ARTICLE 13
[ARTICLE 13 INTENTIONALLY LEFT BLANK]
ARTICLE 14
INDEMNIFICATION; INSURANCE REQUIREMENTS
14.1 IVIVI INDEMNITY. Ivivi agrees to indemnify, defend and hold
harmless Allergan and its subdistributors and sublicensees (and the Affiliated
Parties of any of the foregoing) (collectively, the "ALLERGAN INDEMNIFIED
PARTIES") from and against any claims, losses, damages, liabilities, causes of
action, suits, costs and expenses, including all reasonable attorneys' fees and
disbursements of counsel and expenses of investigation, incurred by Allergan
Indemnified Parties arising out of or relating to (i) any material breach by
Ivivi of its representations, warranties, covenants and agreements under this
Agreement, (ii) any third-party claims, actions, suits or proceedings alleging
26
personal injury or death, or any damage to any property, caused or allegedly
caused by any Product, or the failure to warn any person or entity of any defect
in any Product, except to the extent resulting from the gross negligence or
willful misconduct of, or material breach of this Agreement by, Allergan, (iii)
allegations that the Ivivi Intellectual Property, or the use thereof, or the
exercise of any rights granted to Allergan and its Affiliates under this
Agreement, violates, infringes upon or misappropriates the rights of any third
party, (iv) any grossly negligent or willful act or omission on the part of
Ivivi, and (v) any product liability claims including, without limitation, any
claim under SECTION 8.3 hereof.
14.2 ALLERGAN INDEMNITY. Allergan agrees to indemnify, defend and hold
harmless Ivivi and its Affiliated Parties from and against any claims, losses,
damages, liabilities, causes of action, suits, costs and expenses, including all
reasonable attorneys' fees and disbursements of counsel and expenses of
investigation, incurred by Ivivi or such Affiliated Parties arising out of or
relating to (i) any material breach by Allergan of its representations,
warranties, covenants and agreements under this Agreement, (ii) any third-party
claims, actions, suits or proceedings relating to the marketing, promotion,
sale, handling or distribution by Allergan or its sublicensees of the Product
but only to the extent such claims arise from a material failure of Allergan or
its sublicensees to comply with the material provisions of this Agreement or
gross negligence or willful misconduct in the representation of the Product, or
(iii) any third-party claims, actions, suits or proceedings relating to personal
injury or death or damage to any property caused by any Allergan product or
service that Allergan bundles or provides in conjunction with the Product but
only if and to the extent it is finally determined by a court of competent
jurisdiction that the Allergan product or service was the cause of such harm;
provided that the foregoing (i) through (iii) is not based upon any claim upon
which Ivivi is to indemnify Allergan under SECTION 14.1 hereof, and except to
the extent resulting from the negligence or willful misconduct of, or material
breach of this Agreement or any inaccuracy of any representation or warranty of
or by, Ivivi.
14.3 CLAIMS FOR INDEMNIFICATION. Whenever any indemnification claim
arises under this Agreement, the party seeking indemnification (the "INDEMNIFIED
PARTY") shall promptly notify the other party (the "INDEMNIFYING Party") of the
claim and, when known, the facts constituting the basis of such claim; provided,
however, that failure to give such notice shall not relieve the Indemnifying
Party of its obligation hereunder unless and to the extent that such failure
substantially prejudices the Indemnifying Party. To clarify, and without
limiting any obligation hereunder, the parties agree that any and all liability
of one party to the other under SECTION 14.1 and SECTION 14.2 hereof regarding
any amounts paid or payable to a third party related to any claim, demand,
proceeding, suit or action for which one party is obligated to indemnify the
other party pursuant to ARTICLE 14 hereof are and shall be considered
compensatory or direct damages (and not indirect, special, consequential,
punitive, exemplary, collateral or incidental damages) and the parties do not
intend that such damages are and they shall not be subject to the liability
limitation set forth in SECTION 14.7 hereof.
