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EXHIBIT 10.19
LICENSE AND JOINT DEVELOPMENT AGREEMENT BETWEEN
NIMCO, ALTEA AND SPECTRX
This License and Joint Development Agreement is made as of the 1st day
of March, 1996 (Effective Date), by and between SpectRx, Inc. ("SRX"), a
Delaware corporation having its principal offices at 6025A Unity Drive,
Norcross, Georgia and both Non-Invasive-Monitoring Company, Inc. ("NIMCO") and
Altea Technologies, Inc. ("ALTEA"), both Delaware corporations having their
principal place of business at 2844 Jasmine Court, Atlanta, Georgia 30345 (each
a "Party," collectively "the Parties").
WHEREAS, NIMCO and ALTEA are the owners of certain TECHNOLOGY (as
defined hereinafter) and SRX and Altea are jointly the owners of certain
TECHNOLOGY.
WHEREAS, TECHNOLOGY is useful in MONITORING TECHNOLOGY (as defined
hereinafter) and is also useful in DELIVERY TECHNOLOGY (as defined hereinafter).
WHEREAS, MONITORING TECHNOLOGY and DELIVERY TECHNOLOGY are specifically
embodied and claimed in one or more of the LICENSED PATENTS (as defined
hereinafter), EXISTING JOINT TECHNOLOGY PATENTS (as defined hereinafter), and in
associated supporting proprietary confidential information and know-how.
WHEREAS, NIMCO, ALTEA and SRX wish to enter into a License and Joint
Development Agreement ("AGREEMENT") whereby SRX will receive exclusive rights to
any MONITORING TECHNOLOGY and ALTEA will receive and/or retain exclusive rights
to DELIVERY TECHNOLOGY.
WHEREAS, in accordance with JOINT DEVELOPMENT (as defined hereinafter)
activities, ALTEA and SRX, may also discover, conceive and during the TERM of
this AGREEMENT, have reduced to practice, additional JOINT TECHNOLOGY (as
defined hereinafter) which may be applicable to either MONITORING TECHNOLOGY
and/or DELIVERY TECHNOLOGY.
WHEREAS, the Parties from time to time have disagreed as to the
interpretation of the Option Agreement dated June 27, 1995 and certain
employment agreements relating to TECHNOLOGY, the Parties now wish through this
AGREEMENT to resolve these differences.
NOW THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, receipt of which is hereby
acknowledged, the Parties agree to be bound by the following terms and
conditions.
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1. DEFINITIONS
As used herein:
1.1 (a) "LICENSE PATENTS" means:
(i) United States Patent No. 5,458,140, issued
October 17, 1995, entitled "Enhancement of Transdermal Monitoring Applications
With Ultrasound and Chemical Enhancers" and any reissuances thereof (owned by
NIMCO);
(ii) Divisional application Serial No. 08/465,874
filed June 6, 1995 and any patent issuances or reissuances thereof (TNW File
T1214DIV, owned by NIMCO);
(b) "EXISTING JOINT TECHNOLOGY PATENTS" means the following
patent applications and resulting patents issued therefrom (including foreign
filings and issued patents therefrom):
(i) United States Patent continuation-in-part
application Serial No. 08/520,547 filed August 29, 1995 (TNW File T1214CIP,
jointly owned by ALTEA and SRX);
(ii) Application relating to optical poration filed
in the U.S. Patent Office on October 30, 1995 (TNW File T3491, jointly owned by
ALTEA and SRX); and
(iii)Application relating to mechanical poration
(TNW File T3621, jointly owned by ALTEA and SRX).
1.2 "AFFILIATE" of a party means an entity of which that party has,
directly or indirectly, at least fifty (50) percent ownership of or the power to
direct the voting activities of 50% or more of the voting stock of such entity.
1.3 "AGREEMENT" means this agreement including all Exhibits attached to
this Agreement together with any written amendments of any of the foregoing as
mutually executed by the applicable Parties.
1.4 "EFFECTIVE DATE" means March 1, 1996.
1.5 "ENDUSER" means (a) the first THIRD PARTY purchaser of a product,
use, or other application of TECHNOLOGY, other than a SUBCONTRACTOR, in the
distribution line who sells such product, use or other application of TECHNOLOGY
directly to the retailer, or customer, including the final wholesalers, supply
houses, distributors and/or retailers; and (b) a THIRD PARTY customer who is the
patient or consumer, if SRX or ALTEA their AFFILIATES or their SUBCONTRACTOR(S),
sell such product, use or application of TECHNOLOGY to such patient or consumer
without an intermediary wholesaler or retailer.
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For Example: ENDUSERS include wholesalers and supply houses; or
the patient or the consumer if products, use or applications
of TECHNOLOGY are sold directly to such patients, or consumers
by SRX or ALTEA; their AFFILIATES, SUBCONTRACTOR(S).
1.6 (a) "JOINT DEVELOPMENT" means development of JOINT TECHNOLOGY (as
defined hereinafter), exclusive of LICENSED PATENTS, resulting from the
cooperative efforts of ALTEA and SRX regardless of where conceived or reduced to
practice. An outline of the research program for JOINT DEVELOPMENT activities is
attached as EXHIBIT A, and shall be mutually updated annually or as otherwise
agreed by ALTEA and SRX.
(b) "JOINT TECHNOLOGY" means all TECHNOLOGY other than
LICENSED PATENTS, or United States Patent No. 5,445,611 or reissuance thereof,
both
(i) discovered or conceived by ALTEA and/or SRX until
SRX's rights and obligations to MONITORING TECHNOLOGY under this AGREEMENT are
no longer in effect, and
(ii)reduced to practice by SRX or jointly by SRX and ALTEA prior
to the EFFECTIVE DATE and hereinafter jointly by SRX and ALTEA pursuant
to the cooperative efforts of SRX and ALTEA under the AGREEMENT, or by
SRX alone, but only for so long as SRX retains all or part (such part to at
least encompass the Western Hemisphere pursuant to Section 2.6(a)) of its rights
and obligations to MONITORING TECHNOLOGY; or if conceived by SRX either solely
or jointly with ALTEA pursuant to (i) above, and reduced to practice by ALTEA at
any time after the EFFECTIVE DATE and during the TERM.
Such JOINT TECHNOLOGY, which includes EXISTING JOINT TECHNOLOGY PATENTS
and JOINT TECHNOLOGY PATENTS, is jointly owned by ALTEA and SRX, subject to the
terms and conditions of this AGREEMENT.
(c) "JOINT DELIVERY TECHNOLOGY" means DELIVERY TECHNOLOGY part
of JOINT TECHNOLOGY.
1.7 "JOINT TECHNOLOGY PATENTS" means all patent applications and issued
patents claiming JOINT TECHNOLOGY and shall be jointly owned by ALTEA and SRX
subject to the terms and conditions of this AGREEMENT.
1.8 "MONITORING TECHNOLOGY" means TECHNOLOGY, including JOINT
TECHNOLOGY, that is useful in transdermal/intradermal monitoring, detection,
sampling, measuring, and/or quantification of substances from within a living
organism (ANALYTES) including but not limited to human beings, and is to be used
solely for monitoring applications. For clarification, MONITORING TECHNOLOGY
does not include technologies (a) developed or acquired by any Party specific to
quantitation methodologies, for example biosensor technology, enzyme or
immunoassay technologies, optical assay technologies, and the like, or (b) in
which no ANALYTES crosses the stratum corneum or mucosal membrane.
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1.9 (a) "LIQUIDITY EVENT" or "Liquidity Event" shall mean
(i) an INITIAL PUBLIC OFFERING of shares or stock of SRX or
an AFFILIATE who is carrying out SRX's obligations under this AGREEMENT;
(ii) any sale (by means of a sale of assets, merger,
consolidation, or otherwise) of SRX or any AFFILIATE who is carrying out SRX's
obligations under this AGREEMENT or of all or substantially all of the assets of
SRX or any AFFILIATE who is carrying out SRX's obligations under this AGREEMENT
in either case to any person who is not an AFFILIATE;
(iii) the assignment of SRX's or its AFFILIATES' rights and
obligations under this AGREEMENT to a THIRD PARTY or group of THIRD PARTIES
acting in concert; or
(iv) any transaction or series of transactions pursuant to
which or in connection with which the stockholders of SRX (a) sell, transfer or
exchange a material portion of the equity securities of SRX, (b) receive any
material dividend (special, liquidating or otherwise), distribution or other
payment (whether in cash or kind) with respect to their SRX equity securities
or (c) otherwise receive a material payment (of cash or other property) or a
material amount of the securities (equity or debt, other than securities of an
AFFILIATE) of any other persons with respect to their SRX equity securities.
(b) "INITIAL PUBLIC OFFERING (IPO)" with respect to any person
means the closing of the initial underwritten public offering of shares of stock
of that person pursuant to an effective registration statements under the
Securities Act of 1933, as amended.
(c) "CONTROLLING INTEREST" with respect to any person, means
(i) the ownership of more than 50% of the common stock or other equity interests
of such person, (ii) the ability to elect, appoint or designate a majority of
the members of the board of directors or other governing body of such person
(including, without limitation, the general partner of such person) or having
the power, direct or indirect, to direct or cause the direction of the
management and policies of such person by contract or otherwise, or (iii) the
ability to acquire the equity interest described in clause (i) or the direction
of management and policies described in clause (ii), whether through option,
other contract or otherwise.
(d) "CHANGE IN CONTROL TRANSACTION" means any transaction
subsequent to which any THIRD PARTY or group of THIRD PARTIES acting in concert
obtains a CONTROLLING INTEREST in SRX.
1.10 "MAJOR COUNTRY" means any or all of the United States and/or
Canada; the European countries of France, Germany, Italy, Spain, and/or the
United Kingdom; and/or Japan.
1.11 "NET REVENUES" means the gross realization by SRX or ALTEA and
their AFFILIATES as the case may be from: (i) any revenues, payments including
payments for equity or other fees SRX or ALTEA and their AFFILIATES receive from
any product, use or application of
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TECHNOLOGY, including all disposable and nondisposable components of such
product, from any of their SUBCONTRACTOR(S) (who are not ENDUSERS) in relation
to TECHNOLOGY to which they have rights, less, in the same consecutive twelve
(12) month period, (ii) the actual Manufacturing Cost by SRX or ALTEA of such
products of TECHNOLOGY so sold or transferred to such SUBCONTRACTOR; or less, in
the same consecutive twelve (12) month period, (iii) any consecutive twelve (12)
month period actual reasonable research expenses incurred by SRX or ALTEA in
carrying out development activities on TECHNOLOGY prior to its
COMMERCIALIZATION, with both (ii) and (iii) calculated in accordance with
Generally Accepted Accounting Principles ("GAAP"), consistently applied.
Manufacturing Cost includes the cost of tooling, equipment, labor and materials
used in manufacture of such products, as well as reasonable manufacturing
overhead for such manufacture, such components and costs of Manufacturing Cost
are to be reviewed and agreed upon by the Parties at the time of commencement of
such commercial manufacture of such product by SRX or ALTEA. For clarification,
NET REVENUES includes all payments received by SRX or ALTEA from any
SUBCONTRACTOR in relation to TECHNOLOGY.
1.12 "NET SALES" from a product, use or application of TECHNOLOGY,
including all disposable and nondisposable components associated therewith,
means the total gross realization for commercial sale or other commercial
transfer or application, including lease and related arrangements, to an ENDUSER
of such TECHNOLOGY including all disposable and nondisposable components
associated therewith, from SRX or ALTEA, or their AFFILIATES or their
SUBCONTRACTOR(S), less only: deductions for the following to the extent actually
paid, and not reimbursed by the ENDUSER:
(a) customary trade, quantity, or cash discounts actually
allowed and taken;
(b) any freight or other transportation costs, insurance
charges, duties and tariffs separately invoiced and paid;
(c) returns which are accepted by SRX or ALTEA or their
AFFILIATES or their SUBCONTRACTORS from such ENDUSER in accordance with normal
practice and for which credit is given to such ENDUSER; and
(d) sales or use taxes which are required to be paid, when paid.
Where a product, use or application of TECHNOLOGY, including all
disposable and nondisposable components associated therewith, is sold, leased or
otherwise commercially transferred as one of a number of items without a
separate price, or the consideration shall include any non-cash element or is
transferred in any manner other than an invoiced sale. NET SALES shall be
calculated for sale, use or application of, for the same units of, TECHNOLOGY,
when sold or otherwise commercially transferred with an invoiced sale or lease
price at that time in that country.
1.13 "DELIVERY TECHNOLOGY" means TECHNOLOGY, including JOINT
TECHNOLOGY, that is useful in transdermal/intradermal delivery of substances
into a living organism (DRUGS, TATTOOS, ETC.) including but not limited to human
beings, and is to be used solely for delivery applications.
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1.14 "TECHNOLOGY" means technology (including uses, applications and
products) relating to transdermal/intradermal transport, migration, and/or
movement of substances utilizing microporation, ultrasound, chemical and
physical enhancers, and heat, including but not limited to optical, mechanical,
hydraulic, pneumatic, thermal, chemical, electrical, and/or ultrasound mediated
or assisted permeation, poration and/or migration but shall not include
technology meeting the terms of this definition which is in the public domain
and/or belongs to THIRD PARTIES, now or in the future.
1.15 "TERM" means the period commencing on the EFFECTIVE DATE and
terminating on the earlier of (a) subject to Section 7.1, the date of the last
to expire of LICENSED PATENTS or EXISTING JOINT TECHNOLOGY PATENTS in the
TERRITORY or, because of JOINT DEVELOPMENT activities, JOINT TECHNOLOGY PATENTS
in the TERRITORY, containing a claim not adjudicated invalid by a competent
court or administrative body that covers a use, application or product of
TECHNOLOGY, or (b) the date of earlier termination pursuant to the AGREEMENT.
