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