1
NOTE: CERTAIN PORTIONS OF THE EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST
FOR CONFIDENTIAL TREATMENT. THE OMITTED PORTIONS HAVE BEEN SEPARATELY FILED
WITH THE COMMISSION
EXHIBIT 10.16
RESEARCH AND DEVELOPMENT AGREEMENT
among
IOMED, INC.,
DERMION, INC.
and
CIBA-GEIGY CORPORATION
Dated as of March 29, 1996
2
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS................................................................................. 1
1.1 Definitions........................................................................ 1
1.2 General Definition Provisions...................................................... 9
ARTICLE 2 THE PROGRAM................................................................................. 9
2.1 Basic Provisions of the Program.................................................... 9
2.2 Staffing and Resources............................................................. 10
2.3 Annual Plans....................................................................... 11
2.4 The Committee...................................................................... 11
2.5 Research Records; Reports.......................................................... 14
2.6 Access to Facilities............................................................... 15
2.7 Clinical Trials.................................................................... 15
2.8 Clinical Manufacturing of Products................................................. 15
2.9 Liability Insurance................................................................ 15
ARTICLE 3 EXCLUSIVITY................................................................................. 16
3.1 Ciba Fields; Ciba Proprietary Drugs............................................. 16
3.2 Dermion Exclusivity................................................................ 17
3.3 Development of Systems for or by Dermion Outside the Program....................... 17
3.4 Development by Dermion of Abandoned Products....................................... 19
3.5 Development of Systems for or by Ciba.............................................. 19
ARTICLE 4 OWNERSHIP OF TECHNOLOGY; PATENTS............................................................ 21
4.1 Licensed Technology; No Other Rights............................................... 21
4.2 Improvements....................................................................... 22
4.3 Ownership and Use of Jointly Developed Technology.................................. 22
4.4 Transfer of Jointly Developed Technology........................................... 23
4.5 Patents and Patent Applications.................................................... 24
4.6 Infringement of Patent Rights...................................................... 26
4.7 Infringement of Third Party Rights................................................. 27
ARTICLE 5 LICENSES 28
5.1 Licenses to Ciba................................................................... 28
5.2 License from Ciba.................................................................. 29
5.3 Sublicensing....................................................................... 29
5.4 Transfers of Second Generation Technology by Dermion............................... 30
5.5 Future IOMED Licenses.............................................................. 30
ARTICLE 6 EQUITY AND FUNDING.......................................................................... 31
6.1 Related Transactions; License Fee.................................................. 31
6.2 Program Funding.................................................................... 31
6.3 Milestone Payments................................................................. 32
i
3
Page
6.4 Royalties Payable by Ciba.......................................................... 34
6.5 General Provisions Regarding Royalties............................................. 35
6.6 Incorporation of Technology........................................................ 37
ARTICLE 7 REPRESENTATIONS AND WARRANTIES.............................................................. 37
7.1 Representations and Warranties of IOMED and Dermion......................................... 37
7.2 Representations and Warranties of Ciba............................................. 39
7.3 DISCLAIMERS........................................................................ 40
7.4 LIMITED LIABILITY.................................................................. 40
ARTICLE 8 OTHER COVENANTS AND AGREEMENTS.............................................................. 41
8.1 Confidentiality.................................................................... 41
8.2 IOMED Covenant Not to Compete...................................................... 42
8.3 Change of Control of Dermion....................................................... 43
8.4 Right of First Offer............................................................... 44
ARTICLE 9 TERM AND TERMINATION........................................................................ 45
9.1 Term............................................................................... 45
9.2 Termination........................................................................ 45
9.3 Survival Upon Termination Continuing Liability..................................... 46
9.5 Partial Termination................................................................ 47
9.6 Rejection in Bankruptcy............................................................ 47
9.7 Program Records.................................................................... 47
9.8 Certain Actions Following Termination.............................................. 48
ARTICLE 10 INDEMNIFICATION............................................................................. 48
10.1 Indemnification by Dermion and IOMED............................................... 48
10.2 Indemnification by Ciba............................................................ 48
ARTICLE 11 MISCELLANEOUS............................................................................... 48
11.1 Arbitration........................................................................ 48
11.2 Publicity.......................................................................... 49
11.3 Assignment......................................................................... 49
11.4 Amendment.......................................................................... 50
11.5 Waiver............................................................................. 50
11.6 Notices............................................................................ 50
11.7 Force Majeure...................................................................... 51
11.8 Disclaimer of Agency............................................................... 51
11.9 Further Assurances................................................................. 51
11.10 Expenses........................................................................... 52
11.11 Governing Law...................................................................... 52
11.12 Entire Agreement................................................................... 52
11.13 Severability....................................................................... 52
11.14 Broker's Fees...................................................................... 52
11.15 Article and Section Headings....................................................... 52
11.16 Counterparts....................................................................... 53
ii
4
Schedules
Schedule Description
-------- -----------
Schedule 1.1(a) Ciba Technology
Schedule 1.1(b) Dermion Technology
Schedule 3.1 Ciba Fields
iii
5
RESEARCH AND DEVELOPMENT AGREEMENT
RESEARCH AND DEVELOPMENT AGREEMENT (this "Agreement"), dated
as of March 29, 1996, among CIBA-GEIGY CORPORATION, a New York corporation
("Ciba"), acting through its Pharmaceuticals Division, IOMED, INC., a Utah
corporation ("IOMED"), and Dermion, Inc., a Delaware corporation ("Dermion").
WITNESSETH:
WHEREAS, as part of its business, IOMED has been engaged in
the business of conducting research with respect to and developing Systems on
its own behalf and/or on behalf of third parties (the "Business");
WHEREAS, prior to entering into this Agreement, IOMED formed
Dermion, a wholly-owned subsidiary of IOMED, contributed certain assets and
assigned certain rights to Dermion (including the right to receive any royalties
payable by any Person with respect to the IOMED Technology to the extent such
royalties are payable in connection with the conduct of the Business by Dermion)
and entered into certain agreements with Dermion, such that Dermion has all
assets, rights and properties necessary to conduct the Business as previously
conducted by IOMED other than the IOMED Technology;
WHEREAS, each of Dermion and Ciba have certain expertise in
the development of Systems, and Ciba owns or is licensed under Patent Rights and
Know-How with respect to and manufactures certain drugs;
WHEREAS, the parties desire to collaborate in the research and
development of Systems for the delivery of drugs owned by, licensed to, or
manufactured by Ciba, all on the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and of the
covenants and obligations set forth herein, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
6
"1984 Act" shall mean the United States Drug Price Competition
and Patent Term Restoration Act of 1984 (as amended), including 21 USC 355, 35
USC 155-156, 35 USC 271 and applicable regulations promulgated thereunder.
"Abandoned Product" shall mean any Product with respect to
which Program activities have been terminated by the Committee.
"Affiliate" shall mean, with respect to any Person, any Person
which, directly or indirectly, controls, is controlled by or is under common
control with such Person. For the purposes of this definition, "control"
(including, with correlative meaning, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
**********************************************************
*********
"ANDA" shall mean an Abbreviated New Drug Application, as
defined in the FDA Act.
"Annual Plan" shall mean the written plan describing the
activities to be conducted by the parties during each year of the Program, as
prepared and approved, and as may be amended from time to time, by the Committee
in accordance with Section 2.3.
"Applicable Law" shall mean, with respect to a Person, any
domestic or foreign, federal, state or local statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree or other requirement of any Governmental Authority applicable
to such Person or its properties, business or assets.
"Background Technology" shall mean the Patent-Rights and
Know-How of Ciba or Dermion, or their respective Affiliates, as the case may be,
existing as of the date hereof. Patent Rights shall be deemed to exist as of the
date hereof if such Patent Rights are based on a patent application first filed
in the country of issuance or elsewhere prior to the date hereof, or if such
Patent Rights cover an invention first reduced to practice prior to the date
hereof as evidenced by documents prepared by, on behalf of or in cooperation
with, or in the possession of Ciba or Dermion, or their respective Affiliates,
as the case may be. Know-How shall be deemed to exist as of the date hereof to
the extent described in documents prepared by, on
2
7
behalf of or in cooperation with, or in the possession of Ciba or Dermion, or
their respective Affiliates, as the case may be, prior to the date hereof.
"Bankruptcy Event" with respect to any Person shall mean any
of the following events: such Person makes an assignment for the benefit of its
creditors, files a voluntary petition under federal or state bankruptcy or
insolvency laws, a receiver or custodian is appointed for such Person's
business, proceedings are instituted against such Person under federal or state
bankruptcy or insolvency laws that have not been stayed within 30 days, all or
substantially all of such Person's business or assets become subject to
attachment, garnishment or other process, or a court or other Governmental
Authority of competent jurisdiction determines that such Person is insolvent.
"Business" shall have the meaning set forth in the recitals to
this Agreement.
"Business Day" shall mean any day which is not a Saturday,
Sunday or other day on which banks in the State of New York are legally required
or permitted to be closed.
"Change of Control" with respect to any Person shall mean (i)
any transaction or series of related transactions, other than a registered
public offering, as a result of which Persons owning the outstanding Voting
Securities (as defined below) of such Person immediately prior to such
transaction or series of related transactions cease to own a majority of the
outstanding Voting Securities of such Person thereafter, (ii) the consolidation
or merger of such Person with or into another Person, whether or not such Person
is the surviving entity of such transaction, unless immediately after such
consolidation or merger Persons owning the outstanding Voting Securities of such
Person prior to the transaction own a majority of the outstanding Voting
Securities of such new or surviving entity, or (iii) the sale, assignment or
other transfer of all or substantially all of the business or assets of such
Person to a third party in a single transaction or series of related
transactions. As used herein, the term "Voting Securities" of any Person shall
mean shares of capital stock, partnership interests or other equity interests of
such Person entitling the holder thereof to vote in the election of directors or
other applicable governing body of such Person.
"Ciba Fields" shall have the meaning set forth in Section 3.1.
"Ciba Technology" shall mean (i) the Patent Rights and
Know-How set forth on Schedule 1.1(a) , as such schedule may be
3
8
updated by Ciba from time to time, (ii) all intellectual property rights
(including all Patent Rights and Know-How) of Ciba with respect to drugs to be
evaluated or tested under the Program or for which Systems will be developed
pursuant to the Program, and (iii) all Improvements thereto.
"Committee" shall have the meaning set forth in Section
2.4(a).
"Contribution Agreement" shall have the meaning set forth in
Section 6.1.
"Dermion Technology" shall mean the Patent Rights set forth on
Schedule 1.1(b)(i), as such schedule may be updated by Dermion from time to
time, and shall include all Improvements thereto.
"Drug" shall mean any drug or medicament possessing physical
and chemical properties that render it potentially deliverable by iontophoresis
in therapeutic quantities.
"Exclusivity Period" shall mean the term of this Agreement,
provided, that in the event that this Agreement is terminated by Dermion other
than pursuant to Section 9.2(iii), the Exclusivity Period shall mean the term of
this Agreement plus a period of two (2) years from the effective date of such
termination.
"FDA" shall mean the United States Food and Drug
Administration.
"FDA Act" shall mean the United States Food, Drug and Cosmetic
Act and applicable regulations promulgated thereunder.
"Final Marketing Image" shall mean, with respect to any
System, the physical and chemical form in which such System (including all
components thereof) shall ultimately be manufactured and marketed commercially.
"First Commercial Sale" shall mean, with respect to any
System, the date of the first sale of such System in the ordinary course of
business in any country. Neither transfer of a System for use in a clinical
trial nor a transfer to any Affiliate, licensee or sublicensee of Ciba for
resale will be deemed a "First Commercial Sale" whether or not the transferor
thereof is paid for such System.
"Fiscal Year" shall mean Ciba's fiscal year, which is a
fifty-two to fifty-three (52-53) week year based on 4-4-5 week quarters, ending
on the last Friday of the calendar year.
4
9
"full-time equivalent employee" shall mean an individual or
individuals assigned to work on the Program with time and effort equivalent to
that which would be expended by one individual working on the Program on a
full-time basis consistent with normal business and scientific practice.
"Governmental Authority" shall mean any foreign, domestic,
federal, territorial, state or local governmental authority, court, government
or self-regulatory organization, commission, tribunal, organization or any
regulatory, administrative or other agency, or any political or other
subdivision, department, instrumentality, or branch of any of the foregoing.
"IDE" shall mean an Investigational Drug Exemption as defined
in the FDA Act.
"Improvements" shall mean all improvements, extensions,
enhancements, and modifications of or to Ciba Technology, Dermion Technology or
IOMED Technology, as the case may be.
"IND" shall mean an Investigational New Drug Application, as
defined in the FDA Act.
"Infringement Action" shall mean any action or suit, or threat
of action or suit, by a third party alleging that the manufacture, use or sale
of any Product or other System incorporating (or developed or manufactured
through processes incorporating) Dermion Technology, IOMED Technology or Jointly
Developed Technology, as the case may be, infringes a patent or violates any
other proprietary rights of any third party (which infringement or violation is
alleged to result from the incorporation of, or development or manufacture
through processes incorporating, such Dermion Technology, IOMED Technology or
Jointly Developed Technology in such Product or other System).
"Intercompany Patent License" shall have the meaning set forth
in Section 6.1.
"Interim Agreement" shall mean the Research Agreement, dated
as of July 17, 1995, between IOMED and Ciba, as extended prior to the date
hereof.