1.16 "TERRITORY" means the entire world.
1.17 "NIMCO and/or ALTEA" means the relevant Party having ownership
rights as defined in Sections 1.1(a), 1.1(b), 1.6(a), 1.6(b) and 1.7.
1.18 "SUBCONTRACTOR" means a distributor or sublicense of SRX or ALTEA,
or any THIRD PARTY that has entered into an agreement with SRX or ALTEA relating
to MONITORING TECHNOLOGY or JOINT DELIVERY TECHNOLOGY pursuant to which it makes
payments to SRX or ALTEA as the context indicates, or an AFFILIATE of any such
THIRD PARTY. "SUBCONTRACT" means to grant rights held by the granting Party
under the AGREEMENT to a SUBCONTRACTOR.
1.19 "THIRD PARTY" means a party other than the Parties or their
AFFILIATES.
1.20 "INTEGRATED TESTING" means a clinical test on a human subject
wherein the method of harvesting the subject's interstitial fluid "ISF" and
assaying the glucose levels may be implemented in its entirety with laboratory
based prototype devices which may have physical embodiment substantially
different from the production design to be realized later, but which utilize the
basic concepts (e.g., microporation, ultrasonic pumping, or whatever basic
concepts are employed) and demonstrate the feasibility of these concepts in a
clinical testing environment showing the ability to produce an assayable amount
of ISF within two minutes, without causing tissue damage greater than grade two
on a scale of one to four, wherein grade one is mild erythema and grade four is
blistering of the skin.
1.21 "ALPHA PROTOTYPE" means a prototype system that utilizes the same
underlying sample collection technique, sample handling and as much as possible
the same glucose assay techniques as anticipated for the production design at
the time of fabrication of the ALPHA PROTOTYPE. The glucose assay of the
harvested ISF may be performed with any of the wide variety of commercially
available or laboratory glucose assay systems. The ALPHA PROTOTYPE must exhibit
an output with a repeatability both within a factor of two of these parameters
exhibited by at least one of the currently available home glucose monitoring
systems when both are tested on aqueous standard solution.
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1.22 "PROTOTYPE PRODUCTION UNIT" means a system which contains all of
the basic functional elements and physical form factors of a manufacturable
design, but which has been fabricated without the benefit of production tooling,
(e.g. molds, stamping, custom glucose assay disposable components, etc.) The
PROTOTYPE PRODUCTION UNIT must have the capability of harvesting the ISF and
performing the glucose assay when operated by the test subjects themselves.
1.23 "COMMERCIALIZATION" to "COMMERCIALIZE" means the first NET SALES
and NET SALES thereafter by a Party of a product, use, or application of
MONITORING TECHNOLOGY or JOINT DELIVERY TECHNOLOGY as the case may be.
2. GRANT OF LICENSE AND SUBCONTRACT RIGHTS
2.1 License.
(a) NIMCO and/or ALTEA hereby grant to SRX the exclusive right
and license to use and exploit any MONITORING TECHNOLOGY which NIMCO and/or
ALTEA own; to make, have made, use, market, lease and sell products and to
practice uses and applications encompassing MONITORING TECHNOLOGY for monitoring
applications in the TERRITORY during the TERM. The right and license granted in
this Article 2 are subject to the other provisions of this AGREEMENT, including
modifications as may be required pursuant to Section 11.1.
(b) SRX hereby grants to ALTEA the exclusive right and license to
use and exploit any JOINT DELIVERY TECHNOLOGY which SRX owns; to make, have
made, use, market, lease and sell products and to practice uses and applications
encompassing such JOINT DELIVERY TECHNOLOGY for delivery applications in the
TERRITORY during the TERM. The right and license granted in this Article 2 are
subject to the other provisions of this AGREEMENT.
2.2 Subcontract Rights. SRX and ALTEA shall be allowed to grant
SUBCONTRACT rights under this AGREEMENT, to the extent of their respective
rights, subject to: (i) NIMCO and/or ALTEA's consent as to the identity of such
SRX SUBCONTRACTOR other than licensees in the European Union, such consent, not
to be unreasonably withheld or delayed, (ii) SRX's consent as to the identity of
such ALTEA SUBCONTRACTOR (except if such SUBCONTRACTOR is TheraTech Inc., for
which no consent by SRX is required) other than licensees in the European Union,
such consent, not to be unreasonably withheld or delayed, and (iii) SRX or ALTEA
guaranteeing and being liable for the performance of such SUBCONTRACTOR in
agreement and compliance with the terms of this AGREEMENT. NIMCO and/or ALTEA
may participate in such SUBCONTRACT negotiations in collaboration with SRX, if
mutually agreed.
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2.3 Development Information.
(a) NIMCO and ALTEA shall provide SRX with, upon the EFFECTIVE
DATE and thereafter, as requested, all information which is reasonably available
to NIMCO and/or ALTEA to which it has rights to disclose without obligation to
any THIRD PARTY relating to the development of the MONITORING TECHNOLOGY.
(b) SRX shall provide NIMCO and/or ALTEA with, upon the
EFFECTIVE DATE and thereafter, as requested, all information which is reasonably
available to SRX to which it has rights to disclose without obligation to any
THIRD PARTY relating to the development of the DELIVERY TECHNOLOGY.
2.4 Future Inventions by SRX and ALTEA.
(a) Future inventions made by ALTEA on MONITORING TECHNOLOGY
during the TERM which ALTEA owns with the right to license as above without any
obligations to THIRD PARTIES, will automatically become part of MONITORING
TECHNOLOGY but will not be part of JOINT TECHNOLOGY unless reduced to practice
jointly by SRX and ALTEA pursuant to the cooperative efforts of SRX and ALTEA
under this AGREEMENT.
(b) Future inventions made by SRX on DELIVERY TECHNOLOGY
during the TERM which SRX owns with the right to license as above without any
obligations to THIRD PARTIES, will automatically become part of DELIVERY
TECHNOLOGY and JOINT TECHNOLOGY.
(c) For clarification, neither 2.4(a) nor (b) above gives
ALTEA or SRX the right to offer such specified future inventions to THIRD
PARTIES. If ALTEA or SRX makes such a future invention in conjunction with a
THIRD PARTY concerning MONITORING TECHNOLOGY or DELIVERY TECHNOLOGY, ALTEA or
SRX shall ensure in their agreements with such THIRD PARTY that ALTEA or SRX has
exclusive rights to such MONITORING TECHNOLOGY or DELIVERY TECHNOLOGY,
respectively. ALTEA or SRX shall offer their exclusive rights in such invention
to the respective other Party, subject to whatever terms are in place with the
THIRD PARTY.
2.5 Ownership. Subject to this Article 2, Section 11.1, and the other
terms of this AGREEMENT the Parties agree that TECHNOLOGY claimed in LICENSED
PATENTS is the sole and exclusive property of NIMCO, as specified in Section
1.1(a), that all TECHNOLOGY conceived by ALTEA (and not jointly with SRX) and
reduced to practice by other than SRX is the sole and exclusive property of
ALTEA and that, subject to Sections 1.6(a), 1.6(b), 1.6(c) and 1.7, all other
TECHNOLOGY reduced to practice by SRX, or jointly by SRX and ALTEA, during the
TERM shall be JOINT TECHNOLOGY.
2.6 Diligence.
(a) (i) NIMCO and/or ALTEA can revoke all of SRX's rights
under this AGREEMENT as relates to MONITORING TECHNOLOGY, which thereby will
terminate all of SRX's
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obligations, except those of confidentiality pursuant to Article 9 and indemnity
pursuant to Article 12, as relates to MONITORING TECHNOLOGY after the date of
such revocation of rights, if a product utilizing MONITORING TECHNOLOGY is not
yet COMMERCIALIZED in any MAJOR COUNTRY by the later of December 31, 2001 or
five years after the date of reduction to practice prior to December 31, 2001 of
a Major New Invention of MONITORING TECHNOLOGY (either by SRX and/or ALTEA or a
THIRD PARTY from which SRX or ALTEA so acquires rights to such MONITORING
TECHNOLOGY, and such Major New Inventions if part of LICENSED PATENTS or
EXISTING JOINT TECHNOLOGY PATENTS or improvements thereof), provided that such
Major New Invention of MONITORING TECHNOLOGY is required to bring the MONITORING
TECHNOLOGY to a stage suitable for COMMERCIALIZATION as agreed by all Parties,
such agreement not to be unreasonably withheld.
(ii) In addition, by the later of December 31, 2003,
or five years after the date of reduction to practice prior to December 31, 2003
of a Major New Invention of MONITORING TECHNOLOGY (either by SRX and/or ALTEA or
a THIRD PARTY from which SRX or ALTEA so acquires rights to such MONITORING
TECHNOLOGY, and such Major New Invention is not part of LICENSED PATENTS or
EXISTING JOINT TECHNOLOGY PATENTS or improvements thereof), provided that such
Major New Invention of MONITORING TECHNOLOGY is required to bring the MONITORING
TECHNOLOGY to a stage suitable for COMMERCIALIZATION as agreed by all Parties,
such agreement not to be unreasonably withheld, if SRX or its AFFILIATES or
SUBCONTRACTORS fails to COMMERCIALIZE in the United States, and/or at least two
MAJOR COUNTRIES in Europe, and/or in Japan, then all rights to MONITORING
TECHNOLOGY to the entire region respectively revert, be conveyed, and solely
belong to NIMCO and/or ALTEA for the regions of (x) the Western Hemisphere if
such country in which sales have not developed is the United States, (y) Asia if
such country in which sales have not been developed is Japan, and (z) the Rest
Of The World (i.e., the entire world minus the Western Hemisphere and Asia) if
such countries in which sales have not developed are two MAJOR COUNTRIES in
Europe. If rights to an entire region revert to NIMCO and/or ALTEA, then the
minimum royalties henceforward specified in Section 3.5 will be henceforward
reduced by 50% if such region is the Western Hemisphere, by 25% if such region
is Asia and by 25% if such region is the Rest Of The World.
For example: If SRX loses rights to Asia and the
Western Hemisphere prior to January 1, 1997,
the minimum royalty pursuant to Sections 3.4
and 3.5 for 1997 would be
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(iii) If, any time greater than two years after first
COMMERCIALIZATION in the United States of MONITORING TECHNOLOGY by SRX, the
earned royalties pursuant to Section 3.3(b) payable to SRX to NIMCO and/or ALTEA
are less than the minimum payments due on MONITORING TECHNOLOGY pursuant to
Sections 3.4 and 3.5, then SRX may either:
(x) pay the full minimum payment pursuant to
Sections 3.4 and 3.5 and maintain its exclusive right and license to MONITORING
TECHNOLOGY (subject to the other provisions of this AGREEMENT, including those
in Section 2.6(a)(i) and (ii)); or
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pay the earned royalties pursuant to Section 3.3(b) when
due, in which case, subject to the other provisions of this AGREEMENT
(including those in Sections 2.6(a)(i) and (ii), 7.1 and 10.3), the right and
license to MONITORING TECHNOLOGY granted to SRX pursuant to this AGREEMENT,
shall immediately become nonexclusive. SRX shall immediately provide copies to
NIMCO and/or ALTEA as the case may be of all data, documents, including videos,
technical, clinical and regulatory data and documents and submissions and
approvals, and allow ALTEA (or NIMCO for LICENSED PATENTS) to cross-reference
all regulatory documents, and SRX and its AFFILIATES and SUBCONTRACTORS shall
take all other reasonable steps necessary or useful to enable ALTEA (or NIMCO,
for LICENSED PATENTS) to carry out the development and/or marketing of
products, uses or applications of MONITORING TECHNOLOGY in all countries of the
TERRITORY without delay; and SRX (and its AFFILIATES and SUBCONTRACTORS) shall
thereafter offer to ALTEA right of first refusal to acquire exclusive rights to
such MONITORING TECHNOLOGY in all countries of the TERRITORY on
commercially-reasonable terms. For clarification, such right of first refusal
means that should SRX (and its AFFILIATES and/or SUBCONTRACTORS) decide to
offer any of the remainder of SRX's rights to MONITORING TECHNOLOGY to THIRD
PARTIES SRX shall first offer to ALTEA, upon commercially-reasonable terms, the
right to obtain exclusively SRX's rights to MONITORING TECHNOLOGY. If SRX and
ALTEA have negotiated in good faith but have not reached agreement on basic
terms within ninety (90) days of such offer to ALTEA, then SRX shall be free to
SUBLICENSE (pursuant to this AGREEMENT) its rights in MONITORING TECHNOLOGY to
a THIRD PARTY, provided that if the terms offered to such THIRD PARTY are more
favorable than those offered to ALTEA, the SRX shall re-offer such rights to
ALTEA on the new more favorable terms pursuant to this Section 2.6(a)(iii).
(b) If ALTEA is not actively developing or having developed
JOINT DELIVERY TECHNOLOGY by June 30, 2003, SRX shall notify ALTEA if SRX
desires to develop and COMMERCIALIZE such JOINT DELIVERY TECHNOLOGY itself. If
SRX so notifies ALTEA, if ALTEA does not then commence development of such
DELIVERY TECHNOLOGY by December 31, 2003, then ALTEA shall grant an exclusive
license to SRX for all of ALTEA's rights and obligations to JOINT DELIVERY
TECHNOLOGY under this AGREEMENT and 2.6(c) applies.
For clarification, "actively developing JOINT DELIVERY
TECHNOLOGY" is achieved by ALTEA's SUBCONTRACTING of such rights with such
SUBCONTRACTOR carrying out such development, or other research collaboration
with a THIRD PARTY concerning such technology, or by ALTEA'S own work as
documented by its notebooks and other research documents.