14.4 THIRD-PARTY CLAIMS. In the event of a third-party claim giving
rise to indemnification of the Allergan Indemnified Parties hereunder, Allergan
may, upon prior written notice to Ivivi, assume the defense of such claim, at
Ivivi's expense; provided that Ivivi may participate in such defense at its own
expense and with counsel of its choice. In all other cases and if Allergan does
not elect to assume the defense, in the event of a third-party claim giving rise
to indemnification hereunder, the Indemnifying Party may, upon prior written
notice to the Indemnified Party, assume the defense of such claim with counsel
reasonably satisfactory to the Indemnified Party, and shall thereafter be liable
for all expenses incurred in connection with such defense, including attorneys'
27
fees and expenses; provided, however, that if the Indemnifying Party assumes the
defense of any such claim, the Indemnified Party may participate in such defense
at its own expense and with counsel of its choice; provided further, however,
that if there are one or more legal defenses available to the Indemnified Party
that conflict with those available to the Indemnifying Party or there exists any
other conflict of interest, the Indemnifying Party shall not have the right to
assume the defense of such claim but the Indemnified Party shall have the right
to employ separate counsel at the expense of the Indemnifying Party and to
participate in the defense thereof. If the Indemnifying Party elects to control
the defense of such claim, it shall do so diligently and shall have the right to
settle any claim for monetary damages, provided such settlement includes a
complete and absolute release of the Indemnified Party. Notwithstanding anything
to the contrary, the Indemnifying Party may not settle any claims for fines,
penalties or the like or in any way adverse to the Indemnified Party without the
prior written consent of the Indemnified Party.
14.5 THIRD-PARTY INFRINGEMENT. In the case of any infringement or
violation by any third party of any rights granted to Allergan hereunder, Ivivi
shall have the right, at Ivivi's expense, to exercise its rights (including,
without limitation, common law and statutory rights) to cause such third party
to cease such infringement and to otherwise enforce such rights. Each party
shall promptly notify the other party in writing of any infringement or
violation by any third party of any rights granted to Allergan hereunder of
which it becomes aware. Allergan shall assist Ivivi as reasonably requested in
taking any such actions against any such infringer and may join with Ivivi to
recover damages and lost profits in any action, suit or proceeding commenced, or
claim made, by Ivivi against such infringer. In the event that Ivivi fails to
institute proceedings to terminate any third-party infringement during the
ninety (90) day period following notice of any alleged infringement or violation
(but in any event at least forty-five (45) days prior to any related filing
deadlines), Allergan may, at its cost and expense, take such action as it deems
appropriate, including without limitation, the filing and prosecution of a
lawsuit against such third party. In such event, Ivivi will provide such
assistance and cooperation to Allergan as may be reasonably necessary,
including, without limitation, agreeing to be named a co-party or party
plaintiff. Any award in such action shall be first distributed to the parties
until their respective costs (including internal costs) and expenses have been
recouped, and the balance shall be allocated as follows: [*].
14.6 INFRINGEMENT DEFENSE. In the event either party receives notice of
any claim that the manufacture, use or sale of a Product infringes the rights of
a third party, it shall give prompt notice to the other party and shall discuss
in good faith alternative strategies for addressing the matter and cooperate
with each other to terminate such infringement without litigation. After such
discussion, Ivivi shall have the right and obligation, at its sole cost and
expense, to defend against such claim. Notwithstanding the foregoing, at its
sole option, Allergan shall have the right to assume the defense, at Ivivi's
expense; provided that Ivivi may participate in such defense at its own expense
and with counsel of its choice. In such event, Ivivi will provide such
assistance and cooperation to Allergan as may be reasonably necessary. If
Allergan does not assume the defense, Allergan shall provide such assistance and
cooperation to Ivivi as may be necessary to defend any such action, and Ivivi
shall have the right to settle such action for monetary damages, provided such
settlement includes a complete and absolute release of Allergan and, provided
further, that Ivivi uses good faith when it considers any such action and takes
such action as to effectuate the License and intent of this Agreement.
Notwithstanding anything to the contrary, Ivivi may not settle any claims for
fines, penalties or the like or in any way adverse to Allergan without the prior
written consent of Allergan.