"IOMED Technology" shall mean the Patent Rights set forth on
Schedule 1.1(b)(ii), as such schedule may be updated by IOMED from time to time,
and shall include all Improvements thereto.
"Jointly Developed Technology" shall mean any and all
technology (including Patent Rights and Know-How) developed
5
10
pursuant to the Program relating to Systems, provided, that in no event shall
Jointly Developed Technology include Ciba Technology, Dermion Technology or
IOMED Technology.
"Key Employees" shall mean those individuals identified as
such in a letter dated February 27, 1996 from Ciba to IOMED.
"Know-How" shall mean technology, formulae, trade secrets,
technical data, preclinical and clinical data, and any other information or
experience other than Patent Rights.
"Licensed Technology" shall mean Ciba Technology, Dermion
Technology and IOMED Technology.
"Lien" shall have the meaning set forth in Section 7.1(c).
"NDA" shall mean a New Drug Application, as defined in the FDA
Act.
"Net Sales" shall mean the amount billed by a party, its
Affiliates, licensees and sublicensees to third parties for the sale of Products
or other Systems, as the case may be, less allowances for all discounts and/or
rebates, reimbursements or other similar payments which reduce the revenue
actually received by Ciba for Products or Systems sold, as the case may be,
****************************************************************************
****************************************************************************
*************************************************************************
***********************************************************************; all
as determined in accordance with Ciba's standard accounting practices.
"parties" shall mean IOMED, Dermion and Ciba.
"Patent Rights" shall mean the rights and interests in and to
issued patents and pending patent applications, whether domestic or foreign,
claiming patentable inventions, including all substitutions, continuations,
continuations-in-part, divisions, and renewals, all letters patent granted
thereon, and all reissues, reexaminations and extensions thereof, whether owned
or licensed in by a party with the right to sublicense.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or Governmental Authority.
6
11
"Product" shall mean a System developed by Dermion and Ciba
pursuant to this Agreement for delivery of any Drug specified by the parties.
"Program" shall mean those activities conducted pursuant to
this Agreement to research, develop, manufacture and commercialize Products.
"Program Costs" shall mean (i) all costs and expenses directly
related to Program activities incurred by Dermion in accordance with the Annual
Plans and Quarterly Budgets, plus (ii) a general and administrative overhead
*****************************************************************************
****************************************************************************
***************************************************************************
**********************************************************.
"Program Employee" shall have the meaning set forth in Section
2.2.
"Program Records" shall have the meaning set forth in Section
2.5.
"Prohibited Transfer" shall mean any Transfer other than (i)
to the partners, shareholders or other holders of any equity interest in the
transferor, or (ii) pursuant to an effective registration statement under the
Securities Act of 1933, as amended.
"Prohibited Transferee" shall mean **********************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
7
12
************************************************************************
"Prosecution Costs" shall mean all direct and indirect fully
absorbed costs, fees and expenses, including reasonable attorneys' fees incurred
in connection with the filing, maintenance and prosecution of patent
applications and patents with respect to Jointly Developed Technology,
including, without limitation, costs and charges reasonably incurred in
defending any interferences and oppositions with respect thereto.
"Quarterly Reports" shall have the meaning set forth in
Section 6.2(a).
"Research Funding Payments" shall have the meaning set forth
in Section 6.2(a).
"Royalty Period" shall mean that period beginning on the First
Commercial Sale of a System and ending upon expiration of all patents
constituting Dermion Technology, IOMED Technology or Jointly Developed
Technology, as the case may be, incorporated in such System (or in any
processes through which such System is developed or manufactured).
"Settlement Costs" shall mean, with respect to any
Infringement Action, all damages paid or payable to a third party in connection
with such Infringement Action, all costs and expenses (including reasonable
attorneys' fees) incurred in connection with such Infringement Action, and all
fees, royalties or other amounts paid or payable to a third party pursuant to
any Third Party License obtained in connection with such Infringement Action.
"Specified Indication" shall have the meaning set forth in
Section 3.1(b).
"System" shall mean an iontophoretic transdermal drug delivery
system, incorporating a current source, current controller, drug containment
device/electrode, dispersive electrode and method for attachment.
"Technology Transfer Restriction Period" shall have the
meaning set forth in Section 4.4.
"term of this Agreement" shall mean the initial term of this
Agreement and any extensions thereof in accordance with Section 9.1.
"Territory" shall mean **************************.
8
13
"Third Party License" shall mean, with respect to any
Infringement Action, any license which either Dermion or Ciba, as the case may
be, is required to obtain from a third party under the terms of any settlement
or any judgment, decree or decision of a court, tribunal or other authority of
competent jurisdiction in order to make, have made, use or sell Products or
other Systems incorporating (or developed or manufactured through processes
incorporating) Dermion Technology, IOMED Technology or Jointly Developed
Technology, as the case may be.
"Transfer" shall mean (i) the making of any sale, exchange,
assignment, conveyance, gift or other disposition (whether voluntary or
involuntary) , (ii) the granting of any lien, security interest, pledge or other
encumbrance, or (iii) the entering into any agreement to do any of the
foregoing.
1.2 General Definition Provisions. For purposes of this
Agreement, except as otherwise expressly provided herein,
(a) the terms defined in Section 1.1 include the plural as
well as the singular;
(b) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms;
(c) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Section, Paragraph or other subdivision; and
(d) the words "include", "including" and other words of
similar import mean "include, without limitation" or "including, without
limitation," regardless of whether any reference to "without limitation" or
words of similar import is made.
ARTICLE 2
THE PROGRAM
2.1 Basic Provisions of the Program. The Program shall be
conducted by Dermion, subject to oversight by the Committee. Under the Program,
Dermion will use commercially reasonable efforts to conduct research with
respect to and develop Products in accordance with this Agreement. In
furtherance thereof, Dermion shall use commercially reasonable efforts to
perform such tasks and to comply with the time schedules therefor as are set by
the Committee in the Annual Plans or otherwise; provided, that Dermion shall
have no
9
14
obligation to incur costs or expenses to purchase assets or obtain services for
use exclusively in connection with the Program which are materially in excess of
the aggregate amount of Research Funding Payments paid by Ciba. Program
activities shall be conducted at facilities provided by Dermion and/or Ciba and
shall use such personnel, methods and resources as shall be determined by
Dermion, subject to the approval of the Committee; provided, however, that any
such facilities provided by Ciba shall be provided at no charge to Dermion. Such
personnel, methods and resources shall be sufficient to fulfill the objectives
of the Program. Dermion covenants to Ciba that all Program activities conducted
by Dermion or its Affiliates shall be conducted in a professional and competent
manner, in compliance with all Applicable Laws and in accordance with this
Agreement.
2.2 Staffing and Resources.
(a) Dermion. Dermion shall make available for use exclusively
in the Program ****************************** equivalent employees ("Program
Employees") at all times during the term of this Agreement, unless at any time
the Committee determines that the objectives of the Program can be fulfilled
with fewer Program Employees. Each Program Employee shall have such technical
credentials, education and experience as is appropriate for such Program
Employee's position in the Program. It is understood and agreed that the Program
Employees may be consultants or independent contractors of, and need not be
employees of, Dermion. All compensation (including salary, bonus and other
benefits), and all travel, lodging and other business expenses of Program
Employees shall be paid by Dermion. In the event of a Program Employee vacancy
for any reason, prompt notice thereof shall be given to the Committee. Unless
otherwise determined by the Committee, any such vacancy shall be filled by
Dermion with an individual or individuals with comparable qualifications as the
departed Program Employee and acceptable to Ciba, in its reasonable discretion.
Subject to Section 2.2(c) below, Dermion shall provide such other scientific
resources (consultants, facilities, equipment and materials) as are reasonably
necessary to conduct the Program.
(b) Ciba. Ciba shall have the right to designate from time to
time Ciba personnel to participate in the Program ("Ciba Personnel"). Ciba
Personnel shall remain employed or otherwise engaged by Ciba during their
participation in the Program. Ciba shall remain responsible for all compensation
(including salary, bonus and other benefits) payable to, and all travel, lodging
and other business expenses of such Ciba Personnel.
10
15
(c) Equipment. Except as set forth in the next sentence, all
equipment necessary for conducting the Program shall be provided by Dermion at
its cost (which cost, if incurred in compliance with this Agreement, shall be
depreciated in accordance with generally accepted accounting principles as a
Program Cost) and, to the extent purchased by Dermion, title thereto shall be
retained by Dermion. To the extent any item of equipment is required to be
purchased in connection with conducting the Program for a purchase price in
excess of *******, Dermion shall notify the Committee. Subject to Section
2.4(a)(viii), Ciba shall purchase such equipment and make it available for use
in the Program. Ciba shall retain title to any such equipment and such equipment
shall be returned to Ciba upon termination of this Agreement.
2.3 Annual Plans. For each calendar year of the Program, an
Annual Plan shall be approved by the Committee no later than ninety (90) days
before the end of the prior calendar year. The Annual Plan for 1996 shall be
prepared and approved by the Committee no later than thirty (30)days after the
date hereof. Each Annual Plan shall be in writing and shall set forth with
reasonable specificity research objectives, milestones, budgets and personnel
requirements for Program activities to be conducted during the year covered by
such Annual Plan. The Committee may make amendments to the Annual Plan as it may
determine are necessary or desirable from time to time.
2.4 The Committee.
(a) Establishment and Functions. Dermion and Ciba shall
establish a research and development steering Committee (the "Committee"), which
shall be responsible for overseeing all aspects of the Program. The Committee
shall plan, administer, and monitor the Program and shall keep the parties
reasonably informed as to the status of all Program activities. Without limiting
the foregoing, the approval of the Committee shall be required for the following
actions with respect to the Program:
(i) The adoption, amendment or repeal of any material plan or
policy, including Annual Plans, with respect to the Program;
(ii) The determination as to whether to pursue research concerning
or the development of any particular Product;
(iii) The determination as to whether to make any material changes
or material adjustments with respect to the research
concerning or development of any particular Product or the
Program generally;
11
16
(iv) The termination of Program activities with respect to any
Product;
(v) The organization of, or the acquisition or disposition of any
interest in, any other Person by Dermion in connection with
the Program;
(vi) The execution, material amendment or termination by Dermion of
any agreement for the acquisition from a third Person of
Patent Rights or Know-How (or a license thereof) in connection
with Program activities;
(vii) Subject to the provisions of Section 4.5, the filing of any
patent application with respect to any Jointly Developed
Technology;
(viii) Except as contemplated in the then-current Annual Plan, any
capital expenditure or series of related capital expenditures
in connection with the Program aggregating in excess of Five
Thousand Dollars ($5,000);
(ix) Except as contemplated in the then-current Annual Plan, any
agreement for the performance of any Program activities by a
third party subcontractor involving payments in excess of Five
Thousand Dollars ($5,000);
(x) The determination as to whether to pursue an IND, IDE or NDA
with respect to any Product;
(xi) The determination as to whether any technology developed
pursuant to the Program constitutes Improvements to Ciba
Technology, Improvements to Dermion Technology, Improvements
to IOMED Technology or Jointly Developed Technology;
(xii) The establishment and approval of the Final Marketing Image of
any System; and
(xiii) The amendment or appeal of any prior resolutions of the
Committee.
(b) Size and Membership. The Committee shall consist of six
(6) members. Each Committee member shall have appropriate technical credentials,
knowledge and on-going familiarity with this Agreement, and the Committee
members of each party shall have authority to bind such party. Dermion and Ciba
each shall appoint, in its sole discretion, three members to the Committee.
Substitutes may be appointed at any time by notice in writing to the other
party. Vacancies 0 shall be filled by the party who appointed the departing
member.
12
17
The initial members of the Committee shall be as set forth
below:
Dermion Appointees:
Xxx Xxxxxxxxxxx
Xxx Xxxxxxxxx
Xxxxxxx Xxxxx
Ciba Appointees:
Xxxxxx Xxxxxx
Xxxx Xxx Xxxxxxx
Xxxxxx Xxxxxxxx
(c) Meetings. The Committee shall meet at least semiannually,
with such semi-annual meeting to be held, alternatively, in Salt Lake City, Utah
and Summit, New Jersey, unless the parties agree otherwise. Any additional
meetings shall be held at such places and on such dates selected by the parties.
Employees of each party or its Affiliates, in addition to the members of the
Committee, may attend such meetings at the invitation of either party.
(d) Minutes. The Committee shall keep accurate minutes of its
deliberations which record all proposed decisions and all actions recommended or
taken. Drafts of the minutes shall be delivered to all Committee members within
fifteen (15) days after each meeting. The party hosting the meeting shall be
responsible for the preparation and circulation of the draft minutes. Draft
minutes shall be edited by the parties and shall be issued in final form only
with their approval and agreement as evidenced by their signatures on the
minutes.
(e) Quorum; Voting, Decisions. At each Committee meeting, the
presence of at least two representatives of each party shall constitute a
quorum. Each party's Committee representatives shall have in the aggregate one
vote on-all matters before the Committee, regardless of the number of
representatives present. All decisions of the Committee shall be made by
unanimous vote. In the event that the Committee is unable to resolve any matter
before it after substantial good faith negotiation (a "Disputed Matter"), and if
such Disputed Matter is a Ciba Matter (as defined below), Ciba shall cast the
deciding vote on the matter. Any Disputed Matter that is not a Ciba Matter shall
be referred at the request of either party to the Chairman of Dermion and the
Senior Vice President, Research, of the Pharmaceuticals Division of Ciba (or
such other individuals) not on the Committee designated from time to time in
writing by one party to the other) for resolution. Such
13
18
officers shall endeavor in good faith to resolve the matter in dispute. If the
matter has not been resolved within forty-five (45) days of such referral, it
shall be resolved in accordance with Section 11.1. As used in this Agreement,
"Ciba Matter" shall mean any matter described in clauses (i), (ii), (iii), (iv),
(viii), (ix), (x) or (xiii) of Section 2.4(a) (in the case of (xiii), only to
the extent that the resolution being amended or repealed constitutes a Ciba
Matter), and any other matter expressly designated as such in this Agreement.