(c) If SRX so acquires rights to JOINT DELIVERY TECHNOLOGY
pursuant to 2.6(b) above, then:
(i) All rights and obligations under this AGREEMENT,
any uses, applications or products of JOINT DELIVERY TECHNOLOGY thereto made
jointly by ALTEA and SRX, shall be conveyed exclusively to SRX and may be
exploited by SRX as its unencumbered beneficially owned property. ALTEA shall
immediately transfer to SRX ownership of, and where possible possession of all
data, documents, including videos, technical, clinical and regulatory data and
documents, relating to
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JOINT DELIVERY TECHNOLOGY, and where possession is not possible, allow SRX to
cross-reference and make copies of all such data and documents including
laboratory notebooks.
(ii) SRX shall pay royalties to ALTEA on JOINT DELIVERY
TECHNOLOGY pursuant to Section 3.3(a).
(iii) SRX shall pay additional minimum payments to ALTEA, in
accordance with 50% of the schedule shown in Section 3.5, except that
the amount shown for 1996 shall be payable quarterly pursuant to Section 3.5 but
commencing in 2004; for 1997 commencing in 2005; for 1998 commencing in 2006;
and so forth with the amount shown for 2002 commencing in 2010 and each calendar
year thereafter for the TERM.
(iv) If SRX does not actively develop JOINT DELIVERY
TECHNOLOGY or fails to make the minimum payments pursuant to Section 2.6(c)(iii)
at any time after acquiring rights pursuant to Section 2.6(b) above, then from
thenceforth ALTEA shall notify SRX if ALTEA desires to develop and commercialize
such JOINT DELIVERY TECHNOLOGY. If SRX does not then commence or continue active
development of such JOINT DELIVERY TECHNOLOGY (defined in a reciprocal manner as
for ALTEA in 2.6(b), last sentence), within 6 months then SRX shall so convey
all such rights and obligations under this AGREEMENT, uses, applications, or
products, data and documents of JOINT DELIVERY TECHNOLOGY, to ALTEA in a
reciprocal manner as specified in Section 2.6(c)(i).
2.7 The Parties agree that if a "closed loop" insulin delivery/glucose
monitoring system utilizing MONITORING TECHNOLOGY and JOINT DELIVERY TECHNOLOGY
(or DELIVERY TECHNOLOGY if ALTEA owns with the right to license, without
obligation to THIRD PARTIES, such DELIVERY TECHNOLOGY outside of JOINT DELIVERY
TECHNOLOGY) becomes technically feasible, within five (5) years of the EFFECTIVE
DATE, SRX and ALTEA agree to work together to develop/COMMERCIALIZE such a
system, with terms of such development/COMMERCIALIZATION to be mutually agreed
upon and commercially reasonable to all Parties. SRX and ALTEA shall include
provisions in agreements with SUBCONTRACTOR(S) reserving and/or specifying such
joint rights for a "closed loop" insulin delivery/glucose monitoring system so
utilizing MONITORING TECHNOLOGY and JOINT DELIVERY TECHNOLOGY.
3. Royalties, Payments and Reimbursement.
3.1 Lump Sum Payments and Stock. In partial consideration of the right
and licenses granted in this AGREEMENT and regardless of any obligation to pay
royalties or early termination, except as otherwise provided for in Section 10.7
as applied to (c) below, SRX shall pay to ALTEA.
(a) the sum of ______________________________ due within seven
(7) days after the EFFECTIVE DATE of this AGREEMENT;
(b) the sum of ______________________________ due within
ninety (90) days after the EFFECTIVE DATE of this AGREEMENT; and
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(c) the sum of ______________________________ due within 180
days after the EFFECTIVE DATE of this AGREEMENT; provided, however, if SRX so
terminates this AGREEMENT pursuant to Section 10.7, the _________ fee pursuant
to this Section 3.1(c) shall not be due.
In partial consideration of the right and license granted in this
AGREEMENT and regardless of any obligation to pay royalties or early
termination, SRX has already paid to NIMCO in 1995 the sum of $5,000.00, and SRX
shall sell to ALTEA _________________ of SRX common stock at the par value of
___________ per share, for a total cost of ___________ with the fair market
value last determined as ___________ per share, within seven (7) days after the
EFFECTIVE DATE. If SRX so terminates this AGREEMENT pursuant to Section 10.7
within four months after the EFFECTIVE DATE, upon such termination (i) SRX may
buy back the 100,000 shares granted to ALTEA above, at the cost of
_____________, and (ii) ALTEA shall additionally pay to SRX the remainder of
__________ minus the tax liability incurred from the initial acquisition by
ALTEA of the __________ shares of SRX stock.
3.2 Timing and Duration of Royalty Payments. Earned royalties shall be
paid in United States dollars quarterly, within forty-five (45) days after each
calendar quarter ending March 31, June 30, September 30, and December 31 of each
year during the TERM.
(a) Royalties shall be paid by SRX to NIMCO if they result
from the use by SRX (or its AFFILIATES, or SUBCONTRACTORS) of MONITORING
TECHNOLOGY owned by NIMCO, and to ALTEA if they result from the use by SRX of
MONITORING TECHNOLOGY (including MONITORING TECHNOLOGY of JOINT TECHNOLOGY)
owned by ALTEA or by ALTEA and SRX. In the case both NIMCO and/or ALTEA own
patents form which such royalties are derived, the Parties shall agree at the
time of regulatory submission of products, the appropriate division of such
royalty payments between NIMCO and ALTEA, in accordance with the use,
protection, and exclusively provided by their respective patents.
(b) Royalties shall be paid by ALTEA to SRX if they result
from the use of JOINT DELIVERY TECHNOLOGY by ALTEA (or its AFFILIATES or
SUBCONTRACTORS) pursuant to Section 3.7(c).
(c) (i) If earned royalties from SRX for a calendar quarter on
MONITORING TECHNOLOGY or JOINT DELIVERY TECHNOLOGY are in excess of the minimum
payment due for that quarter on that TECHNOLOGY by SRX to ALTEA, the earned
royalty payment shall be paid in full and no minimum payment pursuant to
Sections 3.4 and 3.5 shall be due for that quarter subject to (iii) below, or
(ii) if earned royalties from SRX for a calendar quarter on
MONITORING TECHNOLOGY or JOINT DELIVERY TECHNOLOGY are less than the
minimum payment due for that quarter on that TECHNOLOGY by SRX to ALTEA, then
the minimum payment shall be paid in full for that quarter pursuant to Sections
3.4 and 3.5 subject to (iii) below, and
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(iii) notwithstanding (i) and (ii) above, the application of
minimum payments for MONITORING TECHNOLOGY or JOINT DELIVERY
TECHNOLOGY towards earned royalties for that TECHNOLOGY for each calendar
quarter shall be reconciled not only for that quarter but also for the preceding
calendar quarters (Q) in that same calendar year. By way of example, for 1997
for MONITORING TECHNOLOGY COMMERCIALIZED by SRX, assuming the earned royalties
shown:
3.3 Calculation of Royalty Payment.
(a) SRX shall pay a royalty on MONITORING TECHNOLOGY prior to
its COMMERCIALIZATION, and on JOINT DELIVERY TECHNOLOGY (pursuant to Section
2.6(c)(ii) to NIMCO and/or ALTEA as shown below, and ALTEA shall pay a royalty
to SRX on JOINT DELIVERY TECHNOLOGY pursuant to Section 3.7(c).
For a particular calendar quarter, the royalty payment due pursuant to
Section 3.2 shall be the greater of:
(i) ___________________ of the NET SALES during such
quarter; or
(ii) ___________________ of the NET REVENUES during
such quarter.
In no event shall a royalty be paid on both (i) and (ii) for the same
transaction, although in any quarter a combination of (i) and (ii) may apply for
different transactions.
(b) SRX shall pay a royalty to NIMCO and/or ALTEA on
MONITORING TECHNOLOGY after its COMMERCIALIZATION as shown below:
For a particular calendar quarter, the royalty payment due pursuant to
Section 3.2 shall be the greater of:
(i) ___________________ of the NET SALES during such
quarter; or
(ii) ___________________ of the NET REVENUES during
such quarter.
In no event shall a royalty be paid on both (i) and (ii) for the same
transaction, although in any quarter a combination of (i) and (ii) may apply for
different transactions.
3.4 Minimum Payments. Commencing on January 1, 1996, and subject to the
provisions of Sections 2.6(a), 3.8, 10.3, and 10.4(c), SRX shall be obligated to
make minimum payments to ALTEA for MONITORING TECHNOLOGY during the TERM and for
so long as SRX has rights to MONITORING TECHNOLOGY. If SRX acquires rights to
JOINT DELIVERY TECHNOLOGY pursuant to Section 2.6(b), SRX shall pay additional
minimum payments to ALTEA for such JOINT DELIVERY TECHNOLOGY pursuant to Section
2.6(c)(iii). Minimum payments for each calendar year are fully earned when due
and are non-refundable and shall only be applied to earned royalties for such
TECHNOLOGY for the calendar year for which such minimum payments are due.
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3.5 Calculation of Minimum Payments. Subject to the other terms of this
AGREEMENT including Section 3.4, except as noted below for calendar year 1996,
SRX shall pay minimum payments to ALTEA forty-five (45) days following March
31st, June 30th, September 30th and December 31st of each calendar year during
the TERM according to the following schedule, with each quarterly payment equal
to one fourth of the amount shown below for that calendar year, such amounts to
be adjusted annually from January 1, 1997 for the increase in the United States
Consumer Price Index (CPI) from January 1, 1996, for so long as this AGREEMENT
is in effect. Further, under all conditions, if SRX has been released from its
obligation to pay royalties on MONITORING TECHNOLOGY to ALTEA under this
AGREEMENT pursuant to Section 3.8, then no minimum payments on MONITORING
TECHNOLOGY shall be due.
3.6 No Multiple Royalties. No multiple royalties shall be payable
because any product covered by TECHNOLOGY is covered by more than one patent
within the LICENSED PATENTS, EXISTING JOINT TECHNOLOGY PATENTS or JOINT
TECHNOLOGY PATENTS.
3.7 Delivery Technology/License to ALTEA.
(a) The Parties agree that ALTEA owns all rights in DELIVERY
TECHNOLOGY other than JOINT DELIVERY TECHNOLOGY.
(b) SRX agrees to work with ALTEA on certain aspects of JOINT
DELIVERY TECHNOLOGY as mutually agreed.
(c) For so long as ALTEA has rights to JOINT TECHNOLOGY, ALTEA
shall pay to SRX a royalty on JOINT DELIVERY TECHNOLOGY in the TERRITORY during
the TERM claimed in EXISTING JOINT TECHNOLOGY PATENTS and/or JOINT TECHNOLOGY
PATENTS for as long as there is an EXISTING JOINT TECHNOLOGY PATENT or JOINT
TECHNOLOGY PATENT containing a claim not adjudicated invalid by a competent
court or administrative body claiming such JOINT DELIVERY TECHNOLOGY in the
TERRITORY with the provision that the royalty payable from ALTEA to SRX shall be
calculated at a rate which is equal to 50% of the royalty rate payable to NIMCO
and/or ALTEA by SRX as shown in Section 3.3(a) herein, and paid by ALTEA in
accordance with Section 3.2.
3.8 Sales of Licensed Technology.
(a) For so long as SRX has an obligation to pay royalties or
minimum payments to NIMCO and/or ALTEA on MONITORING TECHNOLOGY, NIMCO and/or
ALTEA may sell their entire right to and interest in MONITORING TECHNOLOGY at
the sole discretion of ALTEA, to SRX, upon the occurrence of a LIQUIDITY EVENT,
and SRX, shall buy such rights and interest upon ALTEA's notification and SRX's
receipt of the Response Notice (as described in Section 3.8(b) below). Upon the
occurrence of such LIQUIDITY EVENT and pursuant to ALTEA's notice and SRX's
receipt of the Response Notice as described in Section 3.8(b) below, NIMCO
and/or ALTEA shall, in exchange for the consideration described in Section 3.8
below:
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4. Improvements in Licensed Technology.
4.1 Notification/Licensing of Improvements.
(a) ALTEA and SRX shall promptly inform the other Party of any
improvements to the MONITORING TECHNOLOGY or JOINT DELIVERY TECHNOLOGY as the
case may be, pursuant to Section 2.4.
(b) All TECHNOLOGY which, according to Section 1.6(a), (b) and
(c), is considered JOINT TECHNOLOGY, shall be communicated by the discovering or
conceiving Party, to the other Party, as promptly as possible following such
discovery or conception.
5. Records.
5.1 Records of Sales. SRX and NIMCO and/or ALTEA shall at all times
during the TERM and for a period of two (2) years after termination of this
AGREEMENT keep at its principal place of business true and accurate records of
all sales or other commercial applications or transfers subject to Article 3.0
of this AGREEMENT in such form and manner that all payments owed hereunder to
SRX or NIMCO or ALTEA may be readily and accurately determined.