28
14.7 LIMITATION ON LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE
TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, PUNITIVE,
EXEMPLARY, COLLATERAL OR INCIDENTAL DAMAGES, HOWEVER CAUSED AND BASED ON ANY
THEORY OF LIABILITY, ARISING OUT OF THIS AGREEMENT, AND WHETHER OR NOT THE OTHER
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS LIMITATION SHALL
APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY
PROVIDED FOR HEREIN. IN ADDITION, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER PARTY FOR AN AMOUNT IN EXCESS OF [*] IN THE AGGREGATE (THE "CAP") FOR
ANY AND ALL CLAIMS ARISING FROM OR RELATING TO THIS AGREEMENT. THE PARTIES
AGREE, HOWEVER, THAT THE FOREGOING LIMITATIONS OF THIS SECTION 14.7 DO NOT APPLY
TO ANY AMOUNTS PAID OR PAYABLE DUE TO ANY THIRD-PARTY RELATED CLAIM, DEMAND,
PROCEEDING, SUIT OR ACTION FOR WHICH A PARTY IS OBLIGATED TO INDEMNIFY THE OTHER
PARTY PURSUANT TO THIS ARTICLE 14, OR FOR PRODUCT RELATED CLAIMS INCLUDING
WITHOUT LIMITATION THOSE UNDER SECTION 8.3 OF THIS AGREEMENT OR OTHERWISE AND
ANY SUCH AMOUNTS WILL BE CONSIDERED COMPENSATORY OR DIRECT DAMAGES AND NOT
INDIRECT, SPECIAL, CONSEQUENTIAL, PUNITIVE, EXEMPLARY, COLLATERAL OR INCIDENTAL
DAMAGES. THE PARTIES FURTHER AGREE THAT THE CAP DOES NOT APPLY TO EITHER PARTY'S
INDEMNIFICATION OBLIGATIONS UNDER THIS SECTION 14, ROYALTIES, TRANSFER PRICE,
INITIAL AND MILESTONE PAYMENTS UNDER SECTION 5.6, EXTENSION FEE, CUSTOMS DUTIES,
EXPORT FEES, IMPORT FEES AND FREIGHT, SHIPPING OR TRANSPORTATION CHARGES DUE AND
PAYABLE TO IVIVI PURSUANT TO THIS AGREEMENT; PROVIDED HOWEVER THAT ALLERGAN
SHALL HAVE A RIGHT OF SET OFF WITH RESPECT TO ALL SUCH AMOUNTS FOR ANY AMOUNTS
OWING TO ALLERGAN PURSUANT TO THIS AGREEMENT. NOTWITHSTANDING ANY PROVISION OF
THIS AGREEMENT, UNDER NO CIRCUMSTANCE SHALL ALLERGAN'S AGGREGATE LIABILITY
(OTHER THAN LIABILITY FOR ROYALTIES, TRANSFER PRICE, INITIAL AND MILESTONE
PAYMENTS UNDER SECTION 5.6, EXTENSION FEE, CUSTOMS DUTIES, EXPORT FEES, IMPORT
FEES AND FREIGHT, SHIPPING OR TRANSPORTATION CHARGES DUE AND PAYABLE TO IVIVI
PURSUANT TO THIS AGREEMENT SUBJECT TO ALLERGAN'S RIGHT OF SET OFF SET FORTH
HEREIN) EXCEED [*].
14.8 COOPERATION AS TO INDEMNIFIED LIABILITY. Each party hereto shall
cooperate fully with other parties with respect to access to books, records, or
other documentation within such party's control, if deemed reasonably necessary
or appropriate by any party in the defense of any claim, which may give rise to
indemnification hereunder.
14.9 INSURANCE REQUIREMENTS. To provide sufficient protection to both
Ivivi and Allergan, Ivivi and Allergan will, individually, at their own cost and
expense, obtain and maintain in full force and effect, during the term of this
Agreement, Commercial General Liability insurance, maintained with responsible,
29
nationally recognized carriers, written on a standard approved policy form,
including Product Liability, Completed Operations and Broad Form Contractual
Liability, with limits of liability of not less than [*] covering each party's
duties and obligations under the Agreement and naming the other party as an
additional insured; [*]. Any and all policy deductibles shall be assumed
respectively by Ivivi and Allergan. Policies held respectively by Ivivi and
Allergan shall be considered primary and bear no relationship to any policies
held by the other. Ivivi and Allergan will each furnish each other with a
certificate of insurance within thirty (30) days of the Effective Date of this
Agreement evidencing that such insurance is in effect and that a minimum of
thirty (30) days notice must be given to the other party prior to any
cancellation or material changes to the policy. Ivivi shall also immediately
furnish such a certificate of insurance upon increasing its limits of liability
to not less than [*].