(f) Expenses. Dermion and Ciba shall each bear all expenses of
their respective Committee members related to their participation on the
Committee and attendance at Committee meetings.
2.5 Research Records; Reports.
(a) Research Records. Dermion shall maintain complete and
accurate records, in good scientific manner and in appropriate detail for patent
purposes, fully and properly reflecting all Program activities performed by it,
costs and expenses incurred in connection therewith and the results thereof,
including, without limitation, such data and materials as are required to be
maintained pursuant to Applicable Laws ("Program Records"). Program Records
shall be maintained on a Product-by-Product basis.
(b) Reports. Within fifteen (15) days after the end of each
calendar quarter (and otherwise at the written request of the Committee),
Dermion shall prepare and provide to the Committee a written summary describing,
in reasonable detail, the status of the Program, including all discoveries and
technical developments, and the status of compliance with research objectives
and milestones as set forth in the Annual Plan. In addition, Dermion shall
provide Quarterly Reports to the Committee pursuant to and in accordance with
Section 6.2. Dermion shall provide such other research, financial or other
reports to the Committee as the Committee may from time to time reasonably
request.
(c) Interim Agreement Report. IOMED has prepared and provided
to Ciba a written report setting forth an accounting of all funds paid by Ciba
to IOMED pursuant to the Interim Agreement.
(d) Review. Subject to Section 8.1, Ciba shall have the right,
during normal business hours and upon reasonable notice, to inspect and copy the
records of Dermion relating to the Program.
14
19
(e) Hazards. Each of Dermion and Ciba shall report to the
other as soon as practicable, and no later than five (5) days following such
party's own notification thereof, any findings associated with the use of any
System that may suggest significant hazards, significant contraindications,
significant side effects or significant precautions pertinent to the safety of
such System, in each case (i) at any time, insofar as it relates to Dermion
Technology, IOMED Technology or Jointly Developed Technology, or (ii) during the
term of this Agreement, insofar as it relates to Ciba Technology.
2.6 Access to Facilities. Subject to Section 8.1,
representatives of Ciba may, upon reasonable notice during normal business
hours, (a) visit any facilities where Program activities are being conducted,
and (b) consult informally, during such visits and by telephone, with
representatives of Dermion concerning the Program. On such visits, a
representative of Dermion may accompany the representatives of Ciba.
2.7 Clinical Trials. Unless otherwise determined by the
Committee with respect to any Product (which determination shall not be a Ciba
Matter), all clinical trials of Products shall be conducted by or under the
supervision of, and at the sole cost and expense of, Ciba, utilizing such
facilities, personnel, methods and other resources as shall be determined by
Ciba, subject to the review and approval of the Committee (which approval shall
be a Ciba Matter), provided, that Ciba shall not be required to pay any
additional compensation to Dermion in the event that any such facilities,
personnel, methods or other resources are provided by Dermion pursuant to this
Agreement. Dermion shall be given the opportunity to assist in the preparation
of any protocol proposed by Ciba for clinical trials of a Product.
2.8 Clinical Manufacturing of Products. Unless otherwise
determined by the Committee with respect to any Product, Dermion shall supply
Products for purposes of conducting clinical trials thereof. Dermion shall use
such facilities, personnel, methods and other resources as shall be determined
by Dermion, subject to the review and approval of the Committee. Ciba shall
reimburse Dermion for all direct out-of-pocket costs and expenses incurred by
Dermion in supplying Products pursuant to this Section 2.8. To the extent that
Dermion obtains products from IOMED, IOMED covenants and agrees to charge
Dermion only IOMED's direct fully absorbed costs and expenses incurred in
supplying such Products to Dermion.
2.9 Liability Insurance. During the term of this Agreement,
each party shall maintain comprehensive general liability insurance with respect
to claims for damages arising
15
20
from bodily injury (including death) caused by, or arising out of, the
development, manufacture and sale of its products in such amounts, with such
deductibles and covering such risks as are customary for comparable companies in
its industry. Prior to the commencement of clinical trials with respect to any
Product, the Committee shall meet to discuss whether the parties should obtain
additional liability insurance with respect to claims caused by, or arising out
of, the development of the Products, including any clinical trials associated
therewith, and the amounts and deductibles of any such insurance.
ARTICLE 3
EXCLUSIVITY
3.1 Ciba Fields; Ciba Proprietary Drugs.
(a) Ciba Fields. Schedule 3.1(a) attached hereto sets forth as
of the date hereof those therapeutic fields in which Ciba or any of its
Affiliates ****************************************************************
***************************************************************************
***************************************************************************
Ciba may update Schedule 3.1(a) from time to time in its discretion during the
Exclusivity Period, subject to Section 3.1(c). The therapeutic fields set forth
on Schedule 3.1(a), as so updated from time to time, shall be referred to herein
as the "Ciba Fields."
(b) Ciba Proprietary Drugs. Schedule 3.1(b) attached hereto
sets forth as of the date hereof certain Drugs with respect ********************
*****************************************, and which Ciba believes are
potentially therapeutic if delivered pursuant to a System in the treatment of
the indication (the "Specified Indication") set forth in Schedule 3.1(b) with
respect to such Drug. Ciba may update Schedule 3.1(b) from time to time during
the term of this Agreement, subject to Section 3.1(c), ***********************
***************************************************************************
**********************************. The Drugs set forth on Schedule 3.1(b), as
so updated from time to time, shall be referred to herein as the "Ciba
Proprietary Drugs."
(c) Updates. If Ciba desires at any time during the
Exclusivity Period to update Schedule 3.1(a) in order to include a new
therapeutic field (the "Proposed Ciba Field"), or at any time during the term of
this Agreement to update Schedule 3.1(b) to include a new Ciba Proprietary Drug
(such Drug, together with the associated Specified Indication, the "Proposed
Ciba
16
21
Proprietary Drug"), it shall notify Dermion in writing, which notice shall
contain (i) in the case of a Proposed Ciba Field, a certification that such
Proposed Ciba Field satisfies the condition set forth in either clause (i) or
clause (ii) of Section 3.1(a) hereof, or (ii) in the case of a Proposed Ciba
Proprietary Drug, a certification that such Proposed Ciba Proprietary Drug
satisfies the condition set forth in Section 3.1(b) hereof. Such Proposed Ciba
Field or Proposed Ciba Proprietary Drug shall automatically and without further
action by any party hereto become a Ciba Field or a Ciba Proprietary Drug, as
the case may be, and be treated as such for all purposes of this Agreement
immediately upon receipt by Dermion of such written notice; provided, however,
that if Dermion has, prior to its receipt of such notice and in compliance with
the terms of this Agreement (including without limitation Section 3.3 hereof)
entered into an agreement with any other Person (a "Third Party Agreement") with
respect to the research, development, manufacture, distribution or sale of any
System to deliver a Drug in the Proposed Ciba Field or the Proposed Ciba
Proprietary Drug for treatment of the Specified Indication, such Third Party
Agreement shall not be subject to this Article 3.
(d) Removal of Ciba Field or Ciba Proprietary Drug. If, at any
time during the Exclusivity Period, any Ciba Field or, during the term of this
Agreement, any Ciba Proprietary Drug ceases to qualify as such, Ciba shall
within ninety (90) days notify Dermion in writing of such fact. Such Ciba Field
or Ciba Proprietary Drug, as the case may be, shall thereafter automatically and
without further action of the parties cease to be a Ciba Field or a Ciba
Proprietary Drug, as the case may be, for purposes of this Agreement.
3.2 Dermion Exclusivity. Dermion shall not conduct, have
conducted or fund any research or development activity with respect to, or
manufacture, distribute or sell (whether independently or on behalf of a third
party) any System for delivery of any Drug in a Ciba Field during the
Exclusivity Period or any Ciba Proprietary Drug for treatment of the Specified
Indication during the term of this Agreement, except (i) pursuant to the Program
in accordance with this Agreement, or (ii) outside the scope of the Program,
subject to compliance with Section 3.3.
3.3 Development of Systems for or by Dermion Outside the
Program.
(a) Notice of Dermion Proposed Systems. In the event that
during the Exclusivity Period Dermion determines to develop a System (including
any Abandoned Product) outside the scope of the Program, either pursuant to a
third party offer (a "Third
17
22
Party Offer") to develop a System, or otherwise (a "Dermion Proposed System"),
Dermion shall give notice of the Dermion Proposed System to the Committee (the
"Notice"). The Notice shall include at least the therapeutic field of the drug
to be delivered pursuant to the Dermion Proposed System (the "Proposed Field"),
as well as such other information as is relevant to the Dermion Proposed System,
provided, that if the Dermion Proposed System is to be developed pursuant to a
Third Party Offer, Dermion shall not be required to disclose to the Committee
the name of such third party, the specific drug for which the System is to be
developed (unless such drug is a Ciba Proprietary Drug, in which case such drug,
as well as whether the indication proposed to be treated thereby is the
Specified Indication with respect to such drug, shall be disclosed) or any other
information that Dermion determines, in its good faith judgment, should not be
disclosed to Ciba because of confidentiality or competitive concerns (other than
the therapeutic field, which must in any event be disclosed).
(b) Dermion Proposed Systems in a Ciba Field. If the Proposed
Field is in whole or in part a Ciba Field, Dermion shall be prohibited from
pursuing the development of the Dermion Proposed System during the Exclusivity
Period without the prior written consent of Ciba, which may be given or withheld
in Ciba's sole discretion.
(c) Dermion Proposed Systems for Ciba Proprietary Drugs. If
the Dermion Proposed System relates to the delivery of a Ciba Proprietary Drug
for treatment of the Specified Indication, Ciba shall have the right during the
term of this Agreement to elect to have Dermion develop a Product for such Ciba
Proprietary Drug for treatment of the Specified Indication for it pursuant to
the Program instead of the Proposed Dermion System. If Ciba so elects, it shall
give notice thereof to the Committee within fifteen (15) Business Days of
receipt by the Committee of the Notice, in which case Dermion shall be
prohibited during the term of this Agreement from developing the Dermion
Proposed System for treatment of the Specified Indication, subject to the last
sentence of this Section 3.3 (c) The development of any such Product for a Ciba
Proprietary Drug for treatment of the Specified Indication pursuant to the
Program shall be pursuant to this Agreement or an amendment to this Agreement
(provided, that, other than providing for incremental costs to be paid by Ciba
and incremental personnel, facilities and resources to be provided by Dermion,
such amendment shall be on the same terms and conditions as this Agreement). If
Ciba fails to give such notice within such fifteen (15) Business Day period, or
if activities with respect to developing a Product for the Ciba Proprietary Drug
for treatment of the Specified Indication pursuant to the Program have not
commenced within
18
23
ninety (90) days of receipt by the Committee of the Notice (other than as a
result of any acts or omissions of Dermion), Dermion shall be free to pursue the
development of the Dermion Proposed System for treatment of the Specified
Indication outside the scope of the Program, provided, that if activities with
respect to developing such Dermion Proposed System for treatment of the
Specified Indication outside the scope of the Program have not commenced within
ninety (90) days after expiration of such fifteen (15) Business Day period or
such ninety (90) day period, as the case may be, any activities by Dermion with
respect to such Dermion Proposed System shall thereafter be subject to
compliance with this Section 3.3.
(d) Other Dermion Proposed Systems. If the Proposed Field is
not a Ciba Field and if the Drug proposed to be delivered pursuant to the
Dermion Proposed System is not a Ciba Proprietary Drug for treatment of the
Specified Indication, Dermion may freely develop the Dermion Proposed System for
a third party (which development may be pursuant to an agreement under which
Dermion grants exclusive licenses to such third party).
3.4 Development by Dermion of Abandoned Products. Dermion
shall be entitled to pursue research concerning and development of Abandoned
Products outside the scope of the Program, provided, that (i) any such activity
shall be subject to compliance with Section 3.3, (ii) Patent Rights covering the
Drug for which such Abandoned Product was being developed or such drug's
manufacture or use shall have expired, and (iii) Dermion shall reimburse Ciba in
accordance with the next sentence for all costs and expenses previously incurred
in conducting Program activities with respect to such Abandoned Product. In
reimbursement of such costs and expenses incurred with respect to any Abandoned
Product, Dermion shall pay to Ciba (i) within thirty (30) days after giving
Notice pursuant to Section 3.3(a) with respect to the proposed development by
Dermion of such Abandoned Product, all such costs and expenses up to a maximum
amount OF $250,000, and (ii) within thirty (30) days of receipt thereof, fifty
percent (50%) of all revenues received by Dermion with respect to such
Abandoned Product (including revenue from sales of and fees and/or royalties
received with respect to such Abandoned Product) up to the amount of such costs
and expenses not reimbursed pursuant to clause (i).