5.2 Inspection by NIMCO and/or ALTEA. Once annually, an independent
accountant or auditor chosen by NIMCO and/or ALTEA shall have the right, at
NIMCO and/or ALTEA's expense, during normal business hours and after providing
at least five business days' notice, during the TERM and for two (2) years
thereafter, to examine those records of SRX which may reasonably be needed for
the purpose of verifying the amounts owed to NIMCO and/or ALTEA under this
AGREEMENT, or the amount of SRX investment "X" pursuant to Section 10.4(b), and
the accuracy of the reports furnished by SRX under Section 6 of this AGREEMENT
and such independent accountant or auditor shall maintain the confidentiality of
all confidential information obtained by it from examination of SRX's records
and shall use such information only for the purposes of this AGREEMENT. If the
results of such inspection show that SRX had underpaid NIMCO and/or ALTEA by 25%
in any year, then costs of such inspection shall be paid for by SRX, and SRX
shall pay such outstanding balance owed to NIMCO and/or ALTEA including interest
determined pursuant to Section 6.2
5.3 Inspection by SRX. Once annually, an independent accountant or
auditor chosen by SRX shall have the right, at SRX's expense, during normal
business hours and after providing at least five business days' notice, during
the TERM, and for two (2) years thereafter, to examine those records of ALTEA
which may reasonably be needed for the purpose of verifying the amounts owed to
SRX under this AGREEMENT and the accuracy of the reports furnished by ALTEA
under Section 6 of this AGREEMENT and such independent accountant or auditor
shall maintain the confidentiality of all confidential information obtained by
it from examination of ALTEA's records and shall use such information only for
the purposes of this AGREEMENT. If the results of such inspection show that
ALTEA had underpaid SRX by 25% in any year, then costs of such inspection shall
be paid for by
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ALTEA, and ALTEA shall pay such outstanding balance owed to SRX including
interest determined pursuant to Section 6.2.
6. Reports and Payments.
6.1 Quarterly Reports SRX. When making each payment pursuant to
Sections 3.2 and 3.3, SRX shall prepare and deliver to NIMCO and/or ALTEA a true
and accurate report, giving such particulars of the business conducted by SRX,
its AFFILIATES, and its SUBCONTRACTOR(S) during the preceding calendar quarter
as is required to calculate the payment and royalties due ALTEA (and NIMCO, if
royalties are so paid to NIMCO) hereunder. If no payment is due for a particular
calendar quarter, SRX shall so report.
6.2 Interest. SRX and ALTEA shall pay interest compounded monthly on
any amounts overdue under this AGREEMENT at a rate of two percent (2%) above the
United States Dollar ("$" or "USD") prime or equivalent rate quoted by Citibank
N.A. or another mutually acceptable United States bank, as in effect during the
period from the date due until payment.
6.3 Exchange Rate. All payments provided in this AGREEMENT shall be
made in USD and based on the exchange rate for the last business day of the
calendar month in which such sales occurred, as calculated using the midpoint of
the rates quoted by the Wall Street Journal, or the rate quoted by Citibank N.A.
or another mutually acceptable United States bank in the absence of a quotation
by the Wall Street Journal.
6.4 Quarterly Reports ALTEA. When making each payment pursuant to
Section 3.7(c), ALTEA shall prepare and deliver to SRX a true and accurate
report, giving such particulars of the business conducted by ALTEA, its
AFFILIATES, and its SUBCONTRACTOR(S) during the preceding calendar quarter as is
required to calculate the payment and royalties due SRX hereunder and if no
payment is due for a particular calendar quarter, ALTEA shall so report.
6.5 (a) As long as SRX has rights to MONITORING TECHNOLOGY and as long
as the sale of MONITORING TECHNOLOGY pursuant to Section 3.8 has not occurred,
SRX shall pay, within 30 days of date of invoice and as agreed upon by SRX in
advance for any single expense in excess of $100 (such amount to be adjusted
annually for increase in the CPI), all reasonable out-of-pocket expenses
incurred by NIMCO and ALTEA in performing activities relating to MONITORING
TECHNOLOGY pursuant to this AGREEMENT, and
(b) SRX shall also pay to employees of NIMCO and ALTEA, if not
simultaneously employed at SRX, a consulting fee of $150/hour for services if
mutually agreed pursuant to Section 2.2 or as otherwise mutually agreed. Such
fees shall be adjusted annually from January 1, 1997, for the increase in the
United States CPI.
6.6 All payments under this AGREEMENT are non-refundable and are
payable in USD when due. So long as all Parties are United States corporations,
there shall be no withholdings from payments
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under this AGREEMENT. Prior to any Party assigning its rights to any non-United
States entity, the Parties shall agree on how foreign withholding taxes shall be
handled, such consent not to be unreasonably withheld or delayed.
7. Patent Maintenance.
7.1 Responsibility. For so long as SRX has an obligation to pay
royalties or minimum payments to NIMCO and/or ALTEA on MONITORING TECHNOLOGY,
SRX shall be responsible for the payment of all fees, costs, and expenses paid
or incurred connected with the payment of any issuance fees, maintenance fees or
annuities to maintain the LICENSED PATENTS, EXISTING JOINT TECHNOLOGY PATENTS
and JOINT TECHNOLOGY PATENTS and for filing and prosecuting all such patent
applications in all countries of the TERRITORY to which SRX wishes to maintain
its rights hereunder relating to MONITORING TECHNOLOGY, inclusive of JOINT
TECHNOLOGY, during the TERM. EXISTING JOINT TECHNOLOGY PATENTS and JOINT
TECHNOLOGY PATENTS shall be jointly assigned to ALTEA and SRX pursuant to
ownership specified in Section 1.7. NIMCO and/or ALTEA shall cooperate (and
cause their officers, directors, employees, and agents to cooperate) as
reasonably requested by SRX in any such filings and prosecutions, such
cooperation to include executing without additional compensation (other than
actual reasonable expenses which shall be paid by SRX) all papers and other
instruments deemed appropriate by SRX for such filings and prosecutions. Except
if NIMCO and/or ALTEA has sold their entire rights to and interest in MONITORING
TECHNOLOGY to SRX pursuant to Section 3.8, if SRX, in its sole discretion,
elects not to file a patent application or not to continue prosecuting a patent
application or not to maintain a patent relating to MONITORING TECHNOLOGY,
including JOINT TECHNOLOGY, in a particular country, it shall so immediately
notify NIMCO and/or ALTEA, and NIMCO and/or ALTEA shall have the right, at its
sole expense, to file or continue prosecuting and to maintain such application
and all rights to any patent issuing from such application as well as MONITORING
TECHNOLOGY, including JOINT TECHNOLOGY, claimed in such patent shall revert, be
conveyed, and belong solely to NIMCO and/or ALTEA depending on the original
ownership of such invention pursuant to Sections 1.1(a) and (b), 1.6(a), (b) and
(c), and 1.7; any such valid patent shall no longer be licensed hereunder and
shall not apply to extending the TERM pursuant to Section 1.15, nor shall SRX be
obligated to pay royalties to ALTEA on such patent claiming MONITORING
TECHNOLOGY, nor shall ALTEA be obligated to pay royalties to SRX on any such
patent claiming JOINT DELIVERY TECHNOLOGY.
7.2 Delivery Technology Patents.
(a) (i) Provided that EXISTING JOINT TECHNOLOGY PATENTS or
JOINT TECHNOLOGY PATENTS claiming MONITORING TECHNOLOGY to which SRX has rights
can also claim DELIVERY TECHNOLOGY, SRX shall be responsible for the protection
of JOINT DELIVERY TECHNOLOGY to the same extent as in Section 7.1 for MONITORING
TECHNOLOGY. However, if NIMCO and/or ALTEA has sold its entire right and
interest in MONITORING TECHNOLOGY pursuant to Section 3.8, then SRX shall still
have the obligations pursuant to Sections 7.1 and 7.2 for those EXISTING JOINT
TECHNOLOGY PATENTS and JOINT
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TECHNOLOGY PATENTS that claim or can claim MONITORING TECHNOLOGY and JOINT
DELIVERY TECHNOLOGY.
(ii) After ALTEA has entered into a SUBCONTRACT
agreement on JOINT DELIVERY TECHNOLOGY, then ALTEA (or its SUBCONTRACTOR) shall
be responsible for (including the costs thereof) the patent filings,
prosecution, and maintenance as relates to JOINT DELIVERY TECHNOLOGY, and SRX
and ALTEA shall cooperate on a filing strategy for MONITORING TECHNOLOGY and
JOINT DELIVERY TECHNOLOGY, respectively.
(iii) In the event that any EXISTING JOINT TECHNOLOGY
PATENTS and/or JOINT TECHNOLOGY PATENTS claim only JOINT DELIVERY TECHNOLOGY,
such EXISTING JOINT TECHNOLOGY PATENTS and/or JOINT TECHNOLOGY PATENTS shall be,
subject to the terms and conditions of this AGREEMENT, the sole property of
ALTEA who shall assume the full responsibility of prosecuting and protecting
such EXISTING JOINT TECHNOLOGY PATENTS or JOINT TECHNOLOGY PATENTS at its sole
expense (unless SRX has rights to JOINT DELIVERY TECHNOLOGY pursuant to Section
2.6(b), in which case SRX shall assume such responsibility and expense).
(b) Notwithstanding the above, SRX shall be responsible for
the payment of all fees, costs and expenses paid or incurred connected with the
filing, prosecution, issuance, and maintenance of JOINT TECHNOLOGY PATENTS
claiming JOINT DELIVERY TECHNOLOGY and not MONITORING TECHNOLOGY, through the
earlier of (i) December 31, 1996, or (ii) ALTEA entering into a SUBCONTRACT
agreement covering JOINT DELIVERY TECHNOLOGY. ALTEA shall reimburse SRX for such
fees paid by SRX by paying an additional royalty upon commercialization of such
JOINT DELIVERY TECHNOLOGY pursuant to Section 3.7(c), such additional royalty to
be equal to that specified in Section 3.7(c), until the fees paid by SRX on
ALTEA's behalf for such patent filings claiming JOINT DELIVERY TECHNOLOGY and
not MONITORING TECHNOLOGY, are fully reimbursed; unless ALTEA enters into a
SUBCONTRACT agreement relating to JOINT DELIVERY TECHNOLOGY; in which case ALTEA
shall reimburse SRX for SRX's actual expenses paid on ALTEA's behalf pursuant to
this sentence, within sixty (60) days after entering into such SUBCONTRACT
agreement.
7.3 NIMCO and/or ALTEA shall determine which patent counsel to employ
in the filing and prosecution and maintenance of patents relating only to JOINT
DELIVERY TECHNOLOGY, and for as long as SRX has rights to MONITORING TECHNOLOGY
SRX shall determine which patent counsel to employ in the filing, prosecution
and maintenance of patents relating only to MONITORING TECHNOLOGY, except as
modified pursuant to Section 7.1. ALTEA and SRX shall agree upon which patent
counsel to employ in the filing, prosecution and maintenance of LICENSED
PATENTS, as well as JOINT TECHNOLOGY PATENTS claiming both JOINT DELIVERY and
MONITORING TECHNOLOGY in the TERRITORY for as long as SRX has rights to
MONITORING TECHNOLOGY; otherwise ALTEA shall solely determine the patent
counsel.
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8. Patent Infringement.
8.1 Notice of Infringement.
(a) SRX shall take all commercially reasonable steps to
protect the LICENSED PATENTS, EXISTING JOINT TECHNOLOGY PATENTS and JOINT
TECHNOLOGY PATENTS in all parts of the TERRITORY in which a patent application
or patent is present or patent application can be filed concerning MONITORING
TECHNOLOGY to which SRX has rights, and each of NIMCO, ALTEA and SRX shall give
prompt notice to the other Parties of any infringement or threatened or
suspected infringement thereof that shall at any time come to its knowledge
together with such detailed information as shall from time to time be available
to such Party relating to such infringement or threatened or suspected
infringement.
(b) SRX shall give ALTEA prompt notice of any infringement or
suspected infringement of JOINT DELIVERY TECHNOLOGY of which SRX becomes aware.
8.2 Defense. In the event that a declaratory judgment action,
cancellation, opposition or similar proceeding alleging invalidity,
unenforceability or noninfringement of any of the LICENSED PATENTS, EXISTING
JOINT TECHNOLOGY PATENTS or JOINT TECHNOLOGY PATENTS claiming MONITORING
TECHNOLOGY shall be brought by a THIRD PARTY against NIMCO and/or ALTEA, and/or
SRX, as long as SRX has rights to MONITORING TECHNOLOGY, SRX shall have the
right to defend and/or settle such action or proceeding as it relates to the
issues of noninfringement. Without NIMCO's and/or ALTEA's knowledge and written
consent, SRX may not settle issues of unenforceability or invalidity of such
LICENSED PATENTS, EXISTING JOINT TECHNOLOGY PATENTS or JOINT TECHNOLOGY PATENTS
in any manner. Subject to Article 12, if SRX determines at any time that it does
not desire to defend and/or settle (or continue to defend and/or settle) such
action, SRX shall promptly so advise NIMCO and/or ALTEA, and NIMCO and/or ALTEA
shall then have the right to defend and/or settle (or continue to defend and/or
settle) such action at NIMCO and/or ALTEA's expense and SRX shall, without cost
or delay, provide NIMCO and/or ALTEA with all unprivileged information, data,
documents, and pleadings it has in its possession to enable NIMCO and/or ALTEA
to defend (or continue to defend) such action. Any privileged information, such
as attorney work product, attorney client communications, legal assessments,
opinions or the like which has been, or can be, asserted by SRX shall also be
provided to NIMCO and/or ALTEA to the extent that such information will not, in
the opinion of counsel for SRX, be detrimental to SRX if the privilege is lost
or which can be passed from counsel for SRX to counsel for NIMCO and/or ALTEA
under a confidential disclosure agreement, protective order, or other
relationship which would not destroy such privilege. NIMCO and/or ALTEA shall
not be liable to SRX for any costs incurred by SRX prior to SRX advising NIMCO
and/or ALTEA of its decision not to defend (or continue to defend) such action.