ARTICLE 15
TERM AND TERMINATION
15.1 TERM. This Agreement shall take effect as of the Effective Date
and shall continue in force and effect for a period of eight (8) years from the
date of the First Commercial Sale of the Product in the U.S. (the "INITIAL
TERM"). Thereafter, provided that Allergan is not in material default of this
Agreement at the time of the expiration of the Initial Term, the Agreement shall
be automatically extended for five (5) consecutive terms of two (2) years each
(each an "EXTENSION TERM") unless Allergan notifies Ivivi, at least one hundred
fifty (150) days prior to the beginning of an Extension Term, of its intent not
to extend the Agreement. Notwithstanding the foregoing, the Agreement shall
terminate after the first Extension Term if Allergan does not pay to Ivivi an
extension fee of Two Million Dollars ($2,000,000) on or before January 1, 2010
(the "EXTENSION FEE").
15.2 TERMINATION. Notwithstanding the provisions of SECTION 15.1, this
Agreement may be terminated in accordance with the following provisions:
(a) Either party may terminate this Agreement at any time by
giving notice in writing to the other party, which notice shall be effective
upon dispatch, should the other party file a petition of any type as to its
bankruptcy, be declared bankrupt, become insolvent, make an assignment for the
benefit of creditors, or go into liquidation or receivership.
(b) Either party may terminate this Agreement by giving notice
in writing to the other party in the event the other party is in material breach
of this Agreement and shall have failed to cure such breach within sixty (60)
days of receipt of written notice thereof specifying the breach in detail from
the non-breaching party, unless such breach cannot be cured within such sixty
(60)-day period, in which case the breaching party shall have undertaken a good
faith effort to cure such breach within such sixty (60)-day period and
diligently prosecuted such cure to prompt completion.
(c) During the Initial Term and during the first Extension
Term, Allergan may terminate this Agreement by giving ninety (90) days notice in
writing to Ivivi, which notice shall be effective upon dispatch. During any
extensions of the Agreement after the Initial Term (other than during the first
Extension Term), Allergan may terminate this Agreement by giving one hundred
eighty (180) days notice in writing to Ivivi, which notice shall be effective
upon dispatch.
30
(d) If Allergan does not pay to Ivivi the minimum royalty
amount set forth on SCHEDULE D for any applicable year or meet the minimum order
requirement set forth in SECTION 5.5, Ivivi will have the right to terminate
this Agreement by giving notice within ninety (90) days after the failure of
Allergan to meet such minimum sales or payment requirements and such termination
shall be effective if Allergen fails to cure such failure within thirty (30)
days of Allergan's receipt of such notice. Any termination pursuant to this
section shall be effective no earlier than twelve (12) months from the date of
such notice.
15.3 RIGHTS AND OBLIGATIONS UPON TERMINATION.
(a) Upon any termination of this Agreement by Ivivi pursuant
to SECTION 15.2(a), or pursuant to SECTION 15.2(b) where Allergan is the
breaching party, Allergan shall (i) promptly deliver to Ivivi or destroy all
materials, samples, documents and information relating to the Product developed
or owned by Ivivi, subject to Allergan retaining a copy of such Confidential
Information solely for the purposes of monitoring its performance hereunder and
as may be reasonably necessary for Allergan to perform relevant post-termination
activities as permitted under this Agreement and as may be required by law, (ii)
immediately cease marketing, promoting or otherwise using the Product, (iii)
have no further interest in the technology and information developed or owned by
Ivivi with respect to the Product; and (iv) transfer and assign, at Ivivi's
cost, to Ivivi or its designees all of Allergan's rights in governmental filings
or approvals and other similar rights in connection with the Product (excluding
any Allergan Intellectual Property) provided that Ivivi reimburses Allergan for
the costs of attaining such governmental filings or approvals and similar
rights. Notwithstanding (iii) above, Ivivi shall have no right and Allergan
shall not be required to transfer and assign, Allergan's rights in any
Intellectual Property including, without limitation, any trademarks owned by
Allergan and used in connection with the Product. In addition, Allergan shall
return to Ivivi or its designees all Product held by Allergan, in return for the
original purchase price paid by Allergan to Ivivi for such inventory, less
appropriate discounts for damaged or obsolete inventory and reasonable costs of
repackaging.