3.5 Development of Systems for or by Ciba.
(a) Systems for the Delivery of Ciba Proprietary Drugs. In the
event that during the term of this Agreement Ciba determines to develop a System
for a Ciba Proprietary Drug for treatment of the Specified Indication, it shall
give notice
19
24
thereof to the Committee (a "Ciba Proposed Proprietary System"). Dermion shall
have the right to elect to develop such Ciba Proposed Proprietary System for
treatment of the Specified Indication as a Product pursuant to the Program. If
Dermion so elects, it shall give notice thereof to the Committee within fifteen
(15) Business Days of receipt by the Committee of such notice, in which case
Ciba shall be prohibited during the term of this Agreement from developing the
Ciba Proposed Proprietary System for treatment of the Specified Indication
outside the scope of the Program, subject to the last sentence of this Section
3.5(a). The development of a Ciba Proposed Proprietary System for treatment of
the Specified Indication as a Product pursuant to the Program shall be pursuant
to this Agreement or an amendment to this Agreement (provided, that, other than
providing for incremental costs to be paid by Ciba and incremental personnel,
facilities and resources to be provided by Dermion, such amendment shall be on
the same terms and conditions as this Agreement). If Dermion fails to give such
notice within such fifteen (15) Business Day period, or if activities with
respect to developing a Product for the Ciba Proprietary Drug for treatment of
the Specified Indication have not commenced within ninety (90) days of receipt
by the Committee of such notice (other than as a result of any acts or omissions
of Ciba), Ciba shall be free to pursue the development of the Ciba Proposed
Proprietary System for treatment of the Specified Indication outside the scope
of the Program, provided, that if activities with respect to developing such
Ciba Proposed Proprietary System for treatment of the Specified Indication
outside the scope of the Program have not commenced within ninety (90) days
after the expiration of such fifteen (15) Business Day period or such ninety
(90) day period, as the case may be, any activities by Ciba with respect to such
Ciba Proposed Proprietary System shall thereafter be subject to compliance with
this Section 3.5(a).
(b) Other Systems. If during the term of this Agreement Ciba
makes the determination to engage a third party (other than Dermion) to develop
a System for a Drug owned, licensed or manufactured by Ciba (other than a Ciba
Proprietary Drug for treatment of the Specified Indication, which shall be
covered by Section 3.5(a) above) (a "Ciba Proposed System"), prior to initiating
discussions with such third party, Ciba shall notify Dermion in writing. Ciba
agrees for a period of thirty (30) days from such notice (the "Ciba Standstill
Period"), (i) to negotiate in good faith with Dermion to reach an agreement
under which Dermion would develop the Ciba Proposed System for Ciba either
pursuant to this Agreement or an amendment to this Agreement (provided, that,
other than providing for incremental costs to be paid by Ciba and incremental
personnel, facilities and resources to be provided by Dermion, such amendment
shall be on the same terms and conditions as this Agreement), and
20
25
(ii) Ciba shall not negotiate with or enter into a binding agreement with any
third party for the development of such Ciba Proposed System. If, upon
expiration of the Ciba Standstill Period, Ciba and Dermion have not reached an
agreement with regard to the development of the Ciba Proposed System, Ciba shall
be free to negotiate with and to enter into an agreement with a third party to
develop the Ciba Proposed System. Notwithstanding the foregoing, this Section
3.5(b) shall not apply to any Ciba Proposed System to the extent that
discussions regarding the development of such Ciba Proposed System are initiated
by a third party.
(c) No Other Restrictions. Notwithstanding any other provision
of this Agreement, Ciba shall be free to pursue the development of any System
(including any Ciba Proposed System) independently without the assistance of a
third party at any time without complying with Section 3.5(b) or any other
provision of this Agreement (other than Section 3.5(a) which shall apply only in
the case of a Ciba Proposed Proprietary System), and without any other
restriction or limitation of any kind.
ARTICLE 4
OWNERSHIP OF TECHNOLOGY; PATENTS
4.1 Licensed Technology; No Other Rights. It is understood and
agreed that Dermion owns the Dermion Technology, that IOMED owns the IOMED
Technology and that Ciba owns the Ciba Technology. It is further understood and
agreed that Dermion or its Affiliates owns Dermion Background Technology and
Ciba or its Affiliates owns Ciba Background Technology. Except as expressly set
forth in Section 5.2, neither IOMED nor Dermion shall, by virtue of entering
into this Agreement or the conduct of the Program, acquire any right, title or
interest in or to any technology (including Patent Rights and Know-How) or
products of Ciba, including the Ciba Technology and Ciba Background Technology.
Except as expressly set forth in Section 5.1, Ciba shall not, by virtue of
entering into this Agreement or the conduct of the Program, acquire any right,
title or interest in or to any technology (including Patent Rights and Know-How)
or products of IOMED or Dermion, including the Dermion Technology, the IOMED
Technology and Dermion Background Technology. Except as expressly provided
herein, nothing in this Agreement shall be deemed to grant (directly, by
implication or estoppel, or otherwise) any license under any such technology. It
is understood and agreed by the parties that this Agreement does not grant to
any party any license or other right to use in advertising, publicity or
otherwise, any trademark, service xxxx,
21
26
trade name or their equivalent, or any contraction, abbreviation or simulation
thereof, of any other party.
4.2 Improvements. Without limiting the generality of the
foregoing, any Improvements of or to Dermion Technology, IOMED Technology or
Ciba Technology made in the course of conducting the Program shall remain the
sole and exclusive property of Dermion, IOMED or Ciba, as the case may be. In
furtherance thereof, as between Dermion and IOMED and Persons claiming through
either of them, on the one hand, and Ciba and Persons claiming through Ciba, on
the other hand, (i) any Improvements made in the course of conducting the
Program, or any results of the Program, in each case that are specific to the
Dermion Technology or the IOMED Technology shall be the sole and exclusive
property of Dermion or IOMED, as the case may be, and all records and data
relating thereto shall be retained by Dermion or IOMED, as the case may be, and
(ii) any Improvements made in the course of conducting the Program, or any
results of the Program, in each case that are specific to the Ciba Technology
shall be the sole and exclusive property of Ciba, and all records and data
relating thereto shall be delivered to Ciba. Each of IOMED and Dermion hereby
assigns to Ciba all intellectual property rights that it may now have or
hereafter acquire in any Improvements that are made in the course of conducting
the Program, or any results of the Program, in each case that are specific to
the Ciba Technology. Ciba hereby assigns to Dermion all intellectual property
rights that it may now have or hereafter acquire in any Improvements that are
made in the course of conducting the Program, or any results of the Program, in
each case that are specific to the Dermion Technology. Ciba hereby assigns to
IOMED all intellectual property rights that it may now have or hereafter acquire
in any Improvements that are made in the course of conducting the Program, or
any results of the Program, in each case that are specific to the IOMED
Technology.
4.3 Ownership and Use of Jointly Developed Technology.
(a) Ownership of Jointly Developed Technology. Subject to
Section 4.3(b) , Dermion and Ciba shall jointly hold all right, title and
interest in and to all Jointly Developed Technology. Except as otherwise
provided in this Agreement, both Ciba and Dermion may freely practice and
otherwise exploit any and all Jointly Developed Technology without the consent
of, and without any obligation (including without limitation any obligation to
pay royalties or other amounts, or to render an accounting) to, the other party.
Each of Dermion and Ciba shall cause its employees and others performing Program
activities on its behalf (including, in the case of Dermion, Program Employees,
and in the case of Ciba, Ciba Personnel) (its "Scientists") to execute
agreements (i) assigning world-wide rights to all Jointly
22
27
Developed Technology made or developed by such Scientists to Dermion and Ciba,
jointly, and (ii) agreeing to cooperate with Dermion and Ciba in obtaining
patent protection with respect thereto (including by executing such documents as
may be required by any patent office in connection with a related patent
application or patent). Each of Dermion and Ciba shall cause its Scientists
promptly to disclose to such party, and shall thereafter promptly disclose to
the other party and the Committee, the conception or reduction to practice of
any Jointly Developed Technology that it believes has a reasonable likelihood of
receiving patent protection.
(b) Limitations on Use of Jointly Developed Technology by
Dermion. Notwithstanding the rights of Dermion and Ciba as joint owners of
Jointly Developed Technology pursuant to Section 4.3(a), any use of Jointly
Developed Technology by Dermion and Ciba shall be subject to Article 3 hereof.
4.4 Transfer of Jointly Developed Technology. During the term
of this Agreement, and for a period of three (3) years after the effective date
of termination thereof (such term and period, the "Technology Transfer
Restriction Period"), neither Dermion nor Ciba shall sell, assign, transfer or
convey (for purposes of this Section 4.4, "Assign") all right, title and
interest in or to any item of Jointly Developed Technology without the prior
written consent of the other party, except (i) to a successor to substantially
all of the business of Dermion or the Pharmaceuticals Division of Ciba, as the
case may be, whether by merger, consolidation, stock sale, asset sale or
otherwise, (ii) in the case of Ciba, to any Person other than a Prohibited
Transferee, or (iii) in the case of Dermion, to any Person other than for use in
connection with the research, development, manufacture, distribution or sale of
Systems for delivery of drugs in any of the Ciba Fields (as defined from time to
time in accordance with Section 3.1(a)), it being a condition precedent to any
Assignment of Jointly Developed Technology pursuant to this clause (iii) that
Dermion obtain the agreement of such Person not to so use during the Technology
Transfer Restriction Period the Jointly Developed Technology to be Assigned;
provided, however, that notwithstanding any other provision of this Section 4.4,
in the event that Dermion Assigns any Jointly Developed Technology to a
Prohibited Transferee (which Assignment by its terms shall require the Assignee
to give notice to Dermion of subsequent Assignments by such Prohibited
Transferee), and such Prohibited Transferee subsequently Assigns such Jointly
Developed Technology to another Prohibited Transferee, Dermion shall promptly
give Ciba notice of such subsequent Assignment, in which case the restriction
set forth in clause (ii) above shall, as of the date of such subsequent
Assignment, terminate and thereafter be of no further force or effect.
23
28
4.5 Patents and Patent Applications.
(a) Initial Filings. Each party shall promptly disclose to the
Committee the conception or reduction to practice of any Jointly Developed
Technology that the disclosing party believes has a reasonable likelihood of
receiving patent protection. Promptly after such disclosure, the Committee shall
meet (in person or by teleconference) to discuss such Jointly Developed
Technology, including (i) whether to proceed with a patent application with
respect thereto and (ii) the jurisdictions in which such patent application
should be filed. In the event that the Committee elects to file a patent
application with respect to any Jointly Developed Technology, Ciba shall be
responsible therefor (unless the Committee determines that Dermion should file
such patent application (which determination shall not be a Ciba Matter)) (the
party filing such patent application being referred to in this Section 4.5 as
the "Responsible Party"). The Responsible Party shall (i) give the other party
an opportunity to review the text of any such application promptly (with
consideration of all applicable filing deadlines) before filing and (ii)
promptly supply the other party with a copy of the application as filed,
together with notice of its filing date and serial number. Unless otherwise
agreed by the parties, the Responsible Party shall be responsible for the
initial filing of any such patent application and the subsequent prosecution and
maintenance of the application and any resulting patents.
(b) Foreign Filings. Within a reasonable period of time (which
the parties shall use reasonable efforts to ensure is no more than nine (9)
months) following the filing date of a patent application pursuant to Section
4.4(a), the Committee shall determine whether to abandon such application
without replacement, abandon and refile such application, proceed with such
application only in the country of filing, or use such application (e.g. as the
basis for a claim of priority under the Paris Convention) for corresponding
applications in other countries. Dermion and Ciba shall consult together to
ensure that, so far as practicable, the texts of applications filed in different
jurisdictions contain the same information and claim the same scope of
protection.
(c) Patent Prosecution and Maintenance. The Responsible Party
shall diligently prosecute and maintain, using commercially reasonable
practices, patent applications and patents with respect to Jointly Developed
Technology for which it is responsible, and promptly provide the other party
with copies of all relevant documentation with respect thereto. The Responsible
Party shall use patent counsel and other professional
24
29
advisors of its own selection, reasonably acceptable to the other party. The
Committee shall periodically review the status of patents and patent
applications constituting Jointly Developed Technology, including whether the
prosecution and/or maintenance of each such patent or patent application should
be continued.
(d) Authority. The Responsible Party shall have the sole and
exclusive authority to prosecute and maintain the patent application and patent
for which it is responsible, including the right to amend and cancel claimed
subject matter, as may be reasonably appropriate or desirable in the view of the
Responsible Party, but shall consult in good faith with the other party
regarding such prosecution and maintenance with respect to Jointly Developed
Technology for which it is responsible, and will promptly provide the other
party with a copy of all relevant documentation with respect thereto. The other
party shall cooperate with the Responsible Party, including providing the
Responsible Party with access to such information as may be reasonably necessary
to permit such prosecution and maintenance, and signing, or causing to have
signed, such documents as may be necessary or appropriate in connection
therewith. Prior to abandoning any such patent application or patent, the
Responsible Party shall offer the same to the other party for prosecution or
maintenance, as the case may be. The costs, if any, of such cooperation shall be
Prosecution Costs subject to Section 4.4(e).
(e) Prosecution Costs. Dermion and Ciba shall bear all
Prosecution Costs equally, provided, that Dermion's share of such Prosecution
Costs shall not exceed $50,000 per patent application (not including any
Premium payable pursuant to Section 4.5(f)).