However, such action by NIMCO and/or ALTEA shall not relieve SRX of its
obligations pursuant to Articles 3 and 12, including defending and indemnifying
NIMCO and/or ALTEA relating to claims relating to ownership or inventorship of
patents, except, however, that SRX shall not be liable for any costs of NIMCO
and/or ALTEA's in defending the LICENSED PATENTS, EXISTING JOINT TECHNOLOGY
PATENTS or JOINT TECHNOLOGY PATENTS pursuant to this Section 8.2. Any action
referenced above pertaining solely to JOINT DELIVERY TECHNOLOGY shall be the
sole responsibility of ALTEA (unless SRX
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has acquired right to JOINT DELIVERY TECHNOLOGY, in which case SRX shall be
solely responsible), and SRX agrees to cooperate with ALTEA in its defense of
such pursuant to Section 8.4
8.3 Infringement Suits.
(a) (i) SRX shall be responsible for instituting legal
action, at its sole expense, against infringers of MONITORING TECHNOLOGY to
which SRX has rights claimed in the LICENSED PATENTS, EXISTING JOINT TECHNOLOGY
PATENTS and JOINT TECHNOLOGY PATENTS, if it is of the opinion that such
infringement will seriously affect its business. The decision to institute or
settle legal action will be solely that of SRX. If NIMCO and/or ALTEA disagrees
with SRX's decision not to institute legal action against infringers, NIMCO
and/or ALTEA shall have the option to institute legal action for patent
infringement at its own expense. If SRX chooses to institute legal action
against infringers, all damages, including attorneys' fees obtained as a result
of such action, shall be retained by SRX. If NIMCO and/or ALTEA chooses
pursuant to this paragraph to so institute legal action against infringers, all
damages, including attorney fees obtained as a result of such legal action,
shall be retained by NIMCO and/or ALTEA, respectively. SRX shall not be liable
for any loss suffered by NIMCO and/or ALTEA as a result of NIMCO's and/or
ALTEA's legal action against an infringer.
(ii) ALTEA shall be responsible for instituting legal
action, at its sole expense, against all infringers of JOINT DELIVERY TECHNOLOGY
to which ALTEA has rights claimed in the EXISTING JOINT TECHNOLOGY PATENTS and
JOINT TECHNOLOGY PATENTS, if its is of the opinion that such infringement will
seriously affect its business. The decision to institute or settle legal action
will be solely that of ALTEA. IF SRX disagrees with ALTEA's decision not to
institute legal action against infringers, SRX shall have the option to
institute legal action for patent infringement at its own expense. If ALTEA
chooses to institute legal action against infringers, all damages, including
attorneys' fees obtained as a result of such action, shall be retained by ALTEA.
If SRX chooses pursuant to this paragraph to so institute legal action against
infringers, all damages, including attorney fees obtained as a result of such
legal action, shall be retained by SRX. ALTEA shall not be liable for any loss
suffered by SRX as a result of SRX's legal action against an infringer.
(b) (i) If any THIRD PARTY accuser institutes action against
SRX, NIMCO or ALTEA alleging that the use of MONITORING TECHNOLOGY to which SRX
has rights is an infringement of THIRD PARTY technology or patents, SRX shall be
responsible at its sole expense for defending itself, and defending and
indemnifying NIMCO and ALTEA against such actions. If SRX shall be liable for
obtaining a license under such THIRD PARTY patents and/or making payments to
such THIRD PARTIES, SRX shall be solely responsible for any payments due to such
THIRD PARTIES. SRX shall consult with NIMCO and/or ALTEA in any such defense and
settlement, and shall reach a settlement that is reasonably agreeable to all
Parties, such agreement not to be unreasonably withheld.
(ii) If any THIRD PARTY accuser institutes action against
ALTEA or SRX alleging that the use of JOINT DELIVERY TECHNOLOGY to which ALTEA
has rights is an infringement of THIRD PARTY technology or patents, ALTEA shall
be responsible, at its sole expense, for defending itself and SRX against such
actions. If ALTEA shall be liable for obtaining a license under
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such THIRD PARTY patents and/or making payments to such THIRD PARTIES, ALTEA
shall be solely responsible for any payments due to such THIRD PARTIES. ALTEA
shall consult with SRX in any such defense and settlement, and shall reach a
settlement that is reasonably agreeable to all Parties, such agreement not to be
unreasonably withheld.
8.4 Cooperation. In any suit, either Party may commence or defend
against a THIRD PARTY pursuant to its rights under this AGREEMENT in order to
enforce or defend the validity or enforceability of the LICENSED PATENTS,
EXISTING JOINT TECHNOLOGY PATENTS or JOINT TECHNOLOGY PATENTS, the other Party
shall, at the request and expense of the Party initiating or defending such
suit, cooperate in all respects and, to the extent possible, have its employees
testify when requested and make available without delay relevant records,
papers, information, samples, specimens and the like.
9. Confidentiality.
9.1 Confidentiality Nondisclosure. During the TERM and for seven (7)
years thereafter without regard to the means of termination or expiration,
neither SRX, NIMCO, nor ALTEA, nor any of their respective AFFILIATES shall
reveal or disclose to THIRD PARTIES any confidential information received from
the other Party under this AGREEMENT or under prior agreements without first
obtaining the written consent of the other Party, except (i) as may be required
for securing regulatory approval, subject to seeking confidential treatment
where available; (ii) as may be required to be disclosed to an agency or as
otherwise required by law, or court order, subject to seeking confidential
treatment where available. This confidentiality obligation shall not (a) apply
to such information which is or becomes a matter of public knowledge other than
through breach of this AGREEMENT; (b) is already in the possession of the
receiving Party; (c) is disclosed non-confidentiality to the receiving Party by
a THIRD PARTY having the right to do so, (d) is subsequently and independently
developed by employees of the receiving Party or AFFILIATES thereof who had no
knowledge of the confidential information disclosed. The Parties shall take
reasonable measures to assure that no unauthorized use or disclosure is made by
others to whom access to such information is granted.
9.2 Scope of Confidentiality. SRX, NIMCO, and ALTEA agree to limit the
disclosure of any technical data and information or other confidential
information received hereunder to such employees and consultants as are
reasonably necessary to carry out the provisions of this AGREEMENT and such
employees and consultants are likewise bound by the provisions of this Section
9.0. In addition any Party may disclose confidential information related to
TECHNOLOGY to which they have rights to THIRD PARTIES under conditions at least
as stringent as those in Section 9.1 at any time after the TERM. If after
termination or expiration, any Party has rights to all confidential information
generated under this AGREEMENT, then such Party shall not be restricted in its
use of such confidential information.
9.3 Notwithstanding the foregoing Sections 9.1 and 9.2, any Party is
permitted to disclose TECHNOLOGY to which it has COMMERCIALIZATION rights under
this AGREEMENT to THIRD PARTIES at its sole discretion under confidentiality
under conditions at least as stringent as those in Sections 9.1 and 9.2.
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10. Term and Termination.
10.1 Duration. The term of this AGREEMENT shall be the TERM as defined
in Section 1.15.
10.2 Termination for Breach. A non-defaulting Party shall have the
option, in addition to all other legal and equitable rights and remedies
available to it, to terminate this AGREEMENT effective immediately upon the
expiration of any applicable cure period, in the event of a "default" by the
other Party (as defined below) if written notice of the defaulting activity has
been given to the Party in default. Written notice of termination following the
providing of written notice of default shall not be a prerequisite to
termination. The term "default" shall mean any of the following events:
(a) failure by SRX, NIMCO or ALTEA to comply with or perform
any provision of this AGREEMENT such that it materially adversely affects the
other Party's aggregate rights and benefits hereunder, and such default remains
uncured for ninety (90) days following written notice of the defaulting activity
provided that if the default is cured within such notice period the notice shall
become null and void and of no further effect.
10.3 Termination of SRX MONITORING RIGHTS by SRX. SRX may terminate all
its rights and obligations, except confidentiality pursuant to Article 9 and
indemnity pursuant to Article 12, to MONITORING TECHNOLOGY under this AGREEMENT
at any time by giving NIMCO and/or ALTEA three (3) months prior written notice
if before COMMERCIALIZATION of MONITORING TECHNOLOGY and six (6) months prior
written notice if after COMMERCIALIZATION of MONITORING TECHNOLOGY of SRX's
election to so terminate its rights. SRX may terminate its rights in less than
three (3) or six (6) months as the case may be upon receiving written permission
from NIMCO and/or ALTEA to do so. For clarification, SRX's termination of its
MONITORING RIGHTS pursuant to this Section 10.3 shall not terminate this
AGREEMENT.
10.4 Events Following Termination or Expiration.
(a) Unless this AGREEMENT is terminated by SRX for default by
NIMCO and/or ALTEA pursuant to Section 10.2, upon expiration or termination of
this AGREEMENT in accordance with the provisions herein, or revocation or
termination of SRX's rights pursuant to Sections 2.6(a) or 10.3, all rights to
TECHNOLOGY and JOINT TECHNOLOGY (except for TECHNOLOGY conceived, after the
termination of this AGREEMENT, by SRX without benefit of confidential
information pursuant to this AGREEMENT), any uses, applications or products
encompassing TECHNOLOGY, including JOINT TECHNOLOGY shall become or remain, the
exclusive property of ALTEA, except that all rights to LICENSED PATENTS shall
become or remain the exclusive property of NIMCO. NIMCO and/or ALTEA shall then
have the right to continue or commence the development and/or COMMERCIALIZATION
of, with all rights to, any products, uses or applications of TECHNOLOGY whether
or not they were developed under this AGREEMENT (except for TECHNOLOGY
conceived, after termination of this AGREEMENT by SRX without benefit of
confidential information pursuant to this AGREEMENT). All rights and
obligations, and all data and documents in relation to such TECHNOLOGY thereto
made solely by NIMCO and/or ALTEA, or jointly by ALTEA and SRX, and all
improvements thereto shall remain with or revert exclusively to NIMCO and/or
ALTEA and may be
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exploited by NIMCO and/or ALTEA as its unencumbered beneficially owned property,
except as stated in 10.4(b) herein.
If this AGREEMENT is terminated by SRX for default by NIMCO and/or
ALTEA pursuant to Section 10.2, upon such termination,
(i) all rights to MONITORING TECHNOLOGY (except for
MONITORING TECHNOLOGY conceived, after termination of this AGREEMENT, by ALTEA
without benefit of confidential information pursuant to this AGREEMENT) in the
countries in which SRX has retained its exclusive rights pursuant to Sections
2.6(a) and 7.1 including MONITORING TECHNOLOGY of JOINT TECHNOLOGY, any uses,
applications or products encompassing MONITORING TECHNOLOGY, shall become the
exclusive property of SRX. In the countries where SRX has non-exclusive rights
to MONITORING TECHNOLOGY pursuant to Section 2.6(a)(iii), each Party shall
retain their non-exclusive rights. SRX shall then have the right to continue or
commence development and/or COMMERCIALIZATION of, with rights (exclusive or
non-exclusive, as the case may be) to, any products, uses or applications of
such MONITORING TECHNOLOGY, and
(ii) all rights to DELIVERY TECHNOLOGY (except for
DELIVERY TECHNOLOGY conceived, after termination of this AGREEMENT, by SRX
without benefit of confidential information pursuant to this AGREEMENT),
including JOINT DELIVERY TECHNOLOGY (or excluding JOINT DELIVERY TECHNOLOGY if
SRX has acquired and retained rights to JOINT DELIVERY TECHNOLOGY pursuant to
Section 2.6(b) and (c)) any uses, applications or products encompassing DELIVERY
TECHNOLOGY, shall become or remain the exclusive property of ALTEA. ALTEA shall
then have the right to continue or commence development and/or COMMERCIALIZATION
of, with all rights to, any products, uses or applications of JOINT DELIVERY
TECHNOLOGY as well as DELIVERY TECHNOLOGY outside of JOINT DELIVERY TECHNOLOGY.
(b) Unless this AGREEMENT is terminated by NIMCO and/or ALTEA
for default by SRX pursuant to Section 10.2, if SRX loses its rights to
MONITORING TECHNOLOGY pursuant to Sections 2.6(a) or 10.3 prior to
COMMERCIALIZATION of MONITORING TECHNOLOGY, then
(i) in the case where SRX loses all its rights to
MONITORING TECHNOLOGY, NIMCO and/or ALTEA agrees to pay to SRX after such
reacquisition of all rights to MONITORING TECHNOLOGY form SRX, an amount (Z)
reflective of SRX's and NIMCO and/or ALTEA's relative investment by way of a
royalty calculated at a rate which is equal to that defined in Section 3.3(a)
herein where;
Z=6X-3Y; and
X=SRX investment after June 27, 1995
directly used by SRX in the development of
MONITORING TECHNOLOGY and not subsequently
applied to other technologies or projects.
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Y=NIMCO and/or ALTEA investment after
reacquisition of all rights to MONITORING
TECHNOLOGY under this AGREEMENT for
development of MONITORING TECHNOLOGY,
updated annually.
Z=Maximum Amount to be paid to SRX as a
royalty on NET SALES by NIMCO and/or ALTEA.
The calculation of Z shall be updated
annually and once the updated amount Z has
been paid to SRX pursuant to this Section
10.4(b), NIMCO and/or ALTEA shall have no
further obligation to SRX, and
(ii) in the case where SRX has lost part of its
rights pursuant to Section 2.6(a), Section 10.4(d) shall apply for those
countries for which SRX has lost its rights.
(c) The provisions of Section 3.0 concerning the payment of
royalties and other fees shall continue to bind the Parties if this AGREEMENT
expires or is terminated or SRX's MONITORING RIGHTS are limited or terminated
for any reason until all payments payable under this AGREEMENT accrued during
its TERM or prior to such termination of rights are paid; provided, however,
upon expiration or termination of this AGREEMENT or termination of SRX's rights
pursuant to Sections 2.6(a) or 10.3,
(i) the final minimum payment accrued as described
above and payable under paragraph 3.4 and 3.5 shall be due to ALTEA upon the
date of termination except if terminated pursuant to section 10.7 and shall be
prorated for that portion of the year prior to such termination,
For Example: If the AGREEMENT or SRX's rights are so terminated on
September 30, 1997, the minimum royalty due to ALTEA on September 30, 1997 is
__________ and
(ii) if this AGREEMENT or SRX's rights to MONITORING
TECHNOLOGY are terminated (except if terminated pursuant to Section 10.7) prior
to January 1, 1997, SRX agrees to pay to ALTEA the full remaining minimum
payment that would have been due for Calendar Year 1996 upon the date of
termination.