(b) Upon the termination of this Agreement by Allergan
pursuant to SECTION 15.2(a), or pursuant to SECTION 15.2(b) where Ivivi is the
breaching party (other than for a Failure to Supply or for a breach of the
representation in SECTION 9.1(f)) where as a result of such breach by Ivivi the
benefits Allergan would otherwise enjoy under this Agreement will be
substantially diminished, then: (i) upon the election of and written notice by
Allergan, Ivivi shall promptly deliver to Allergan copies of any and all
information, and license to Allergan such rights as are necessary for Allergan
to take over Ivivi's obligations hereunder including, without limitation, all
materials, samples, documents and information relating to the Product in the
Field, (ii) upon the election of and written notice by Allergan, Ivivi shall
promptly license to Allergan, or otherwise provide to Allergan the benefit of,
any and all governmental filings or approvals and other similar rights in
connection with the Product in the Field, (iii) the Escrow Deposit shall be
released to Allergan, (iv) Allergan shall continue to enjoy the benefits of the
License until the date the Agreement would have otherwise expired (after all
applicable extensions thereof) had the Agreement not been terminated, and (v)
31
Allergan shall have the right to exercise the license rights granted under
SECTION 3.1(b) of this Agreement and shall pay Ivivi the Manufacturing License
Compensation in accordance with and subject to the limitations set forth in
SECTION 4.3 hereof, provided, however, that the royalty rate used to calculate
such Manufacturing License Compensation shall be [*], and not the royalty rate
set forth in SECTION 5.4(a). In addition, the compensation to be paid pursuant
to clause (v) shall not be subject to the minimum royalty required by SECTION
5.4(b). Ivivi agrees that all licenses or grants of any of the rights set forth
above shall be on an exclusive basis in the Territory, as necessary to allow
Allergan to enjoy the same rights and benefits it would have enjoyed during the
term of this Agreement (including all applicable extensions thereof). Without
limiting the grant of any rights or licenses provided above, or the exclusivity
of any of the foregoing, nothing in this SECTION 15.3(b) shall abrogate or
impair any of the right, title and interest of Ivivi in the Product, the Patents
or the Ivivi Intellectual Property, or constitute a transfer or assignment of
any rights of Ivivi in the Product, the Patents or the Ivivi Intellectual
Property to Allergan except as explicitly set forth herein. At the conclusion of
the term of this Agreement (including all applicable extensions thereof),
Allergan shall comply with all of the obligations set forth in SECTION 15.3(c)
as if the termination was pursuant to SECTION 15.3(c). The parties agree that
this Agreement shall be subject to Section 365(n) of the Bankruptcy Code.
(c) Upon any termination or expiration of this Agreement other
than pursuant to SECTION 15.2(a) or SECTION 15.2(b), (i) each party shall
promptly deliver to the other party or destroy all Confidential Information of
the other party, including materials, samples and documents of the other party,
subject to either party retaining a copy of the other party's Confidential
Information solely for any purpose contemplated by this Agreement or as may be
required by law, and (ii) Allergan shall cease marketing, promoting or otherwise
using the Product immediately after the resale of any inventory as provided in
SECTION 15.4(c).
15.4 EFFECT OF TERMINATION. Except as otherwise provided in this
Agreement:
(a) Termination or expiration of this Agreement shall not
release either party from the obligation to make payment of all amounts then or
thereafter due and payable.
(b) The terminating party shall have the right, at its option,
to cancel any or all purchase orders that provide for delivery after the
effective date of termination.
(c) Allergan shall be permitted to resell any inventory of the
Product on hand or en route or which has been ordered from Ivivi at the time of
termination and the License (other than the license granted under SECTION
3.1(b)) shall continue on a non-exclusive basis until all such Units have been
sold, provided Allergan continues to pay the applicable royalty on Net Sales of
such Units; provided, however, that Allergan shall have no obligation to
purchase or take delivery of any Product from or after the effective date of
termination.