(f) Independent Filing. In the event that after consideration
thereof the Committee elects not to file a patent application in any
Jurisdiction with respect to any Jointly Developed Technology, either Dermion or
Ciba shall be entitled to file a patent application in such jurisdiction with
respect to such Jointly Developed Technology (an "Independent Filing"). In such
event, the party making the Independent Filing shall bear all Prosecution Costs
with respect to such patent application and shall own all right, title and
interest in and to any Patent Rights arising or resulting from such Independent
Filing. Notwithstanding the foregoing, the other party may within one (1) year
of the filing date elect to join the filing party in such Independent Filing, in
which case (i) such other party shall pay to the filing party such other party's
share of Prosecution Costs incurred by the filing party to date in connection
with such Independent Filing plus an amount equal to ******************** (a
"Premium") of all such Prosecution Costs, (ii) all Patent Rights arising or
resulting from such filing shall be deemed
25
30
Jointly Developed Technology for all purposes under this Agreement, and (iii)
thereafter all of the other provisions of this Section 4.5 shall apply to such
patent application (with the filing party serving as the Responsible Party).
4.6 Infringement of Patent Rights.
(a) Notice. If any party shall become aware of any
infringement or threatened infringement of any Patent Rights constituting
Jointly Developed Technology or Licensed Technology, including that contained in
a notice provided under the 1984 Act by a party filing an ANDA or an NDA for a
System, or an equivalent action in any other country of the world (an
"Infringement"), then the party having such knowledge shall give notice
"Infringement Notice") to the other parties promptly upon becoming aware of such
Infringement.
(b) Jointly Developed Technology. Promptly upon receipt of any
Infringement Notice relating to Infringement of Jointly Developed Technology,
the Committee shall meet to determine appropriate action to take with respect to
such Infringement (the "Committee's Determination"), including (i) whether the
parties should prosecute such Infringement jointly, whether either party should
prosecute such Infringement independently, or whether no action should be taken
by the parties with respect to such Infringement, (ii) in the event that the
Committee determines to prosecute such Infringement jointly, the party or
parties to have primary responsibility therefor (the "Responsible Party(ies)"),
(iii) allocation between the parties of expenses to be incurred with respect to
the prosecution of such Infringement, (iv) allocation between the parties of any
damages recovered in respect of such Infringement, and (v) any other matter
deemed relevant by the Committee in respect of such Infringement. With respect
to any joint prosecution, the Responsible Party(ies) shall take such action, as
deemed appropriate, whether by action, suit, proceeding or otherwise, in
accordance with the Committee's Determination to prevent or eliminate the
Infringement and to collect damages with respect thereto. Except as set forth
below, all costs and expenses incurred by any party in connection with the
Infringement shall be borne by the parties in accordance with the Committee's
Determination. Except as set forth below, damages recovered by any party in such
action, suit or proceeding in connection with such Infringement shall be
apportioned between the parties in accordance with the Committee's
Determination. In the event that the Committee is unable to make a determination
mutually acceptable to the parties as to how to proceed with respect to such
Infringement, either party shall be entitled to prosecute such Infringement in
its own name and on its own behalf, in which case such party shall bear all
costs and expenses incurred by it
26
31
in connection with prosecuting such Infringement and shall retain all damages
recovered in respect thereof.
(c) Licensed Technology. Each party shall be responsible to
take such action as it deems appropriate, whether by action, suit, proceeding or
otherwise, at its own expense to prevent or eliminate an Infringement of such
party's Licensed Technology and to collect damages, provided, that, with respect
to Patent Rights constituting Dermion Technology or IOMED Technology
incorporated in any Product (or in any process used in developing or
manufacturing any Product), Ciba shall have the right to prosecute such
infringement in the same manner and under the same terms and conditions as set
forth in Section 4.6(b).
4.7 Infringement of Third Party Rights.
(a) Notice. If either Dermion or Ciba shall become aware of
any Infringement Action with regard to the manufacture, use or sale of any
System incorporating (or developed or manufactured through processes
incorporating) Jointly Developed Technology, the party aware shall promptly
notify the other party of the same and fully disclose, to its knowledge, the
basis therefor.
(b) Infringement Actions with respect to Products. If the
Infringement Action relates to a Product incorporating (or developed or
manufactured through processes incorporating) Jointly Developed Technology, the
parties shall jointly compromise or defend the Infringement Action on such basis
and on such terms as the parties shall mutually agree. In such event the parties
shall cooperate fully with respect to the compromise or defense of such
Infringement Action, and each party shall keep the other fully informed as to
the status of such Infringement Action. If, in connection with such Infringement
Action, either Dermion or Ciba is required to obtain a Third Party License in
order to make, have made, use or sell Products incorporating (or developed or
manufactured through processes incorporating) Jointly Developed Technology, such
Third Party License shall be obtained for the benefit of both Dermion and Ciba,
and all rights under such Third Party License shall be held jointly by the
parties. All Settlement Costs incurred by the parties with respect to such
Infringement Action shall be borne eighty percent (80%) by Ciba and twenty
percent (20%) by Dermion.
(c) Infringement Actions with respect to Other Systems. If the
Infringement Action relates to a System incorporating (or developed or
manufactured through processes incorporating) Jointly Developed Technology,
which System is not a Product developed pursuant to the Program, the Committee
shall meet to determine appropriate action to take with respect to such
27
32
Infringement Action, including (i) whether the parties should compromise or
defend such Infringement jointly or whether either party should compromise or
defend such Infringement independently, (ii) in the event that the Committee
determines to compromise or defend such Infringement Action jointly, the party
or parties to have primary responsibility therefor, (iii) allocation between the
parties of expenses to be incurred with respect to the compromise or defense of
such prosecution, (iv) allocation between the parties of rights under any Third
Party License obtained in connection with such Infringement Action, and (v) any
other matter deemed relevant by the Committee in respect of such Infringement
Action. In the event that the Committee is unable to make a determination
mutually acceptable to the parties as to how to proceed with respect to such
Infringement Action, either party shall be entitled to compromise or defend such
Infringement Action in its own name and on its own behalf, in which case such
party shall bear all Settlement Costs incurred by it in connection with
compromising or defending such Infringement Action and shall retain sole
ownership of all rights under any Third Party License obtained by it in
connection with such Infringement Action.
ARTICLE 5
LICENSES
5.1 Licenses to Ciba. (a) Dermion hereby grants to Ciba during
the term of this Agreement a non-exclusive license under the Dermion Technology,
with the right to sublicense (subject to Section 5.3), to make, have made, use
and sell Systems in the Territory. At the end of the term of this Agreement,
Ciba shall have a perpetual, worldwide, paid-up, royalty-free (subject to
Section 6.4), non-exclusive license under the Dermion Technology, with the right
to sublicense (subject to Section 5.3), to further make, have made, use and sell
Systems. All rights granted under this Section 5.1(a) are subject to Section
5.1(c) below.
(b) IOMED hereby grants to Ciba during the term of this
Agreement a non-exclusive license under the IOMED Technology, with the right to
sublicense (subject to Section 5.3), to make, have made, use and sell Systems in
the Territory. At the end of the term of this Agreement, Ciba shall have a
perpetual, worldwide, paid-up, royalty-free (subject to Section 6.4),
non-exclusive license under the IOMED Technology, with the right to sublicense
(subject to Section 5.3), to further make, have made, use and sell Systems. All
rights granted under this Section 5.1(b) are subject to Section 5.1(c) below.
28
33
(c) ******************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
(d) IOMED and Dermion agree to abide by and not breach the
***********************************************, and shall not terminate, agree
to any amendment or modification of or waive any rights under such licenses
without the prior written consent of Ciba (not to be unreasonably withheld).
(e) Notwithstanding the foregoing, with respect to
Improvements to Dermion Technology and IOMED Technology, respectively, the
licenses granted under this Section 5.1 shall only include such Improvements
made during the term of this Agreement.
5.2 License from Ciba. Ciba hereby grants to Dermion during
the term of this Agreement a non-exclusive, royalty-free, license under the
Patent Rights included in the Ciba Technology to make, have made, use and sell
Products in the Territory pursuant to the Program. In addition to the foregoing,
Ciba hereby grants to Dermion during the term of this Agreement a nonexclusive
license to practice the Know-How included in the Ciba Technology in the
Territory pursuant to the Program. All rights to Ciba Technology (including
Patent Rights and Know-How) granted to Dermion pursuant to this Agreement shall
terminate upon the effective date of termination of this Agreement, and Dermion
shall have no right, title or interest in such Ciba Technology thereafter.
5.3 Sublicensing.
(a) Dermion. Notwithstanding any other provision of this
Agreement, Dermion shall not sublicense the rights granted to it under Section
5.2 without the prior written consent of Ciba, which Ciba may give or withhold
in its sole discretion.
29
34
(b) Ciba. Subject to Section 5.1(c), Ciba shall be permitted
to sublicense the rights granted to it under Sections 5.1(a) and 5.1(b) to any
Person in connection with the research concerning, development, manufacture,
distribution or sale by such Person of Systems for drugs owned, licensed or
manufactured by Ciba; provided, however, that such license may not permit such
Person to grant lower level licenses. Any other sublicense by Ciba of its rights
under Sections 5.1(a) and 5.1(b) may be made only with the prior written consent
of Dermion, which Dermion may give or withhold in its sole discretion.
5.4 Transfers of Second Generation Technology by Dermion. If
at any time during the term of this Agreement and for a period of five (5) years
after the effective date of termination thereof, Dermion obtains any Patent
Rights covering Second Generation Technology (as defined below), Dermion shall
notify Ciba in writing of such event. Dermion agrees that for a period of thirty
(30) days from such notice (the "Dermion Standstill Period"), (i) it will
negotiate in good faith with Ciba to reach an agreement to license the Second
Generation Technology to Ciba on terms and conditions acceptable to the parties,
and (ii) Dermion shall not negotiate or enter into a binding agreement with any
third party to Transfer the Second Generation Technology, provided, that clause
(ii) of this sentence shall only apply during the term of this Agreement. If,
upon expiration of the Dermion Standstill Period, Ciba and Dermion have not
reached an agreement for the license of such Second Generation Technology to
Ciba, Dermion shall be free to Transfer such Second Generation Technology to any
third party. In addition, if Ciba and Dermion have reached an agreement for a
license, Dermion shall also be free to Transfer such Second Generation
Technology to any third party to the extent permitted under the terms of the
license from Dermion to Ciba. Notwithstanding the foregoing, Dermion shall not
be required to enter into a license with Ciba if and to the extent that the
terms of such license would, in the good faith judgment of Dermion on advice of
counsel, violate the terms of any agreement between Dermion and any third party
then in effect. As used in this Section 5.4, "Second Generation Technology"
shall mean any technology (including Patent Rights and Know-How), other than
Improvements to Dermion Technology or IOMED Technology, developed by Dermion
that is applicable or potentially applicable to the development of Systems. If
any transaction is covered by both this Section 5.4 and Section 8.4 below, the
terms of Section 8.4 shall exclusively govern such transaction.
5.5 Future IOMED Licenses. Subject to Section 5.1(c), upon the
request of Dermion, IOMED shall grant a non-exclusive license of the IOMED
Technology to such licensee and on such terms and conditions as may be requested
by Dermion in connection
30
35
with the conduct of the Business by Dermion. IOMED acknowledges that all rights
to royalties payable in connection with any such license have been assigned to
Dermion pursuant to the Contribution Agreement.
ARTICLE 6
EQUITY AND FUNDING
6.1 Related Transactions; License Fee. (a) Simultaneously with
the execution and delivery of this Agreement (i) Ciba and Dermion shall enter
into a Stock Purchase Agreement pursuant to which Ciba shall purchase shares of
Dermion's Common Stock for a purchase price of One Million Dollars ($l,000,000)
(the "Stock Purchase Agreement"); (ii) IOMED and Dermion shall enter into a
Contribution Agreement (the "Contribution Agreement") in the form attached as
Exhibit F to the Stock Purchase Agreement; (iii) Ciba, Dermion and IOMED shall
enter into a Stockholders' Agreement in the form attached as Exhibit E to the
Stock Purchase Agreement; (iv) IOMED and Dermion shall enter into a Patent
License Agreement in the form attached as Exhibit B to the Stock Purchase
Agreement (the "Intercompany Patent License"); (v) IOMED and Dermion shall enter
into an Agreement of Sublease in the form attached as Exhibit D to the Stock
Purchase Agreement (the "Sublease"); and (vi) IOMED and Dermion shall enter into
a Support Services Agreement in the form attached as Exhibit C to the Stock
Purchase Agreement (the "Support Services Agreement").
(b) In consideration of the rights granted to Ciba in Section
5.1, Ciba shall pay IOMED the sum of One Million Dollars ($1,000,000) upon
execution of this Agreement.
6.2 Program Funding
(a) Research Funding Payments. In order to fund activities to
be conducted under the Program, Ciba shall reimburse Dermion for all Program
Costs up to a maximum aggregate amount per annum equal to *****************
*************************************. Such amounts are referred to in this
Agreement as "Research Funding Payments." Research Funding Payments shall be
payable quarterly as follows:
(i) Within thirty (30) days after the end of each calendar
quarter, Dermion shall prepare and provide to the Committee a
financial report with respect to the Program (the "Quarterly
Report"), which shall include (x) a statement setting forth in
comparative form Program Costs actually paid or
31
36
incurred by Dermion during the previous calendar quarter
("Actual Costs") and Program Costs previously budgeted with
respect to such calendar quarter ("Budgeted Costs"), together
with the amount by which Actual Costs exceeded or were less
than Budgeted Costs, and (y) a budget (the "Quarterly Budget")
of Program Costs for the current calendar quarter. ********
*********************************************************
********.
(ii) Subject to subparagraph (iii) below, within fifteen (15) days
after receipt by the Committee of the Quarterly Report, Ciba
shall pay Dermion the amount of Program Costs for the current
quarter as set forth in the Quarterly Budget plus or minus the
amount by which Actual Costs exceeded or were less than
Budgeted Costs for the previous quarter.