(d) Upon termination or expiration of this AGREEMENT or
termination of SRX's or ALTEA's rights to any aspect of MONITORING TECHNOLOGY or
JOINT DELIVERY TECHNOLOGY, the Party who does not have rights to the field of
TECHNOLOGY pursuant to Section 10.4(a) above shall immediately transfer to the
other Party (NIMCO and/or ALTEA, or SRX) ownership of, and where possible
possession of, all data, documents, including videos, technical, clinical and
regulatory data and documents, and submissions and approvals, and as applicable
all LICENSED PATENTS, EXISTING JOINT TECHNOLOGY PATENTS, JOINT TECHNOLOGY
PATENTS, samples, inventory, work-in-progress, products, customer and
distribution lists, promotional materials and the like relating to MONITORING
TECHNOLOGY or JOINT DELIVERY TECHNOLOGY, and where possession is not possible,
allow the other Party to cross-reference and make copies of all such data and
documents including laboratory notebooks, and the Party not having MONITORING
TECHNOLOGY or JOINT DELIVERY TECHNOLOGY rights shall take all other steps
necessary or
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useful to enable the other Party to carry out the development and/or marketing
or products, uses or applications covered by MONITORING TECHNOLOGY or JOINT
DELIVERY TECHNOLOGY, as the case may be, in all countries to which that Party
has rights to such TECHNOLOGY of the TERRITORY without delay.
10.5 The expiration or termination of this AGREEMENT shall not affect
any rights and obligations of the Parties under this AGREEMENT which are
intended by the Parties to survive such termination. Without limiting the
generality of the foregoing, the following provisions of this AGREEMENT shall
survive expiration or termination hereof: Articles 1 (to the extent definitions
apply to termination or expiration events), 5, 6 (to the extent for payments due
or accrued prior to termination or expiration) 9, 11, and 12 and Sections 7.1,
7.2, 8.2 (last sentence), 10.4, 10.5, 10.6, 13.3, 13.4 13.7(b), 13.15, Exhibits
B and C and any other Sections that are intended by the Parties to survive
expiration or termination. Such expiration or termination shall not prejudice
NIMCO and/or ALTEA's rights to any royalties and other sums due hereunder and
shall not prejudice any cause of action or claim of NIMCO and/or ALTEA accrued
or to accrue on account of any breach or default by SRX. Such expiration or
termination shall not prejudice SRX's rights to any royalties and other sums due
hereunder and shall not prejudice any cause of action or claim of SRX accrued or
to accrue on account of any breach or default by NIMCO and/or ALTEA.
10.6 Neither Party shall be entitled to any compensation whatsoever as
a result of termination or expiration of this AGREEMENT, but without limiting
either Party's damages for any breach of this AGREEMENT.
10.7 SRX shall have the right to terminate this AGREEMENT at any time
within four months of the EFFECTIVE DATE, upon written notice if NIMCO does not
resolve the dispute with MIT under terms satisfactory to SRX.
11. Warranties.
11.1 General. As of the EFFECTIVE DATE, SRX, NIMCO and ALTEA are aware
of claims and actions raised by the Massachusetts Institute of Technology (MIT),
Robert Langer and Joseph Kost, with respect to the MONITORING TECHNOLOGY. While
NIMCO and ALTEA vigorously deny such claims, NIMCO and ALTEA make no warranty
that the claims raised by MIT, Robert Langer or Joseph Kost will be found to be
invalid. If such claims are found to be valid or a settlement is otherwise
reached, the license and rights granted herein, in Article 2, shall be modified
in accordance and agreement with the resolution of such claims.
11.2 NIMCO and ALTEA Representations and Warranties. As of the
EFFECTIVE DATE, except as stated in Section 11.1, NIMCO and/or ALTEA warrant and
represent to SRX that they are owners of the MONITORING TECHNOLOGY as listed in
Section 1.1, and that they are not aware of any THIRD PARTY claims or rights to
MONITORING TECHNOLOGY, except as noted herein.
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11.3 SRX Representation and Warranty. SRX represents that it is fully
aware of and has reviewed the claims and actions referenced in Section 11.1, and
the LICENSED PATENTS and the EXISTING JOINT TECHNOLOGY PATENTS, and that it is
entering into this AGREEMENT with this knowledge. As of the EFFECTIVE DATE,
except as stated in Section 11.1, SRX warrants and represents that it is not
aware of any THIRD PARTY claims or rights to MONITORING TECHNOLOGY, SRX warrants
that it has the full right and authority to enter into this AGREEMENT.
11.4 NO PARTY MAKES ANY WARRANTY, OTHER THAN AS STATED IN SECTIONS 11.2
AND 11.3, EXPRESS OR IMPLIED, WITH RESPECT TO THE TECHNOLOGY. EACH PARTY
EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR NON-INFRINGEMENT. IN NO EVENT SHALL ANY PARTY BE LIABLE
FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES EXCEPT FOR
DAMAGES ARISING OUT OF BREACH BY THAT PARTY OF THIS AGREEMENT.
12. Indemnification.
(a) SRX shall (and shall require its SUBCONTRACTORS to)
indemnify, hold harmless, defend NIMCO and ALTEA, their directors, officers,
employees, permitted successors and assigns, AFFILIATES, and agents from and
against any and all monetary losses including but not limited to any claims
(including but not limited to claims for injury to tangible property or the
environment, and claims for injury to persons and other product liability
claims), legal actions, lawsuits, and the like made or filed by THIRD PARTIES
(including but not limited to directors, officers, employees and agents of SRX)
against or naming NIMCO and/or ALTEA, their directors, officers, employees,
permitted successors and assigns, AFFILIATES; and agents (collectively
"NIMCO/ALTEA LOSSES"), and shall pay reasonable attorneys' fees of NIMCO and
ALTEA directly connected with such NIMCO/ALTEA LOSSES, relating to any
activities undertaken by SRX, its AFFILIATES or SUBCONTRACTORS relating to any
aspect of TECHNOLOGY or the subject matter of this AGREEMENT, provided that any
activities undertaken by Jonathan Eppstein (JAE) as part of his employment by
SRX or its successors or assigns and any activities undertaken by NIMCO or ALTEA
or their AFFILIATES or SUBCONTRACTORS with the prior consent of SRX, with prior
or subsequent confirmation in writing, shall be deemed to be activities of SRX
for the purposes of this indemnity.
(b) NIMCO and ALTEA shall (and shall require their
SUBCONTRACTORS to) indemnify, hold harmless, and defend SRX, its directors,
officers, employees, permitted successors and assigns, AFFILIATES, and agents
from and against any and all monetary losses including but not limited to any
claims (including but not limited to claims for injury to tangible property or
the environment, and claims for injury to persons and other product liability
claims), legal actions, lawsuits, and the like made or filed by THIRD PARTIES
(including but not limited to directors, officers, employees and agents of NIMCO
and ALTEA other than JAE in his role as employee of SRX or its successors or
assigns) against or naming SRX, its directors, officers, employees, permitted
successors and assigns, AFFILIATES, and agents (collectively "SRX LOSSES"), and
shall pay reasonable attorneys fees of SRX directly connected with such SRX
LOSSES, relating to any activities undertaken after the EFFECTIVE DATE by NIMCO
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or ALTEA, their AFFILIATES or SUBCONTRACTORS relating to any aspect of
TECHNOLOGY or the subject matter of this AGREEMENT, other than as indemnified
and defended by SRX pursuant to Sections 12(a) and (c). For purposes of
clarification, the agreement of the Parties is that Section 12(a) shall without
limiting its generality indemnify and defend NIMCO and ALTEA against all product
liability claims arising out of commercialization of TECHNOLOGY by SRX or its
AFFILIATES or SUBCONTRACTORS and that Section 12(b) shall without limiting its
generality indemnify and defend SRX against all product liability claims arising
out of commercialization of TECHNOLOGY by NIMCO or ALTEA or their AFFILIATES or
SUBCONTRACTORS through THIRD PARTIES.
(c) SRX shall (and shall require its SUBCONTRACTORS to)
indemnify, hold harmless, and defend NIMCO and ALTEA, their directors, officers,
employees, permitted successors and assigns, AFFILIATES, and agents from and
against any claims, legal actions, lawsuits and the like made or filed by the
Massachusetts Institute of Technology, Ben Gurion University, Robert Langer or
Joseph Kost, (the "MIT PARTIES") relating to inventorship, ownership or rights
of LICENSED PATENTS made after June 27, 1995 and thereafter during the period
that SRX shall have rights to MONITORING TECHNOLOGY, provided NIMCO's and
ALTEA's response to any such action is agreed upon with SRX (such agreement to
be confirmed in writing), and provided further that in this instance the
indemnity shall be limited to payment of damages or other payments to the MIT
PARTIES together with reasonable attorneys' fees of NIMCO and ALTEA directly
connected with the foregoing and SRX's costs of defense.
(d) All reasonable expenses paid by SRX in defense and
indemnity of NIMCO and/or ALTEA of claims under Section 12(c) shall be
subtracted from the amount of payments thereafter due from SRX under Sections
3.4 and 3.5, until paid or this AGREEMENT is terminated or expires, but at a
rate no grater than twenty five percent (25%) of any annual payment in excess of
fifty thousand dollars ($50,000). Such payments shall be reconciled each quarter
not only for that quarter but also for the preceding calendar quarters in that
same calendar year.
(e) In the event of any matter referenced in Section 12(c) in
which the Parties do not agree on the course of action in defending NIMCO and/or
ALTEA against such claims, if NIMCO and/or ALTEA shall continue such defense on
its own, then NIMCO may, at its sole option, delete the relevant LICENSED
PATENTS from this AGREEMENT and SRX, its AFFILIATES and SUBCONTRACTORS shall no
longer have rights to such LICENSED PATENTS.
13. Miscellaneous and General.
13.1 Independent Contractor.
(a) SRX's relationship to NIMCO and ALTEA hereunder, whether
as a licensee, licensor or joint developer, shall be that of an independent
contractor only. SRX shall not be the agent of NIMCO or ALTEA and shall have no
authority to act for or on behalf of NIMCO or ALTEA in any matter. Persons
retained by SRX as employees or agents shall not by reason thereof be deemed to
be employees or agents of NIMCO or ALTEA.
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(b) NIMCO or ALTEA's relationship to SRX hereunder, whether as
a licensee, licensor or JOINT DEVELOPER, shall be that of an independent
contractor only. NIMCO or ALTEA shall not be the agent of SRX and shall have no
authority to act for or on behalf of SRX in any matter. Persons retained by
NIMCO as employees or agents shall not by reason thereof be deemed to be
employees or agents of SRX.
13.2 Patent Marking. SRX and ALTEA agree to mark the products covered
by LICENSED PATENTS, EXISTING JOINT TECHNOLOGY PATENTS and JOINT TECHNOLOGY
PATENTS sold in the United States with all applicable United States patent
numbers. All products shipped to or sold in other countries shall be to the
extent practical marked in such a manner as to conform with the patent laws and
practice of the country of sale.
13.3 Interpretation. In this AGREEMENT, the singular shall include the
plural and vice versa, and the word "including" shall be deemed to be followed
by the phrase "without limitation."
13.4 Resolution of Disputes. In the event the Parties have a dispute or
claim of any kind arising under this AGREEMENT that they are unable to resolve
through direct communications, such dispute shall be resolved through
arbitration pursuant to the commercial rules of the American Arbitration
Association with one arbitrator chosen by NIMCO and/or ALTEA, one arbitrator
chosen by SRX, and the third arbitrator chosen by the proceeding first two
arbitrators.
13.5 No term or condition of this AGREEMENT shall be considered waived
unless reduced to writing and duly executed by an officer of the waiving Party.
Any waiver by any Party of a breach of any term or condition of this AGREEMENT
will not be considered as a waiver of any subsequent breach of this AGREEMENT,
of that term or condition or any other term or condition hereof.
13.6 Neither Party shall be virtue of this AGREEMENT have any power to
bind the other to any obligation, nor shall this AGREEMENT create any
relationship of agency, partnership or joint venture.
13.7 Joint Development Activities.
(a) For so long as (JAE) is employed by SRX and, during the
TERM, JAE's activities relating to JOINT DEVELOPMENT shall be allocated to both
ALTEA and SRX.
(b) If any of the terms and conditions of this AGREEMENT are
in conflict with any SRX. NIMCO, or ALTEA employment agreement, the terms and
conditions of this AGREEMENT shall prevail.
(c) If any Party finds that any of the terms and conditions
(other than obligations of minimum payments and royalties) prevents that Party
from entering into a SUBCONTRACT agreement that is mutually beneficial to all
Parties, the Parties shall meet to discuss the situation and attempt to resolve
the situation to the mutual benefit of all Parties. If the terms of this
AGREEMENT are found to present a substantial barrier to COMMERCIALIZATION of
either MONITORING TECHNOLOGY
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or JOINT DELIVERY TECHNOLOGY and this AGREEMENT can be modified without material
damage to any Party, while providing equivalent economic benefit to each Party,
then the Parties agree to negotiate in good faith to so modify this AGREEMENT to
eliminate such barrier to COMMERCIALIZATION to the benefit of all Parties.
13.8 Legal Compliance. SRX and ALTEA shall comply with all rules and
regulations concerning TECHNOLOGY or the sale of any product, use or application
thereof, in any country of the TERRITORY in which the Parties, their AFFILIATES
or their SUBCONTRACTOR(S) are selling, leasing or otherwise commercially
transferring products, uses or applications covered by the TECHNOLOGY, including
JOINT TECHNOLOGY.