(d) Notwithstanding any other provision of this Agreement, in
the event Allergan terminates this Agreement (i) pursuant to SECTION 15.2(b), or
(ii) because Ivivi has breached its obligations under SECTION 5.7 or (iii) in
connection with a Failure to Supply, Ivivi shall refund to Allergan any payment
made by Allergan to Ivivi pursuant to SECTION 5.6. In the event (x) Ivivi
terminates this Agreement pursuant to SECTION 15.2(b) and (y) Allergan has been
reimbursed in full for the costs of pursuing or maintaining any patents that
were assigned to Allergan pursuant to SECTION 7.5, then Allergan shall assign to
Ivivi the patents that it took over pursuant to such section.
32
(e) Allergan's and Ivivi's indemnification obligations
pursuant to ARTICLE 14 and their respective obligations pursuant to Sections
5.4, 5.8, 5.9, 5.10, 5.11 and 7.3 and ARTICLE 8, ARTICLE 9, ARTICLE 11, ARTICLE
12, ARTICLE 15 and ARTICLE 16 shall survive termination of this Agreement. All
other provisions of this Agreement shall terminate upon termination of this
Agreement.
(f) Except as specifically set forth in this ARTICLE 15, upon
termination of this Agreement for any reason, neither party shall have any
further obligations pursuant to this Agreement, including any obligation of
Allergan to purchase or order any minimum number of Units.
ARTICLE 16
MISCELLANEOUS
16.1 RELATIONSHIP OF PARTIES. The relationship of the parties
established by this Agreement is solely that of independent contractors, and
nothing shall be deemed to create or imply any employer/employee,
principal/agent, partner/partner or co-venturer relationship, or that the
parties are participants in a common undertaking. Neither party shall have the
right to direct or control the activities of the other party or incur or assume
or create any obligation, representation, warranty or guarantee, express or
implied, on behalf of the other party or bind such other party to any obligation
for any purpose whatsoever.
16.2 ENTIRE AGREEMENT. This Agreement, including the exhibits and
schedules attached hereto and incorporated as an integral part of this
Agreement, constitutes the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all previous proposals, oral or written,
and all negotiations, conversations or discussions heretofore had between the
parties related to this Agreement.
16.3 NO WAIVER; AMENDMENT. No waiver of any term or condition of this
Agreement shall be valid or binding on any party unless agreed to in writing by
the party to be charged. The failure of either party to enforce at any time any
of the provisions of the Agreement, or the failure to require at any time
performance by the other party of any of the provisions of this Agreement, shall
in no way be construed to be a present or future waiver of such provisions, nor
in any way affect the validity of either party to enforce each and every such
provision thereafter. This Agreement may not be amended or modified except by
the written agreement of the parties. All purchase orders are subject to the
terms and conditions of this Agreement, and any attempt by such purchase order
to alter or modify the terms and conditions of this Agreement shall be void.
16.4 PARTIAL INVALIDITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid by
a court of competent jurisdiction, then the remaining provisions shall remain,
nevertheless, in full force and effect. The parties agree to renegotiate in good
33
faith, or instruct the court to rewrite, any term held invalid and to be bound
by the mutually agreed substitute provision in order to give the most
approximate effect intended by the parties.
16.5 ASSIGNMENT.
(a) Neither party may assign or otherwise transfer its rights
and obligations under this Agreement, including upon a Change of Control (as
defined below), without the prior written consent of the other party, which
consent shall not be unreasonably withheld, delayed or conditioned.
(b) Notwithstanding the foregoing, Allergan may assign or
otherwise transfer its rights and obligations under this Agreement, without the
prior written consent of Ivivi, (A) to its Affiliates or affiliates (as such
term is defined under federal securities laws), and (B) upon a sale of all or
substantially all of the assets or equity of the business entity, division or
unit, as applicable, that markets, distributes or sells the Product.
(c) Any attempted assignment or transfer in violation of this
provision shall be null and void. All terms and conditions of this Agreement
shall be binding on and inure to the benefit of the successors and permitted
assigns of the parties.
(d) For purposes of this Section 16.5, the term "Change of
Control" shall mean any sale of the equity securities of a party following which
the equity holders of such party immediately prior to such sale own, directly or
indirectly, less than fifty percent (50%) of the combined voting power of the
outstanding voting securities of such party; provided, that the term Change in
Control shall not include a transaction involving either party in a sale of
equity securities for the purpose of raising capital to a group of financial
investors and where management of the selling party before the financing is
substantially the same as management of such party after the financing.