(iii) To the extent that Ciba disagrees with any item or amount set
forth in the Quarterly Report, including any Actual or
Budgeted Cost for the previous quarter or the budgeted Program
Costs for the current quarter set forth in the Quarterly
Budget, any such disagreement shall be submitted to the
Committee for resolution in accordance with Section 2.4(e) and
Ciba shall be entitled to withhold from any amounts to be paid
under subparagraph (ii) above the amount in dispute until such
disagreement shall be resolved.
(iv) Upon execution of this Agreement, Ciba shall pay Dermion
******** representing the remaining Research Funding Payment
for the calendar quarter ended March 31, 1996.
(b) Use of Proceeds. All Research Funding Payments shall be
used by Dermion solely to pay for Program Costs. All Program activities, as
described in the Annual Plans, shall be paid for by Dermion out of Research
Funding Payments or otherwise, subject to Section 2.1.
6.3 Milestone Payments.
(a) Payments. For each Product, Ciba shall make the following
payments (each, a "Milestone Payment") to Dermion upon achievement of the
milestone events set forth below with respect to such Product:
32
37
(i) ***********************************************************
*********************************************************
*********************************************************
*********************************************************
*********************************************************
*********************************************************
(ii) ********************************************************
**********************************************
(iii) *********************************************************
*********************************************************
For purposes of this Section 6.3(a), (i) to the extent that multiple Systems are
developed pursuant to the Program in order to deliver multiple dosage regimens
of the same Drug for treatment of the same indication, or (ii) to the extent
that any System developed pursuant to the Program can be used, without material
modification, in order to deliver any Drug for treatment of multiple
indications, then, in either case, such Systems or System shall be considered
one Product. Upon termination of the development of any Product (whether
pursuant to a termination of this Agreement or otherwise), Dermion shall
thereafter be entitled to any Milestone Payment with respect to such Product
only if the Milestone Trigger for such Milestone Payment is achieved within ***
********** after the effective date of termination of such Product. For purposes
of this Section 6.3, "Milestone Trigger" with respect to a Milestone Payment
shall mean (x) in the case of a Milestone Payment referred to in Section
6.3(a)(i), ****************************************, as the case may be, with
respect to such Product and (y) in the case of a Milestone Payment referred to
in Section 6.3(a)(ii) or (iii), the establishment and approval by the Committee
of ************************* with respect to such Product, provided, that the
effectiveness of such establishment and approval of ************************* as
a Milestone Trigger shall be conditioned upon Dermion's continued cooperation
and provision of assistance to Ciba (to the extent reasonably requested by Ciba)
in connection with the ********************************************* with
respect to such Product.
(b) Milestone Credits. ******************* of Milestone
Payments paid with respect to a Product pursuant to Sections 6.3(a)(ii) and
(iii) above ("Milestone Credits") shall be credited against royalties on Net
Sales of such Product pursuant to Section 6.4(a), or, pursuant to Section
6.4(e), against other amounts payable under this Article 6. In payment of
Milestone Credits, Dermion shall receive no royalties with respect to a Product
pursuant to Section 6.4(a) until aggregate royalties payable with respect to
such Product are in excess of the amount of such credit.
33
38
6.4 Royalties Payable by Ciba.
(a) Royalties on Net Sales of Products. With respect to each
Product incorporating, or developed or manufactured through processes
incorporating, patents constituting Dermion Technology or IOMED Technology
licensed to Ciba hereunder or Jointly Developed Technology, Ciba shall pay to
Dermion for each Fiscal Year during the Royalty Period, royalties equal to ****
*************************************************.
(b) Royalties on Net Sales of Other Systems. With respect to
each System incorporating, or developed or manufactured through processes
incorporating, patents constituting Dermion Technology or IOMED Technology
licensed to Ciba hereunder but which System is not a Product developed pursuant
to the Program, Ciba shall pay to Dermion for each Fiscal Year during the
Royalty Period royalties equal to **********************************************
*******.
(c) Termination. Upon termination of this Agreement, a System
being developed pursuant to the Program and incorporating or developed or
manufactured through processes incorporating Jointly Developed Technology (and
not Dermion Technology or IOMED Technology) shall be deemed to be a Product
giving rise to royalties payable pursuant to Section 6.4 (a) only if the Final
Marketing Image of such System shall have been established and approved by the
Committee within six (6) months after the effective date of termination of such
Product. In the event that this Agreement is terminated by Ciba pursuant to
Section 9.2(iii), Ciba shall be entitled to set off against any royalties
payable under this Section 6.4 any liability, damage, loss or expense (including
reasonable attorney's fees and expenses) arising from or in connection with the
breach by Dermion giving rise to the right of termination by Ciba.
(d) Invalidity of Dermion Technology or IOMED Technology. In
the event that one or more claims of patents constituting Dermion Technology or
IOMED Technology are declared invalid or unenforceable by a judgement, decree or
decision of a court, tribunal or other authority of competent jurisdiction
("Invalid Claims") , Ciba shall be relieved of its obligations to pay royalties
to Dermion pursuant to this Section 6.4 on any Products or Systems incorporating
(or developed or manufactured through processes incorporating) such Dermion
Technology or IOMED Technology, but only to the extent that any such Products or
Systems do not incorporate, and were not developed or manufactured through
processes incorporating either (i) any Dermion Technology or IOMED Technology
other than Invalid Claims, or (ii) in the case of Products only, any Jointly
Developed Technology, provided, however, that such royalty obligation shall
34
39
revive effective immediately as of the date, if ever, that any such judgment,
decree or decision is overturned or otherwise modified such that any claim at
issue therein once again becomes valid and enforceable.
(e) Infringement of Third Party Rights. If, in connection with
any Infringement Action with regard to the manufacture, use or sale (either in
the United States (a "US Infringement Action") or outside the United States (a
"Non-US Infringement Action")) of any System incorporating (or developed or
manufactured through processes incorporating) Dermion Technology or IOMED
Technology, Ciba is required to obtain a Third Party License in order to make,
have made, use or sell any System, and/or to pay Settlement Costs in connection
with such Infringement Action, then, if and to the extent that that any such
consequence results from the incorporation of Dermion Technology or IOMED
Technology in such System, or from the development or manufacture of such System
through processes incorporating Dermion Technology or IOMED Technology, in
either case in compliance with the terms of this Agreement, any royalties
payable under this Section 6.4 with respect to such System shall be reduced by
***************************************************************************
***************************************************************************
***************************************************************************
***************************************************************************
*******************. In such event, to the extent that Ciba is unable to recoup
Milestone Credits as a result of such reduction in royalties, Ciba shall be
entitled to reduce any amount payable under this Article 6 by the amount of such
unpaid Milestone Credits.
(f) No Waiver. Nothing in Section 6.4(d) or (e) shall be
construed as a waiver or cure of any breach of any warranties set forth in
Section 7, or any release of any claim by Ciba as may be appropriate relating
thereto.
6.5 General Provisions Regarding Royalties.
(a) Payments. For purposes of determining the applicable
royalty amounts to be paid pursuant to Section 6.4, Net Sales shall be converted
from the currency used in each country of sale to Swiss Francs and then to
United States Dollars, all in accordance with Ciba's standard method of currency
conversion. All royalty payments shall be made in United States Dollars.
(b) Intra-Company Sales. Sales of any System between or among
Ciba and its Affiliates, licensees and sublicensees shall not be subject to any
royalty hereunder, and in such cases
35
40
royalties shall be calculated in accordance with this Agreement upon Net Sales
to an independent third party by Ciba or its Affiliates, licensees and
sublicensees. Ciba shall be responsible for payment of any royalty accrued on
Net Sales of such System to such independent third party through its Affiliates,
licensees or sublicensees. Royalties shall accrue hereunder only once in respect
of the same unit of System.
(c) Timing of Royalty Payments; Records.
(i) within ninety (90) days after the end of each half-year of the
Fiscal Year, Ciba shall pay to Dermion the royalty payment due
for that half year, provided, that royalties with respect to
the first half-year in which any Product or other System is
sold shall not be payable with respect to such Product or
System until the royalty payment date for the next succeeding
half-year.
(ii) Together with each royalty payment, Ciba shall submit to the
Dermion a written accounting showing its computation of
royalties due under this Agreement for such half-year of the
Fiscal Year. Said accounting shall (A) set forth gross sales,
Net Sales, the specific deductions used in arriving at Net
Sales, and the total royalties due for the half-year in
question and (B) be in accordance with Ciba's standard
accounting practices.
(iii) Ciba shall keep full and accurate books and records setting
forth gross sales, Net Sales, the specific deductions used in
arriving at Net Sales and the amount of royalties payable to
Dermion hereunder for no less than two (2) years after the end
of each half-year of the Fiscal Year. Ciba shall permit
Dermion, at Dermion's expense, to have such books and records
examined by independent certified public accountants retained
by Dermion and reasonably acceptable to Ciba, during regular
business hours upon reasonable advance notice, but not later
than two (2) years following the rendering of any such
reports, accounting and payments, and no more often than one
(1) time per year. Such independent accountants shall keep
confidential any information obtained during such examination
and shall report to Dermion only the amounts of royalties
which the independent accountant believes to be due and
payable hereunder.
36
41
6.6 Incorporation of Technology. For purposes of this
Agreement, a System shall be deemed to incorporate, or to be developed or
manufactured through processes incorporating Dermion Technology, IOMED
Technology, or Jointly Developed Technology to the extent that the manufacture,
use or sale of such System would, if not for the rights granted herein,
constitute an act of infringement of such Dermion Technology, IOMED Technology
or Jointly Developed Technology.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties of IOMED and Dermion. IOMED
and Dermion hereby jointly and severally represent and warrant to Ciba that, as
of the date of this Agreement, the following statements are true and correct in
all material respects:
(a) Organization and Good Standing. Such party is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the corporate power and
authority to engage in the business such party is presently engaged in and to
enter into this Agreement and to perform its obligations hereunder.
(b) Authorization; Binding Effect. All corporate action on the
part of such party and such party's officers and directors necessary for the
authorization, execution and delivery of this Agreement and for the performance
of all of such party's obligations hereunder has been taken and this Agreement,
when executed and delivered, shall constitute a valid, legally binding
obligation of such party, enforceable against it in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency and other
similar laws affecting creditors' rights generally or general equitable
principles.
(c) Noncontravention. The execution, delivery and performance
by such party of this Agreement do not and will not (i) violate or breach the
certificate of incorporation or bylaws of such party, (ii) violate or conflict
with any Applicable Law, (iii) violate, breach, cause a default under or
otherwise give rise to a right of termination, cancellation or acceleration with
respect to (presently, with the giving of notice or the passage of time) any
material agreement, contract or instrument to which it is a party or by which
any of its assets is bound, or (iv) result in the creation or imposition of any
lien, pledge, mortgage, claim, charge, or encumbrance ("Lien") upon any assets
of such party.
37
42
(d) Government and Other Consents. No consent, authorization,
license, permit, registration or approval of, or exemption or other action by,
any Governmental Authority or other Person is required in connection with such
party's execution and delivery of this Agreement or with the performance by it
of its obligations hereunder; provided, however, that no representation is made
with respect to any consent, authorization, license, permit, registration or
approval that may be required from Governmental Authorities as a pre-condition
to the First Commercial Sale of any Product in any jurisdiction.
(e) Dermion Technology. Dermion is the owner or licensee of
the Dermion Technology and has the right to license said Dermion Technology free
of any Lien **************************************************************
*************************** in the manner set forth in this Agreement. IOMED is
the licensee of the IOMED Technology and has the right to license said IOMED
Technology free of any Lien **********************************************
**************************** (in the manner set forth in this Agreement. There
are no existing defaults under the ******************************************
(or events which, with notice or lapse of time or both, would constitute a
default) either by IOMED or, to the best of IOMED's knowledge, by any other
party thereto, and true and correct copies of such licenses have been delivered
to Ciba. Neither IOMED nor Dermion has assigned or conveyed any interest in the
Dermion Technology or the IOMED Technology which conflicts with the rights
granted hereunder; to the best of its knowledge, the practice of the Dermion
Technology and the IOMED Technology by IOMED or Dermion in connection with its
business activities does not infringe any rights of third parties; such party is
not aware that any third party is infringing any Dermion Technology or any IOMED
Technology; with respect to all Patent Rights constituting Dermion Technology or
IOMED Technology which were prosecuted by IOMED, such Patent Rights have been
prosecuted in good faith; and neither IOMED nor Dermion has reason to believe
that any patent included within the Dermion Technology or the IOMED Technology
would be invalid or would be held to be unenforceable by a court of competent
jurisdiction. To the best of such party's knowledge, after reasonable inquiry,
Schedules 1.1(b)(i) and 1.1(b)(ii) set forth all Patent Rights and identifiable
Know-How owned or licensed by IOMED or Dermion or their respective Affiliates
applicable to the development of Systems.