13.9 Notices. Any notices required or permitted to be given hereunder
shall be in writing in the English language and shall be delivered in person or
by Federal Express (or other reputable express courier service documenting proof
of receipt) or by telecopy confirmed by a documented proof of receipt as above,
to the addresses set forth below. The Parties may change the address at which
notice is to be given by giving notice to the other Party as herein provided.
All notices shall be deemed effective upon the courier confirmed receipt by the
Party to whom it is addressed, or upon personal delivery.
If to SRX: Mr. Mark A. Samuels
SpectRx, Inc.
6025A Unity Drive
Norcross, Georgia 30071
Facsimile: (770) 242-8723
With a copy to: Dean W. Russell, Esq.
Kilpatrick & Cody
Suite 2800, 1100 Peachtree Street
Atlanta, Georgia 30309-4530
Facsimile: (404) 815-6555
If to NIMCO: Dr. Deborah A. Eppstein
Non-Invasive Monitoring Company, Inc.
1675 Emigration Canyon Road
Salt Lake City, Utah 84108
Facsimile: (801) 582-1317
With a copy to: Jonathan A. Eppstein
Non-Invasive Monitoring Company, Inc.
12844 Jasmine Court
Atlanta, Georgia 30345
Facsimile: (770) 908-1981
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and a copy to: Stephen Johnson, Esq.
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022-4675
Facsimile: (212) 446-4900
If to ALTEA: Dr. Deborah A. Eppstein
Altea Technologies, Inc.
1675 Emigration Canyon Road
Salt Lake City, Utah 84108
Facsimile: (801) 582-1317
With a copy to: Jonathan A. Eppstein
Non-Invasive Monitoring Company, Inc.
2844 Jasmine Court
Atlanta, Georgia 30345
Facsimile: (770) 908-1981
and a copy to: Stephen Johnson, Esq.
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022-4675
Facsimile: (212) 446-4900
Any Party hereto may change the address to which notices to such Party are to be
sent by giving notice to the other Party at the address and in the manner
provided above. Any notice herein required or permitted to be given may be
given, in addition to the manner set forth above, by telex, facsimile or cable,
provided that the Party giving such notice obtains acknowledgment by telex,
facsimile or cable that such notice has been received by the Party to be
notified. Notice made in this manner shall be deemed to have been given when
such acknowledgment has been transmitted.
13.10 Force Majeure. If either Party is prevented from complying,
either totally or in party, with any of the terms or provisions of this
AGREEMENT, by reason of force majeure, including, but not limited to fire,
flood, earthquake, explosion, storm, strike, lockout or other labor trouble,
riot, war, rebellion, accident, acts of God and/or any other cause or externally
induced casualty beyond its reasonable control, whether similar to the foregoing
matters or not, then, upon written notice by the Party liable to perform to the
other Party, the requirements of this AGREEMENT or such of its provisions as may
be affected, and to the extent so affected, shall be suspended during the period
of such disability; provided that the Party asserting force majeure shall bear
the burden of establishing the existence of such force majeure by clear and
convincing evidence; and provided further, that the Party prevented from
complying shall use its best efforts to remove such disability within thirty
(30) days, and shall continue performance with the utmost dispatch whenever such
causes are removed, and shall notify the other Party of the event no more than
five (5) working days from the time of the event. When such circumstances arise,
the Parties shall discuss what, if any, modification of the terms of this
AGREEMENT may be
-30-
31
required in order to arrive at an equitable solution. Notwithstanding the
foregoing, in the event that a material event of force majeure shall continue
for a period of longer than six (6) months, then the Party unaffected by such
event may terminate this AGREEMENT by not less than ninety (90) days written
notice of termination to the other Party.
13.11 Assignments and Inurement. Except to the extent otherwise herein
provided, no Party shall grant, transfer, convey, or otherwise assign any of its
rights to delegate any of its obligations (except in the occurrence of an event
as described in Section 1.9(a)(ii) or (iv), for either SRX, NIMCO or ALTEA) as
relates to MONITORING TECHNOLOGY or JOINT DELIVERY TECHNOLOGY under this
AGREEMENT to a THIRD PARTY without the prior written consent of the other, which
consent shall not be unreasonably withheld, provided that such THIRD PARTY has
the capability to and agrees to comply with the terms of this AGREEMENT
including Section 3.8; as relates to events as described in Section 1.9(a)(ii)
and (iv) for either SRX, NIMCO or ALTEA, such Party may assign this AGREEMENT
without the consent of the other Parties, provided such THIRD PARTY agrees to
comply with the terms of this AGREEMENT including Section 3.8; provided however
that the Parties agree that SRX shall not be permitted to partially assign its
rights or delegate its obligations under this AGREEMENT. SRX shall be permitted
to transfer its rights, hereunder only if it shall transfer all of its rights
and obligations hereunder to such THIRD PARTY or AFFILIATE. This AGREEMENT shall
be binding upon and inure to the benefit of the successors and permitted assigns
of the Parties hereto. Notwithstanding the foregoing, any Party shall be
permitted to perform this AGREEMENT in whole or in part through its AFFILIATES
controlled by such Party, provided that such Party shall be responsible and
liable for performance by that AFFILIATE.
13.12 Entire AGREEMENT. This AGREEMENT supersedes all prior agreements,
both verbal and written, between NIMCO and SRX, and between ALTEA and SRX, with
respect to the subject matter hereof and constitutes the entire agreement
between the Parties with respect to the subject matter hereof, and shall not be
modified, amended or terminated except as herein provided or except by another
agreement in writing executed by the affected Parties hereto.
13.13 Headings. The section and paragraph headings are for convenience
only and are not a part of this AGREEMENT.
13.14 Severability. All rights and restrictions contained herein may be
exercised and shall be applicable and binding only to the extent that they do
not violate any applicable laws and are intended to be limited to the extent
necessary so that they will not render this AGREEMENT illegal, invalid or
unenforceable. If any provision or portion of any provision of this AGREEMENT
not essential to the commercial purpose of this AGREEMENT shall be held to be
illegal, invalid or unenforceable by a court of competent jurisdiction, it is
the intention of the Parties that the remaining provisions or portions thereof
shall constitute their AGREEMENT with respect to the subject matter hereof, and
all such remaining provisions or portions thereof shall remain in full force and
effect. To the extent legally permissible, any illegal, invalid or unenforceable
provision of this AGREEMENT shall be replaced by a valid provision which will
implement the commercial purpose, to the extent possible, with similar economic
benefits to each of the Parties of the illegal, invalid or unenforceable
provision. In the event that any provision essential to the commercial purpose
of this AGREEMENT is held to be illegal, invalid
-31-
32
or unenforceable and cannot be replaced by a valid provision which will
implement the commercial purpose of this AGREEMENT, NIMCO and/or ALTEA or SRX
shall have the right to terminate this AGREEMENT and the rights granted herein
shall terminate unless the Parties agree to other terms with comparable economic
benefit to each Party.
13.15 Choice of Law. This AGREEMENT is acknowledged to have been made
under and shall be construed in accordance with and governed in all respects by
the laws of the State of Delaware, United States of America as they apply to
contracts made and performed entirely within such state.
-32-
33
EXHIBIT A
OUTLINE OF RESEARCH PROGRAM FOR JOINT DEVELOPMENT ACTIVITIES
SRX/ALTEA JOINT DEVELOPMENT PLAN FOR JOINT TECHNOLOGY
MARCH 1, 1996
This plan presents an outline of the first two years activities for the
JOINT DEVELOPMENT program to be executed by SpectRx, Inc. and Altea
Technologies, Inc. Whereas this plan is focused on describing the tasks related
to developing a system to sample the interstitial fluid, it is to be understood
that virtually all of these development activities have direct applications to
the enhancement of transdermal delivery capabilities, and while not specifically
stated in this outline, a parallel set of activities led by ALTEA in
collaboration with SRX will be conducted evaluating the delivery aspects of the
work as it progresses.
For Task Areas:
- Interstitial Fluid Pumping sub-system, ultrasonic, pneumatic,
or otherwise.
- Micro-poration sub-system.
- Selection and development of disposable component and assay
sub-system.
- Clinical testing of prototype systems to establish feasibility
of Interstitial Fluid Harvesting techniques, laboratory quantitation of
Interstitial Fluid glucose levels and correlation to blood glucose levels.
For each of these efforts, a basic plan has been outlined based on the
current level of understanding of problems and risks associated with each
different area of activity. This is presented below with a brief option of the
specific task.
If pumping sub-system, Ultrasonic
1.1.1 Assemble an ultra-sonic in vitro test bed.
1.1.2 Based on integration discussions with the other subsystem
development teams, refine the design for the ultrasonic subsystem.
1.1.7 Fabricate prototypes of ultrasonic subsystem design.
Exhibit A-1
34
If pumping sub-system, Mechanical
2.1 Survey and evaluate different forms of mechanical pumps possibly
applicable to the system, i.e. suction, vibrator, etc . . .
If Micro-poration sub-system, Optical
2.1.1 Build evaluation test cell to candidate the relative performance
of the different candidate approaches and wavelengths.
2.1.2 Based on integration discussions with the other subsystem
development teams, refine the design for the micro-poration subsystem to be
compatible with the developing overall system design.
2.1.3 Fabricate and test prototype micro-poration subsystems.
Section and development of disposable component and assay sub-system
3.1 Identify and if appropriate form development partnership with
existing bio-sensor or other quantitation technology manufacturer.
3.2 In cooperation with the bio-sensor/quantitation technology
development partner, evaluate the requirements for a custom designed
bio-sensor/quantitation technology for this application re: volume of
interstitial fluid needed, packaging considerations, method of interface to the
reading mechanism, etc. . . .
3.3 Working with the system integration development team, build the
final design sensor/disposable subsystem design prototype, test, and integrate
into the total system.
Clinical testing
4.1 Clinical testing of ALPHA PROTOTYPE systems to establish
feasibility of Interstitial Fluid Harvesting techniques, laboratory quantitation
of Interstitial Fluid glucose levels and correlation to blood glucose levels.
4.2 Clinical testing of PROTOTYPE PRODUCTION UNIT to establish
correlation between Interstitial Fluid glucose levels and blood glucose levels.
Exhibit A-2
35
EXHIBIT A-1
NOTICE OF EXERCISE
To: SPECTRX, INC.
(Company Name)
1. The undersigned hereby:
[ ] elects to purchase __________ shares of Common Stock
of the Company pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase
price of such shares in full; or
[ ] elects to exercise its net insurance rights pursuant
to Section 3.2 of the attached Warrant with respect
to __________ shares of Common Stock.
2. Please have a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
--------------------------------------
(Name)
--------------------------------------
(Address)
--------------------------------------
(Address)
3. The undersigned represents that the aforesaid shares being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.
- ---------------------------------
(Date)
------------------------------------
(Signature)
Exhibit A1-1
36
EXHIBIT A-2
NOTICE OF EXERCISE
To: SPECTRX, INC.
(Company Name)
1. Contingent upon and effective immediately prior to the closing (the
"Closing") of the Company's public offering contemplated by the Registration
Statement on Form S-___, filed on __________, 19___, the undersigned hereby:
[ ] elects to purchase __________ shares of Common Stock
of the Company (or such lesser number of shares as
may be sold on behalf of the undersigned at the
Closing) pursuant to the terms of the attached
Warrant; or
[ ] elects to exercise its net issuance rights pursuant
to Section 3.2 of the attached Warrant with respect
to __________ shares of Common Stock.
2. Please deliver to the custodian for the selling stockholders a stock
certificate representing such __________ shares.
3. The undersigned has instructed the custodian for the selling
stockholders to deliver to the Company $__________ or, if less, the net proceeds
due the undersigned from the sale of shares in the aforesaid public offering. If
such net proceeds are less than the purchase price for such shares, the
undersigned agrees to deliver the difference to the Company prior to the
Closing.
- ---------------------------------
(Date)
------------------------------------
(Signature)
Exhibit A2-1
37
APPENDIX I
ADJUSTMENT PROVISIONS
1. Capitalized Terms. Capitalized terms used in this Appendix I that
are not otherwise defined herein shall have the respective meanings assigned to
them in the Warrant, dated as of January ___, 1996, to which this Appendix I is
attached, if therein defined.
2. Reclassification or Merger. In case of any reclassification, change
or conversion of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), the
Company shall execute a new Warrant providing that the holder(s) of this Warrant
shall have the right to exercise such new Warrant and upon such exercise to
receive, in lieu of each share of Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification or change
by a holder(s) of one share of Common Stock. Such new Warrant shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Appendix I. The provisions of this Section 2
shall similarly apply to successive reclassifications, changes, mergers and
transfers.
3. Subdivision or Combination of Shares. If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or combine
its Common Stock, the Exercise Price and the number of Shares issuable upon
exercise hereof shall be proportionately adjusted.
4. Stock Dividends. If the Company at any time while this Warrant is
outstanding and unexpired shall pay a dividend payable in shares of Common
Stock, then the Exercise Price shall be adjusted, from and after the date of
determination of stockholders entitled to receive such dividend or distribution,
to that price determined by multiplying the Exercise Price in effect immediately
prior to such date of determination by a fraction (a) the numerator of which
shall be the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (b) the denominator of which shall
be the total number of shares of Common Stock outstanding immediately after such
dividend or distribution and the number of Shares subject to this Warrant shall
be proportionately adjusted.
5. Other Distributions. In the event the Company shall declare a
dividend or distribution payable in cash, securities of other persons, evidences
of indebtedness issued by the Company or other persons, assets or options or
rights not referred to in Section 2, 3 or 4 of this Appendix I, then, in each
such case, provision shall be made by the Company such that the holder(s) of
this Warrant shall receive upon exercise of this Warrant a proportionate share
of any such dividend or distribution as though it were the holder(s) of the
Shares as of the record date fixed for the determination of the stockholders of
the Company entitled to receive such dividend or distribution.