(e) Prior to or promptly after any assignment not requiring
consent of the other party, the assigning party shall give the other party
notice of the assignment.
16.6 GOVERNING LAW. This Agreement shall be governed by, and
interpreted and construed in accordance with the laws of the State of
California, without reference to rules of conflicts or choice of laws.
16.7 JURISDICTION AND VENUE. Each of the parties hereto irrevocably
submits to the exclusive jurisdiction of the courts of the State of California
located in the County of Orange and the United States District Court for the
Southern District of California for the purpose of any suit, action, proceeding
or judgment relating to or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Agreement.
Each of the parties hereto (i) irrevocably consents to the jurisdiction of any
such court in any such suit, action or proceeding and to the laying of venue in
such court and (ii) irrevocably waives, and agrees not to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or proceeding, any
claim that it is not subject personally to the jurisdiction of the above named
court, that its property is exempt or immune from attachment or execution
(except as protected by applicable law), that the suit, action or proceeding is
34
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that this Agreement or the subject matter hereof may
not be enforced in or by such court, and hereby waives and agrees not to seek
any review by any court of any other jurisdiction which may be called upon to
grant an enforcement of the judgment of any such court. Each of the parties
hereto agrees that its, his or her submission to jurisdiction and its, his or
her consent to service of process by mail is made for the express benefit of the
other parties hereto. Final judgment against any party hereto in any such
action, suit or proceeding may be enforced in other jurisdictions by suit,
action or proceeding on the judgment, or in any other manner provided by or
pursuant to the laws of such other jurisdiction.
16.8 REMEDIES. The exercise of any remedies hereunder shall be
cumulative and in addition to and not in limitation of any other remedies
available to such party at law or in equity.
16.9 FURTHER ASSURANCES. Each party agrees to cooperate fully with the
other and execute such instruments, documents and agreements and take such
further actions to carry out the intents and purposes of this Agreement.
16.10 COUNTERPARTS; FACSIMILE. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which,
taken together, shall constitute one instrument. For purposes hereof, a
facsimile copy of this Agreement, including the signature pages hereto, shall be
deemed to be an original.
16.11 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested), to the other party at the following address
(or at such other address for which such party gives notice hereunder):
If to Allergan: Inamed Medical Products Corporation
0000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: President
Facsimile No.: (000) 000-0000
WITH A COPY TO:
Allergan, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: General Counsel
Facsimile No.: (000) 000-0000
35
WITH A COPY TO:
Xxxxxx & Xxxxxxx, LLP
00 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Ivivi: Ivivi Technologies, Inc.
000-X Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: President
Facsimile No.: (000) 000-0000
WITH A COPY TO:
Xxxx & Xxxxx P.C.
0000 Xxxxxxx Xxxx Xxxx, 00xx xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
WITH A COPY TO:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
16.12 CONSTRUCTION; INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Any article, section, recital,
exhibit, schedule and party references are to this Agreement unless otherwise
stated. No party, nor its counsel, shall be deemed the drafter of this Agreement
for purposes of construing the provisions of this Agreement, and all provisions
of this Agreement shall be construed in accordance with their fair meaning, and
not strictly for or against any party.
16.13 PRESS RELEASES AND ANNOUNCEMENTS. Except as provided under this
SECTION 16.13 or under SECTIONS 12.3 and 12.5, Ivivi may not issue any press
release or make any public announcement concerning the transactions contemplated
by this Agreement without the prior consent of Allergan (which consent shall not
be unreasonably withheld, conditioned or delayed) except for (i) any releases or
announcements which may be required by applicable law or the rules and
regulations of the Applicable Market, in which case Ivivi will allow Allergan at
least two (2) full business days to review and comment on such release or
announcement in advance of such issuance or making (unless such release or
announcement is required by applicable law or the rules and regulations of the
Applicable Market to be made within less than four (4) business days of an
event, in which case Ivivi will allow Allergan a reasonable opportunity to
review and comment on such release or announcement, which shall in any event be
at least twenty-four (24) hours in advance of the issuance or making of the
36
release or announcement), and (ii) any release by Ivivi announcing its quarterly
or annual financial results or any announcement in a conference call with
analysts and investors following the release by Ivivi of its quarterly or annual
financial results, but in each case only to the extent reasonably necessary to
comply with its obligations pursuant to applicable law and the rules and
regulations of the Applicable Market. Notwithstanding any other provision
hereof, except as allowed in clauses (i) and (ii) above and in SECTIONS 12.3,
12.4 or 12.5, the name "Allergan" may not be used or referred to in any way by
Ivivi (without the prior express written consent of Allergan, which shall not be
unreasonably withheld or delayed, other than (x) in press releases announcing
Ivivi's quarterly or annual financial results and in a conference call with
analysts and investors following the release by Ivivi of its quarterly or annual
financial results, but in each case only to the extent reasonably necessary to
comply with its obligations pursuant to applicable law and the rules and
regulations of the Applicable Market, or (y) to the extent already used in
disclosures made pursuant to clause (i) or (ii) above or SECTIONS 12.3 or 12.5).