(f) The Business. IOMED has contributed to Dermion assets,
properties and rights that are sufficient, when taken together with the
facilities to be made available to Dermion pursuant to the Sublease and the
services to be made available to Dermion pursuant to the Support Services
Agreement, for the conduct of the Business as previously conducted by IOMED,
other
38
43
than the IOMED Technology. Dermion currently owns or has full right to use
all assets, rights and properties (including all authorizations, approvals and
consents of Governmental Authorities) necessary (i) to conduct the Business as
previously conducted by IOMED and (ii) to perform the transactions contemplated
by this Agreement except, in each case, for the IOMED Technology.
(g) Interim Agreement. All amounts paid by Ciba to IOMED prior
to the date hereof pursuant to the Interim Agreement and not previously spent in
accordance therewith have been contributed to Dermion by IOMED pursuant to the
Contribution Agreement.
7.2 Representations and Warranties of Ciba. Ciba hereby
represents and warrants to IOMED and Dermion that, as of the date of this
Agreement, the following statements are true and correct in all material
respects:
(a) Organization and Good Standing. Ciba is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has the corporate power and authority to engage in the business
Ciba is presently engaged in and to enter into this Agreement and to perform its
obligations hereunder.
(b) Authorization; Binding Effect. All corporate action on the
party of Ciba and Ciba's officers and directors necessary for the authorization,
execution and delivery of this Agreement and for the performance of all of
Ciba's obligations hereunder has been taken and this Agreement, when executed
and delivered, will constitute a valid, legally binding obligation of Ciba
enforceable against Ciba in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency and other similar laws affecting
creditors' rights generally or by general equitable principles.
(c) Noncontravention. The execution, delivery and performance
by Ciba of this Agreement do not and will not (i) violate or breach the
certificate of incorporation or bylaws of Ciba, (ii) violate or conflict with
any Applicable Law, (iii) violate, breach, cause a default under or otherwise
give rise to a right of termination, cancellation or acceleration with respect
to (presently, with the giving of notice or the passage of time) any material
agreement, contract or instrument to which Ciba is a party or by which any of
its assets is bound, or (iv) result in the creation or imposition of any Lien
upon any assets of Ciba.
39
44
(d) Government and Other Consents. No consent, authorization,
license, permit, registration or approval of, or exemption or other action by,
any Governmental Authority or other Person is required in connection with Ciba's
execution and delivery of this Agreement or with the performance by Ciba of its
obligations hereunder; provided, however, that no representation is made with
respect to any consent, authorization, license, permit, registration or approval
that may be required from Governmental Authorities as a precondition to the
First Commercial Sale of any Product in any jurisdiction.
(e) Ciba Technology. Ciba is the owner of the Ciba Technology
and has the right to license said Ciba Technology free of any Lien in the manner
set forth in this Agreement; it has not assigned or conveyed any interest in the
Ciba Technology which may be inconsistent with the rights granted hereunder; to
the best of its knowledge, the practice of the Ciba Technology by Ciba in
connection with its business activities does not infringe any rights of third
parties; Ciba is not aware that any third party is infringing the Ciba
Technology; and Ciba has prosecuted all patent applications within the Ciba
Technology in good faith and has no reason to believe that any patent included
within the Ciba Technology would be invalid or would be held to be unenforceable
by a court of competent jurisdiction. To the best of Ciba's knowledge, after
reasonable inquiry, Schedule 1.1(a) sets forth all Patent Rights and
identifiable Know-How owned or licensed by Ciba or its Affiliates applicable to
the development of Systems.
7.3 DISCLAIMERS. EXCEPT TO THE EXTENT EXPRESSLY PROVIDED IN
THIS AGREEMENT, THE PARTIES HEREBY EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING (A) ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, AND (2) THAT ANY PATENT WILL ISSUE BASED UPON ANY PENDING
PATENT APPLICATION INCLUDED WITHIN LICENSED TECHNOLOGY.
7.4 LIMITED LIABILITY. NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT OR OTHERWISE, NO PARTY TO THIS AGREEMENT SHALL BE LIABLE WITH
RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE,
STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR (A) ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES OR LOST PROFITS OR (B) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, TECHNOLOGY OR SERVICES.
40
45
ARTICLE 8
OTHER COVENANTS AND AGREEMENTS
8.1 Confidentiality.
(a) Confidential Information. "Confidential Information" of
Dermion, IOMED or Ciba shall mean (1) all written information disclosed by such
party hereunder (i) bearing a legend indicating that such information is
confidential and (ii) that does not constitute Confidential Information of any
non-disclosing party pursuant to clause (2), (3) or (4) below, (2) all
intellectual property of such party that is disclosed or furnished by such party
hereunder (including, without limitation, in the case of Ciba, all Ciba
Technology, in the case of Dermion, all Dermion Technology, and, in the case of
IOMED, all IOMED Technology), (3) Improvements specific to the Licensed
Technology of such party made in the course of the Program and (4) any results
of the Program that are specific to the Licensed Technology of such party.
(b) Nondisclosure. During the term of this Agreement and for a
period of ten (10) years thereafter, except as expressly authorized by the other
party in writing, each of Dermion, IOMED and Ciba agrees to use diligent
efforts, and at least the same degree of care that it uses to protect its own
confidential information of like importance, to prevent unauthorized use,
dissemination and disclosure of any other party's Confidential Information. In
furtherance, and not in limitation of the foregoing, each of Dermion, IOMED and
Ciba agrees that, except as otherwise permitted hereunder, it shall (1) use such
confidential Information exclusively for the purpose of exercising its rights
and fulfilling its obligations under this Agreement, (2) restrict disclosure of
such Confidential Information to those of its employees, agents, collaborative
partners and Affiliates who have a "need to know" such information, and refrain
from disclosing such Confidential Information to anyone other than such
employees, agents, collaborative partners and Affiliates, and (3) cause each of
its Scientists to agree in writing to, and instruct all other such employees,
agents, collaborative partners and Affiliates, to maintain the confidentiality
of such information and not to use such Confidential Information except as
expressly permitted herein.
(c) Exceptions. The provisions contained in Section 8 (b)
above shall not apply to any portion of the Confidential Information of any
party which: (1) becomes a matter of public knowledge through no fault of the
party receiving the Confidential Information, (2) is rightfully
41
46
received by the receiving party from a third party, (3) was known to the
receiving party before its first receipt from the disclosing party, as shown by
files existing at the time of initial disclosure, or (4) is independently
developed by the receiving party without use of another party's Confidential
Information.
(d) Return of Information. After any termination of this
Agreement, upon written request, each party shall promptly discontinue the use
of, and return all originals and copies of, any requested Confidential
Information that has been fixed in any tangible means of expression within
thirty (30) days of such request; provided, however, that if a party's license
rights pursuant to Article 5 shall remain in effect notwithstanding such
termination, such party shall be permitted to retain such information concerning
Licensed Technology as is necessary, in its reasonable judgment, in connection
with the continued exercise of its license rights hereunder. In the event that
information concerning Licensed Technology is retained after termination
pursuant to the preceding sentence, the retaining party shall, upon the request
of the party to which such information relates or belongs (as used in this
paragraph (d), the "other party"), within ninety (90) days after termination,
provide the other party with a written description, in reasonable detail, of the
information concerning the other party's Licensed Technology that has been
retained.
(e) Court or Administrative Order. In the event that Dermion,
IOMED or Ciba is requested or required pursuant to Applicable Law by any
Governmental Authority to disclose any Confidential Information, such party
shall provide the party whose Confidential Information is the subject of the
request or requirement (as used in this paragraph (e), the "other party") with
prompt written notice of such request or requirement so that the other party may
seek a protective order or other appropriate remedy or waive compliance with the
provisions of this Agreement. If, in the absence of a protective order or other
remedy or the receipt of a waiver by the other party, the party being requested
or required to disclose any Confidential Information is nonetheless legally
compelled to disclose such Confidential Information, it may, without liability
hereunder, disclose only that portion of the Confidential Information which it
is legally compelled to disclose.
8.2 IOMED Covenant Not to Compete.
(a) Covenant. IOMED agrees that during the term of this
Agreement neither it nor any of its subsidiaries, other than Dermion, shall
engage, directly or indirectly, in the Restricted Business. For purposes of this
Section 8.2 the term "Restricted
42
47
Business" shall mean the business of conducting research with respect to or
developing Systems on its own behalf and/or on behalf of third parties (other
than such research or development by IOMED on its own behalf and not for a third
party with respect to Systems for Drugs used in the treatment of acute
inflammation or for inducement of local anesthesia).
(b) Blue Penciling. The parties agree and acknowledge that the
duration, scope and geographic area of the covenant not to compete described in
this Agreement are fair, reasonable and necessary in order to protect the
legitimate interests of Ciba, and that adequate consideration has been received
by IOMED for such obligations. If, however, for any reason any court determines
that the restrictions in this Agreement are not reasonable or that such
consideration is inadequate, such restrictions shall be interpreted, modified or
rewritten to include as much of the duration, scope and geographic area
identified in this Agreement as will render such restrictions valid and
enforceable.
(c) Injunctive Relief. The parties acknowledge that any breach
of the provisions contained in this Section 8.2 will result in serious and
irreparable injury to Ciba. Therefore, IOMED acknowledges and agrees that in the
event of a breach of such provisions, Ciba shall be entitled, in addition to any
other remedy at law or in equity to which Ciba may be entitled, to equitable
relief against IOMED, including, without limitation, an injunction to restrain
IOMED from such breach and to compel compliance with this Section 8.2 in
protecting or enforcing the rights and remedies of Ciba hereunder.
(d) No Other Limitation. Except only as provided in Section
8.2(a) above, nothing contained in this Agreement or any other document executed
in connection herewith shall be construed as limiting in any manner the free and
unrestricted ability of IOMED to carry on its business activities in any manner
that it chooses in its sole and absolute discretion.
8.3 Change of Control of Dermion.
(a) Covenant Against a Change of Control of Dermion. For a
period of two (2) years from the date of this Agreement, Dermion covenants and
agrees that, without the prior written consent of Ciba, it shall not cause or
approve a Change of Control of Dermion.
(b) Injunctive Relief. The parties acknowledge that any breach
of the provisions contained in this Section 8.3 will result in serious and
irreparable injury to Ciba. Therefore, Dermion acknowledges and agrees that in
the event of a breach of
43
48
this Agreement, Ciba shall be entitled, in addition to any other remedy at law
or in equity to which Ciba may be entitled, to equitable relief against Dermion,
including, without limitation, an injunction to restrain Dermion from such
breach and to compel compliance with this Agreement in protecting or enforcing
the rights and remedies of Ciba hereunder.
8.4 Right of First Offer.
(a) Offer. If at any time the Board of Directors of Dermion
proposes to enter into or approve a transaction or series of related
transactions which, if consummated, would result in a Change of Control of
Dermion (a "Transaction"), then it shall promptly forward to Ciba a written
notice (an "Offer Notice") offering to enter into a Transaction with Ciba and
specifying the purchase price (the "Proposed Purchase Price") and other terms
and conditions under which it would enter into such Transaction with Ciba (the
offer made in any such Offer Notice, the "Offer"). Ciba shall have sixty (60)
days after its receipt of an Offer Notice (the "Acceptance Period") to provide
written notice to Dermion of its acceptance of the offer.
(b) Response to Offer. If Ciba accepts the offer, it shall be
obligated to consummate such Transaction at the price and other terms specified
in the Offer Notice within one hundred twenty (120) days after the acceptance of
the Offer, subject to negotiation of a definitive acquisition agreement
containing representations and warranties, covenants, conditions to closing and
such other terms and conditions customary for agreements of its type. If Ciba
rejects the Offer (or otherwise fails to forward an acceptance of the offer
prior to the expiration of the Acceptance Period), Dermion shall, for a period
of two hundred seventy (270) days after expiration of the Acceptance Period,
have the right to consummate a Transaction of the type described in the Offer
Notice only at a price greater than ninety percent (90%) of the Proposed
Purchase Price and on such other terms and conditions more favorable to it than
those offered to Ciba (unless Ciba consents to such lower price or other terms
and conditions, which consent shall not be unreasonably withheld, it being
understood that Ciba's withholding of consent based on its desire to consummate
a Transaction at such lower price or other terms and conditions shall be deemed
reasonable); provided, however, that in the event that a Transaction has not
been consummated within such two hundred seventy (270) day period, then any
proposed future Transaction shall continue to be subject to this Section 8.4.
(c) Survival. The offer rights of Ciba described in this
Section 8.4 shall survive any termination of this Agreement
44
49
for a period of twelve (12) months from the effective date of such termination.
ARTICLE 9
TERM AND TERMINATION
9.1 Term. Unless terminated sooner pursuant to Section 9.2,
this Agreement shall continue in full force and effect from the date hereof
through and including December 31, 1997, and shall automatically be renewed for
subsequent one (1) year periods indefinitely.