6. Notice of Adjustments. Whenever the Exercise Price shall be adjusted
pursuant to the provisions thereof, the Company shall within thirty (30) days of
such adjustment deliver a certificate
Appendix I-1
38
signed by its chief financial officer to the registered holder(s) hereof setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Exercise Price after giving effect to such adjustment.
Appendix I-2
39
EXHIBIT D
AGREEMENT BETWEEN THERATECH, INC., NIMCO, AND ALTEA
Exhibit D-1
40
EXHIBIT E
AGREEMENT BETWEEN THERATECH, ALTEA, AND NIMCO
This Agreement is made as of the 22nd day of February, 1996, (Effective
Date) by and between TheraTech, Inc. (THERATECH), a Delaware Corporation having
its principal offices at 417 Wakara Way, Salt Lake City, Utah, 84108, and both
Non-Invasive Monitoring Company, Inc. (NIMCO) and Altea Technologies, Inc.
(Altea), both Delaware Corporations having their registered offices at 2844
Jasmine Court, Atlanta, Georgia 30345 (each a "Party," collectively the
"Parties").
WHEREAS, ALTEA is the owner of and has rights to certain MONITORING
TECHNOLOGY and DELIVERY TECHNOLOGY (as defined hereinafter),
WHEREAS, NIMCO is the owner of and has rights to certain MONITORING
TECHNOLOGY (as defined hereinafter),
WHEREAS, NIMCO and ALTEA may enter into a licensing agreement for such
MONITORING TECHNOLOGY with SpectRx, Inc., (SRX),
WHEREAS, THERATECH is in the business of pharmaceutical drug delivery,
including transdermal drug delivery,
WHEREAS, THERATECH and ALTEA wish to enter into an agreement
("Agreement") whereby ALTEA will offer DELIVERY TECHNOLOGY to THERATECH and
THERATECH may choose to license such.
NOW THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, receipt of which is hereby
acknowledged, the Parties agree to be bound by the following terms and
conditions:
1. Definitions
1.1 "TECHNOLOGY" means technology (including uses,
applications and products) relating to transdermal/intradermal transport,
migration, and/or movement of substances utilizing microporation, ultrasound,
chemical and physical enhancers, and heat, including but not limited to optical,
mechanical, hydraulic, pneumatic, thermal, chemical, electrical, and/or
ultrasound mediated or assisted permeation, poration and/or migration, but shall
not include technology meeting the terms of this definition which is in the
public domain and/or belongs to third parties.
1.2 "DELIVERY TECHNOLOGY" means TECHNOLOGY that is useful in
transdermal/intradermal delivery of substances into a living organism including,
but not limited to, human beings for drug substances (but not tattoos), which
ALTEA owns with the right to license pursuant to this Agreement.
Exhibit E-1
41
1.3 "MONITORING TECHNOLOGY" means TECHNOLOGY that is useful in
transdermal/intradermal monitoring, detection, sampling, measuring, and/or
qualification of substances from within a living organism ("ANALYTES"),
including but not limited to human beings.
2. Offer
2.1 (a) ALTEA'S rights to DELIVERY TECHNOLOGY shall be offered
to THERATECH on a worldwide basis prior to being offered to third parties or
prior to commercialization by ALTEA. Such offer of rights and subsequent license
agreement will include diligence criteria for development and commercialization
of such DELIVERY TECHNOLOGY. If applicable to a particular DELIVERY TECHNOLOGY,
and if NIMCO and ALTEA so license MONITORING TECHNOLOGY to SRX, THERATECH shall
agree to work in collaboration with SRX, upon commercially reasonable terms on a
"closed loop" insulin delivery/glucose monitoring system if such DELIVERY
TECHNOLOGY and the MONITORING TECHNOLOGY so licensed to SRX make such "closed
loop" system technically feasible within five years of a license agreement
between THERATECH and ALTEA.
(b) (i) THERATECH wishes to license such
DELIVERY TECHNOLOGY, THERATECH shall so notify ALTEA within 30 days after
ALTEA's offer and ALTEA and THERATECH shall negotiate in good faith the terms
for such a license agreement, and if the essential terms of such agreement are
not agreed upon within 90 days after the initial offer by ALTEA, and if the
final agreement is not concluded within 180 days after the initial offer by
THERATECH, or
(ii) THERATECH declines the offer or does
not notify ALTEA of its interest pursuant to Section 2.1(b)(i) above, to
negotiate such terms and license agreement for DELIVERY TECHNOLOGY within 30
days after ALTEA's offer.
then ALTEA shall have no further obligation
to THERATECH or its Affiliates with respect
to such DELIVERY TECHNOLOGY, except as
provided in Section 2.2 below.
2.2 If after THERATECH has turned down such DELIVERY
TECHNOLOGY, ALTEA makes material improvements or enhancements or new inventions
to such DELIVERY TECHNOLOGY (as encompassed in new disclosures, patent
applications, or patents) and the DELIVERY TECHNOLOGY that was previously
offered and was subsequently turned down by THERATECH has not yet been licensed
to (or has not become the subject of contractual negotiations as expressed in
written draft of basic terms and conditions by ALTEA with) third parties, then
ALTEA shall re-offer such DELIVERY TECHNOLOGY, including such improvements and
enhancements thereto, to THERATECH pursuant to Section 2.1 above. This re-offer
of rights described in this Section 2.2 shall only be required to be made one
time by ALTEA to THERATECH; after that, ALTEA shall be free of any obligation to
offer such existing or future DELIVERY TECHNOLOGY or improvements or
enhancements thereto to THERATECH, and ALTEA may offer such DELIVERY TECHNOLOGY
to third parties and/or develop it itself at its sole option.
Exhibit E-2
42
2.3 MONITORING TECHNOLOGY is excluded from this offer to THERATECH.
THERATECH has no claim to MONITORING TECHNOLOGY, although THERATECH may enter
into collaborative and/or commercial agreements with NIMCO or ALTEA and their
subcontractors as relates to THERATECH's chemical enhancer systems in
conjunction with MONITORING TECHNOLOGY.
2.4 Pursuant to Section 2.1 above, the Parties acknowledge that
rights to U.S. Patent 5,445,611 were offered to THERATECH and subsequently
declined by THERATECH in 1994, with the understanding as described in Section
2.1 above. THERATECH is aware of the claim Massachusetts Institute of
Technology, Robert Langer, Joseph Kost, and Ben Gurion University have raised
against NIMCO and U.S. Patent No. 5,458,140 on MONITORING TECHNOLOGY. Although
NIMCO and ALTEA vigorously deny such claims, they make no warranty that the
above-mentioned parties will not raise other claims of ownership to U.S. Patent
5,445,611, and if THERATECH so licenses such patent #5,445,611, THERATECH shall
assume full responsibility and cost of defending such patent and defending and
indemnifying NIMCO and ALTEA and their officers, directors, employees,
successors, permitted assignees, Affiliates, and agents from any Losses arising
from such claims.
3. Term
3.1 This Agreement shall be in effect from the Effective Date
until the last to expire of patents to which ALTEA has rights containing a claim
not adjudicated invalid by a competent court or administrative body that covers
a use, application, or product of DELIVERY TECHNOLOGY, unless terminated earlier
pursuant to Section 3.2 or 3.3.
3.2 If THERATECH has not licensed such DELIVERY TECHNOLOGY as
offered by ALTEA by December 1, 2003, this Agreement shall terminate and ALTEA
shall have no further obligations to THERATECH.
3.3 Either Party may terminate this Agreement for material
breach by the other Party, provided a written notice of default has been given
to the Party in default, and the default is not cured within a 90 day period If
the default is cured within such notice period, the notice shall become null and
void and of no further effect.
4. Dispute Resolution. In the event the Parties have a dispute or claim
of any kind arising under this Agreement that they are unable to resolve through
direct communication, such dispute shall be resolved through arbitration
pursuant to the commercial rules of the American Arbitration Association with
one arbitrator chosen by ALTEA, one arbitrator chosen by THERATECH, and the
third arbitrator chosen by the proceeding first two arbitrators, such
arbitration to take place in Salt Lake City, Utah, unless agreed upon otherwise.
5. General
5.1 Choice of Law. This Agreement is acknowledged to have been
made in and shall be construed in accordance with the laws of the state of
Delaware, United States of America.
Exhibit E-3
43
5.2 Force Majeure. If either Party is prevented from
complying, either totally or in part, with any of the terms or provisions of
this Agreement by reason of force majeure, including, but not limited to fire,
flood, earthquake, explosion, storm, strike, lockout or other labor trouble,
riot, war, rebellion, accident, acts of God and/or any other cause or externally
induced casualty beyond its reasonable control, whether similar to the foregoing
matters or not, then, upon written notice by the Party liable to perform to the
other Party, the requirements of this Agreement or such of its provisions as may
be affected, and to the extent so affected, shall be suspended during the period
of such disability; provided that the Party asserting force majeure shall bear
the burden of establishing the existence of such force majeure by clear and
convincing evidence; and provided further, that the Party prevented from
complying shall use its best efforts to remove such disability within thirty
(30) days, and shall continue performance with the utmost dispatch whenever such
causes are removed, and shall notify the other Party of the event not more than
five (5) working days from the time of the event. When such circumstances arise,
the Parties shall discuss what, if any, modification of the terms of this
Agreement may be required in order to arrive at an equitable solution.
Notwithstanding the foregoing, in the event that a material event of force
majeure shall continue for a period of longer than six (6) months, then the
Party unaffected by such event may terminate this Agreement by not less than
ninety (90) days written notice of termination to the other Party.
5.3 Assignments and Inurement. Neither Party shall grant
transfer, convey or otherwise assign any of its rights or delegate any of its
obligation as relates to this Agreement without the prior written consent of the
other, such consent not to be unreasonably withheld. This Agreement shall be
binding upon and inure to the benefit of the successors and permitted assign of
the Parties hereto. Notwithstanding the foregoing, either Party shall be
permitted to perform the Agreement in whole or in part through its Affiliates
(i.e., an entity of which that Party has, directly or indirectly, at least fifty
(50) percent ownership of or the power to direct the voting activities of 50% or
more of the voting stock of such entity), provided that such Party shall be
responsible and liable for performance by that Affiliate.
5.4 Entire Agreement. This Agreement supersedes all prior
agreements between the Parties with respect to the subject matter hereof and
constitutes the entire agreement between the Parties with respect to the subject
matter hereof, and shall not be modified, amended or terminated except as
provided or except by another agreement in writing executed by the Parties
hereto.
5.5 Notices. Any notices required or permitted to be given
hereunder shall be in writing in the English language and shall be delivered in
person or by Federal Express (or other reputable express courier service
documenting proof of receipt) or by telecopy confirmed by a documented proof of
receipt as above, to the addresses set forth below. The Parties may change the
address at which notice is to be given by giving notice to the other Party as
herein provided. All notices shall be deemed effective upon the courier
confirmed receipt by the Party to who it is addressed or upon delivery in
person.
Exhibit E-4
44
If to THERATECH:
President
TheraTech, Inc.
417 Wakara Way
Salt Lake City, UT 84108
Phone: (801) 588-6200
Fax: (801) 583-0050
with a copy to:
Chief Financial Officer
TheraTech, Inc.
417 Wakara Way
Salt Lake City, UT 84108
Phone: (801) 588-6200
Fax: (801) 583-0050
If to NIMCO:
Dr. Deborah A. Eppstein
Non-Invasive Monitoring Company, Inc.
1675 Emigration Canyon Road
Salt Lake City, UT 84108
Phone: (801) 582-1317
Fax: (801) 582-1317
If to ALTEA:
Dr. Deborah A. Eppstein
Altea Technologies, Inc.
1675 Emigration Canyon Road
Salt Lake City, UT 84108
Phone: (801) 582-1317
Fax: (801) 582-1317
with a copy to:
Jonathan A. Eppstein
Altea Technologies, Inc.
2844 Jasmine Court
Atlanta, Georgia 30345
Phone: (770) 908-1981
Fax: (770) 908-1981
Exhibit E-5
45
IN WITNESS WHEREOF, the Parties have hereunto signed this Agreement
with the Effective Date hereto before referenced to:
TheraTech, Inc. Altea Technologies, Inc.
/s/ Dinesh C. Patel /s/ Deborah A. Eppstein
- ---------------------------------- ---------------------------------------
Dinesh C. Patel Deborah A. Eppstein
President and CEO President and CEO
Non-Invasive Monitoring Company, Inc.
/s/ Deborah A. Eppstein
---------------------------------------
Deborah A. Eppstein
President and CEO
Exhibit E-6
46
APPENDIX 2
PATENT RIGHTS
(AS LIMITED TO THE FIELD AND EXCLUDING DELIVERY APPLICATIONS)
1. New International (PCT) Application, filed August 29, 1996, TNW File
#T4345, entitled "Microporation of Human Skin for Drug Delivery and Monitoring
Applications"
2. United States Patent No. 5,458,140 issued October 17, 1995, entitled
"Enhancement of Transdermal Monitoring Applications with Ultrasound and Chemical
Enhancers" and any reissuances Thereof
3. Divisional Application, Serial No. 08/465,874, filed June 6, 1995
and any patent issuances or reissuances Thereof, TNW File #1214DIV
4. United States Patent CIP Application, Serial No. 08/520,547, filed
August 29, 1995, TNW File #T1214CIP
5. Application relating to Optical Poration filed in the United States
Patent Office on October 30, 1995, TNW File #T3491
6. Application relating to Mechanical Poration, TNW File #T3621
Appendix 2-7