[SIGNATURE PAGE FOLLOWS]
37
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date first above written.
INAMED MEDICAL PRODUCTS CORPORATION
By: /S/ XXXXXX X. XXXXX
-------------------
Name: XXXXXX X. XXXXX
------------------
Title: PRESIDENT
---------
IVIVI TECHNOLOGIES, INC.
By: /S/ ANDRE' XXXXXX
-----------------
Name: ANDRE' XXXXXX
----------------
Title: CO-CEO AND VICE CHAIRMAN
------------------------
38
SCHEDULE A
----------
PRICES AND MANUFACTURING COST
TRANSFER PRICE:
---------------
The Transfer Price for each Unit of the Product for the years indicated will be
as follows:
YEAR TRANSFER PRICE
---- --------------
2007 [*]
2008 [*]
2009 [*]
2010 and thereafter [*]
Allergan will have reasonable audit rights (as more fully described in SECTION
5.9) to verify Manufacturing Cost.
39
SCHEDULE B
----------
SPECIFICATIONS
A self contained, battery-operated pulsed electromagnetic field
electrotherapeutic device delivering waveforms as follows:
[*]
40
SCHEDULE C-1
------------
MARKETING TERRITORY
United States of America
41
SCHEDULE C-2
------------
JURISDICTIONS/COUNTRIES TO SEEK APPROVAL
[*]
42
SCHEDULE D
----------
MINIMUM ROYALTIES
MINIMUM ROYALTIES
-----------------
The worldwide annual minimum royalty requirements for the periods indicated
shall be as follows:
YEAR MINIMUM ROYALTY
---- ---------------
2007 None
2008 TBD [*]*
2009 TBD [*]
2010 and each year
thereafter during
the term of this
Agreement TBD [*]
* Only applicable if the Product is launched in 2006.
Minimum annual royalty requirements for the Product for the Marketing Territory,
commencing 2008 if the Product is launched in 2006, or 2009 if the Product is
launched in 2007, shall be mutually agreed to by the parties [*].
In the event that the parties cannot mutually agree upon the minimum annual
royalty requirement for any year indicated above at least [*] before the
beginning of such year, then the matter shall be settled by arbitration (which
arbitration shall be binding and enforceable in any court of competent
jurisdiction for the purposes of the Agreement only) as follows: (a) the parties
shall jointly select one (1) independent arbitrator with expertise in medical
device marketing and sales within five (5) days, (b) the parties shall cooperate
in good faith in the selection of the arbitrator but, if they fail to do so
within the five (5) day period, either party may request appointment of the
arbitrator by AAA, (c) each party will have two (2) day(s) to present its case
(presentation shall be made on a date selected by the arbitrator which shall be
at least five (5) and no more than ten (10) days after selection of the
arbitrator), (d) the arbitrator shall have ten (10) days from completion of such
presentation to render its decision, and (e) such arbitration shall be informal
and need not conform to AAA or other established procedures. Unless otherwise
agreed to by the parties, arbitration shall take place in Irvine, California and
arbitrator fees will be shared equally by the parties.
43
SCHEDULE E
----------
PATENTS
[*]
44
SCHEDULE F
----------
TRADEMARKS
IVIVI serial 78407227 registration 3096530
IVIVI logo serial 78563058
The technology of life serial 78437477 registration 3104960
Changing how you heal serial 78644047
Changing the way you heal serial 78644095
Electroceutical serial 78780940
Electroceuticals serial 78780953
Sofpulse serial 78563014 registration 3065661
Torino serial 78821787
45