9.2 Termination. This Agreement may be terminated by the
parties as follows:
(i) by either Dermion or Ciba, effective as of the
expiration of the initial term or any extension
thereof, for any reason or no reason by written
notice to the other given at least six (6) months
prior to the expiration of the initial term or any
extension thereof;
(ii) by mutual agreement in writing signed by Dermion and
Ciba, effective at the time specified in such
writing;
(iii) by Dermion upon thirty (30) days, prior written
notice to Ciba in the event of a material breach of
this Agreement by Ciba which remains unremedied at
the end of such thirty (30) day period, or by Ciba
upon thirty (30) days, prior written notice to
Dermion in the event of a material breach of this
Agreement by Dermion or IOMED which remains
unremedied at the end of such thirty (30) day period,
effective, in either case, at the end of such thirty
(30) day period;
(iv) by Dermion in the event of a Bankruptcy Event of
Ciba, or by Ciba in the event of a Bankruptcy Event
of Dermion, in either case, effective immediately;
(v) subject to Section 8.3, by Ciba in the event of a
Change of Control of Dermion (other than a Change of
Control resulting from a Transfer that is not a
Prohibited Transfer) upon
45
50
thirty (30) days' prior written notice to Dermion,
effective at the end of such thirty (30) day period,
provided, that Ciba must exercise such right not
later than ninety (90) days after receiving written
notice from Dermion of such transaction; and
(vi) by Ciba, effective immediately, in the event that for
any reason any Key Employee is terminated or resigns
as a Program Employee (or is otherwise unable for a
period of three (3) months to perform his obligations
as a Program Employee in substantially the same
manner as previously performed (a "Disability")) and
such Key Employee is not replaced with an individual
with comparable qualifications and acceptable to Ciba
in its reasonable discretion within three (3) months
of such termination, resignation or Disability.
Any termination of this Agreement effected pursuant to this Section 9.2 shall be
effective with respect to and binding on all parties to this Agreement.
9.3 Survival Upon Termination. The parties agree that their
respective rights and obligations pursuant to Sections 2.4(f), 2.5(e), 3.1-3.3
(to the extent of the Exclusivity Period), 4.1-4.4, 4.6, 4.7, 5.1, 5.3(b), 5.4,
5.5, 6.3-6.6, 7.4, 8.1, 8.3, 8.4, 9.3-9.5, 9.6, 9.7, 9.8, 10.1, 10.2, 11.1 and
11.10 shall survive termination of this Agreement for any reason, and a
non-breaching party shall have the right to seek monetary or injunctive relief
upon any material breach by the other party of such provisions, provided that
such rights and obligations shall in any event terminate on the tenth (l0th)
anniversary of the effective date of termination of this Agreement.
9.4 Continuing Liability. Termination of this Agreement for
any reason shall not release any party from any liability, obligation or
agreement which has already accrued nor affect the survival of any provision
hereof which is expressly stated to survive such termination. Termination of
this Agreement for any reason shall not constitute a waiver or release of, or
otherwise be deemed to prejudice or adversely affect, any rights, remedies or
claims, whether for damages or otherwise, which a party may have hereunder or
which may arise out of or in connection with such termination.
46
51
9.5 Partial Termination. Ciba shall have the right to
terminate this Agreement in part and thereafter continue the Agreement based on
a reduced number of full-time equivalent employees serving as Program Employees
(a "Partial Termination") any such Partial Termination to be effective no
earlier than December 31, 1997 or, if this Agreement is extended in accordance
with Section 9.1, the last day of such extension. In order to exercise such
right, Ciba shall give Dermion notice of such Partial Termination at least three
(3) months prior to the expiration of the initial term or any extension thereof,
such notice to indicate the number and function of the full-time equivalent
employees with respect to which Ciba intends to continue the Agreement. In such
event, this Agreement shall continue in full force and effect in all respects,
with the only modifications as a result of such Partial Termination being the
reduction in full-time equivalent employees serving as Program Employees and
reductions in Research Funding Payments payable by Ciba, and facilities and
other resources to be provided by Dermion. A Partial Termination shall not
constitute a termination of this Agreement for any other purpose.
9.6 Rejection in Bankruptcy. In receipt of good and valuable
consideration, which is hereby acknowledged, Dermion hereby grants to Ciba a
security interest in and to the Dermion Technology to secure performance of any
and all obligations of Dermion set out in this Agreement and agrees to execute
and assist Ciba in filing such Form UCC-l's and other documents as may be needed
from time to time to perfect such security interest. A rejection of this
Agreement by a trustee in bankruptcy or debtor in possession shall be a default
under this Agreement, whereupon Ciba shall have all rights and remedies of a
secured party under the Uniform Commercial Code.
9.7 Program Records.
(a) Retention of Program Records. All Program Records shall be
retained by any party in possession thereof for a period of seven (7) years
following termination of this Agreement (the "Document Retention Period").
During the Document Retention Period, neither Dermion nor Ciba (or their
respective Affiliates) shall destroy or give up possession of any Program
Records without first offering to the other the opportunity to obtain the same.
In such event, such other party shall be responsible for costs of delivery, if
any. Thereafter, the party wishing to dispose of such Program Records shall be
free to do so as it deems fit.
(b) Access to Program Records. During the Document Retention
Period all Program Records that are retained by any party shall be open for
inspection by representatives of the
47
52
other party at any time upon reasonable notice during regular business hours
until such time as such documents are disposed of in accordance with Section
9.7(a), and during such period a party may at its expense make such copies
thereof as it may reasonably request.
9.8 Certain Actions Following Termination. If, following the
effective date of any termination of this Agreement, any action or decision is
required to be taken or made by the Committee under the terms hereof, any such
action or decision shall be taken or made by mutual agreement of Ciba and
Dermion provided, that Ciba will continue to have a veto over Ciba Matters.
ARTICLE 10
INDEMNIFICATION
10.1 Indemnification by Dermion and IOMED. Dermion and IOMED
shall jointly and severally indemnify and hold harmless Ciba and its directors,
officers, employees and agents and their respective successors, heirs and
assigns, against any liability, damage, loss or expense (including reasonable
attorneys' fees and expenses) arising from or in connection with (i) any
inaccuracy in or breach of any of the representations and warranties of Dermion
or IOMED in this Agreement, (ii) any failure by Dermion or IOMED to perform or
comply with any covenant or agreement in this Agreement, and (iii) the acts or
omissions of Dermion or IOMED in performing its obligations under this
Agreement.
10.2 Indemnification by Ciba. Ciba shall indemnify and hold
harmless Dermion and IOMED and their respective directors, officers, employees
and agents and such Persons, respective successors, heirs and assigns, against
any liability, damage, loss or expense (including reasonable attorneys' fees and
expenses) arising from or in connection with (i) any inaccuracy in or breach of
any of the representations and warranties of Ciba in this Agreement, (ii) any
failure by Ciba to perform or comply with any covenant or agreement in this
Agreement, and (iii) the acts or omissions of Ciba in performing its obligations
under this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Arbitration. Any controversy, claim or dispute between
the parties, directly or indirectly, concerning this
48
53
Agreement or the breach hereof or the subject matter hereof, including questions
concerning the scope and applicability of this arbitration clause, shall be
finally settled by three (3) arbitrators knowledgeable in the subject matter
involved in such controversy or claim appointed and acting in accordance with
the then-prevailing commercial arbitration rules of the American Arbitration
Association. One (1) arbitrator shall be selected by each of Ciba and Dermion,
and the third arbitrator shall be selected by mutual agreement of the first two.
The arbitration shall be conducted in New York, NY. The arbitrators shall be
informed that time is of the essence in deciding the matters subject to their
review. The decision in writing of any two of the arbitrators shall be final,
binding and conclusive on each party to this Agreement; judgment upon such
decision or award may be entered in any court of competent jurisdiction; and the
application may be made to such court for confirmation of such decision or
award, for an order of enforcement and for any other legal remedies that may be
necessary to effectuate such decision or award. The arbitrators shall have the
right and authority to assess the costs of the arbitration proceedings.
11.2 Publicity. Except after consultation with the other
parties, no party shall publicize, advertise, announce or publicly describe to
any Governmental Authority or other Person, the terms of this Agreement, the
parties hereto or the transactions contemplated hereby, except as required by
Applicable Law or as required pursuant to this Agreement. In the event that
Dermion or IOMED on the one hand or Ciba on the other is requested or required
pursuant to Applicable Law by any Governmental Authority to disclose to any
Governmental Authority or other Person any terms of this Agreement, the party
subject to such request or requirement shall provide the other with prompt
written notice of such request or requirement so that the other party may seek a
protective order or other appropriate remedy or waive compliance with the
provisions of this Agreement. If, in the absence of a protective order or other
remedy or the receipt of a waiver by the other party, the party being requested
or required to disclose such terms of this Agreement is nonetheless legally
compelled to disclose such terms, it may, without liability hereunder, disclose
only that portion of this Agreement which it is legally compelled to disclose.
11.3 Assignment. This Agreement shall inure to the benefit of,
and shall be binding upon, the parties and their respective successors and
permitted assigns. No party may assign or delegate this Agreement or any of its
rights or duties under this Agreement without the prior written consent of the
other parties except (i) to an Affiliate of such party who expressly assumes the
obligations of the assigning party hereunder (including, without limitation, by
operation of law), (ii) in the
49
54
case of Ciba, to a successor to Ciba's Pharmaceuticals Division, whether by
merger, consolidation, stock sale, asset sale or otherwise, or (iii) as
expressly permitted herein.
11.4 Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument specifically referring to this
Agreement that is signed and delivered by duly authorized officers of each
party.
11.5 Waiver. The failure of any party to enforce at any time
any provision of this Agreement shall not be construed to be a waiver of any
such provision and will not affect the validity of this Agreement or any part
hereof or the right of such party to enforce any such provision. No waiver of
any breach hereof will be construed to be a waiver of any other breach.
11.6 Notices. All notices and communications required or
authorized to be given hereunder shall be in writing and shall be deemed to have
been duly given (a) when delivered by messenger, (b) upon actual receipt if sent
by telecopy (with receipt confirmed), provided that a copy is mailed by
registered or certified mail, postage prepaid, return receipt requested, or (c)
when received by the addressee, if sent by overnight courier, in each case to
the appropriate address or telecopier number set forth below:
If to IOMED or Dermion:
IOMED, INC.
0000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Chief Executive Officer
Tel: 000-000-0000
Fax: 000-000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx
Attn: C. Xxxxxxx Xxxxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
50
55
If to Ciba:
Ciba-Geigy Corporation
Pharmaceuticals Division
000 Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: President
Tel: 000-000-0000
Fax: 000-000-0000
With a copy to:
Ciba-Geigy Corporation
Pharmaceuticals Division
000 Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Division Counsel
Tel: 000-000-0000
Fax: 000-000-0000
or to such other person or address as any party may designate in writing from
time to time.
11.7 Force Majeure. If the performance of this Agreement or
any obligations hereunder is prevented, restricted or interfered with by reason
of fire or other casualty or due to strikes, riot, storms, explosions, acts of
God, war, or a similar occurrence or condition beyond the reasonable control of
the parties, the party so affected shall, upon giving prompt notice to the other
parties, be excused from such performance during such prevention, restriction or
interference, and any failure or delay resulting therefrom shall not be
considered a breach of this Agreement.
11.8 Disclaimer of Agency. This Agreement shall not be
construed to constitute the parties as partners, joint venturers, agents or
otherwise as participants in a joint or common undertaking. No party (or its
agents and employees) is the representative of the other party for any purpose
and no party has power or authority as agent, legal representative, employee or
in any other capacity to represent, act for, bind, or otherwise create or assume
any obligation on behalf of, any other party for any purpose whatsoever.
11.9 Further Assurances. The parties shall each perform such
acts, execute and deliver such instruments and documents, and do all such other
things as may be reasonably necessary to accomplish the transactions
contemplated in this Agreement.
51
56
11.10 Expenses. The parties shall each bear their own costs
and expenses (including attorneys' fees) incurred in connection with the
negotiation and preparation of this Agreement and, except as otherwise provided
herein, consummation of the transactions contemplated hereby, provided, however,
that all such costs and expenses incurred by IOMED and Dermion shall be borne by
Dermion.
11.11 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of New York, without giving effect to the
conflicts of laws provisions thereof.
11.12 Entire Agreement. This Agreement, including the exhibits
and schedules hereto, each of which is incorporated herein by this reference,
contains the entire agreement and understanding of the parties, and supersedes
any prior understandings and agreements, with respect to its subject matter,
including the Interim Agreement.
11.13 Severability. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth herein. In such event, the
parties shall negotiate, in good faith, a substitute, valid and enforceable
provision or agreement which most nearly effects the parties' intent in entering
into this Agreement.
11.14 Broker's Fees. Each of the parties represents and
warrants that it has not dealt with any broker or finder in connection with any
of the transactions contemplated by this Agreement, and, to its knowledge, no
broker or other Person is entitled to any commission or finder's fee in
connection with any of these transactions. Each of the parties shall be
responsible for, and shall indemnify and hold the other parties harmless
against, the fees of its investment bankers and other advisors, if any.
11.15 Article and Section Headings. The article and Section
headings included in this Agreement are for convenience of the parties only and
shall not affect the construction or interpretation of this Agreement.
52
57
11.16 Counterparts. This Agreement may be executed in any
number of counterparts each of which shall constitute an original instrument but
all of which, taken together, shall constitute one and the same instrument.
53
58
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
IOMED, INC.
By:/s/ Xxx X. Xxxxxxxxxxx
-----------------------------------
Name: Xxx X. Xxxxxxxxxxx
--------------------------------
Title: President & CEO
--------------------------------
DERMIION, INC.
By:/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------------
Title: Secretary
--------------------------------
CIBA-GEIGY CORPORATION
Pharmaceuticals Division
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Name:
--------------------------------
Title:
--------------------------------
54
59
Schedule 1.1(a)
---------------
(Ciba Technology)
****
60
Schedule 1.1(b)
---------------
See Attached.
61
Schedule 1.1(b)(i)
(Dermion Technology)
****
62
Schedule 1.1(b)(ii)
(IOMED Technology)
****
63
Schedule 3.1
------------
(a) Ciba Fields
****
(b) Ciba Proprietary Drugs
****
