License And Development Agreement

Exhibit 10.1


DEVELOPMENT AND LICENSE AGREEMENT


This DEVELOPMENT AND LICENSE AGREEMENT (the "Agreement"), effective as of April 2, 1999 ("Effective Date"), is made by and between Amira Medical, a Delaware corporation, with a principal place of business at 4742 Scotts Valley Drive, Scotts Valley, CA 95066 ("Amira"), and Integ Incorporated, a Minnesota corporation, with a principal place of business at 2800 Patton, St. Paul, MN 55113 ("Integ"). The parties agree as follows:


1. DEFINITIONS


"Acquired" shall have the meaning as set forth in Section 4.4.3.


"Affiliate(s)" shall mean all corporations or business entities which, directly or indirectly, are controlled by a Party. The meaning of the word "control" shall mean the ownership of 50% or more of the voting shares or interests of such corporation or business entity so long as such ownership of voting shares or interests continues.


"Agreement" shall have the meaning as set forth in the Preamble.


"Amira" shall have the meaning as set forth in the Preamble.


"Amira Know How" shall mean any unpatented and/or non-patentable technical data, materials, samples and other information (A) which are owned or controlled by Amira or its Affiliates during the term of the Agreement, or (B) which Amira or its Affiliates has the right to license or sublicense (including information or materials developed by Amira in the Development Program) and which in either case (C) relate to Meters or Test Strips or their manufacture or use in the Field. Amira Know-How shall not include the Amira Patent Rights.


"Amira Patent Rights" shall mean (i) the U.S. and foreign patent applications and patents listed on Exhibit B; (ii) any U.S. or foreign patent or patent application which claims an invention made or conceived and reduced to practice by one or more employees, agents or consultants of Amira or of an Amira Affiliate in the Development Program and related to Meters or Test Strips or their manufacture or use in the Field; and (iii) any substitution, continuation, continuation-in-part, or divisional application of any of the preceding, and any patent issuing thereon, including any reissue, reexamination, renewal or extension thereof.


"Amira Technology" shall mean the Amira Patent Rights and Amira Know How.


"Amira/Integ Invention" shall have the meaning as set forth in Section 7.1.3.


"Confidential Information" shall mean (i) any information related to Amira Technology, Integ Technology or the Development Program; (ii) any proprietary or confidential information or material in tangible form disclosed hereunder that is marked as "Confidential" or "Proprietary" at the time it is delivered to the receiving party, or (iii) proprietary or confidential


information disclosed orally hereunder which is identified as confidential or proprietary when disclosed and such disclosure of confidential information is confirmed in writing within thirty (30) days by the disclosing party.


"Costs" shall mean all of a Party's direct and indirect costs related to the manufacture of the Product(s), including without limitation, costs for personnel, materials, quality control, regulatory compliance, third party license royalties, administrative expenses, subcontractors, fixed and variable manufacturing overhead costs reasonably allocable to the manufacture of the Product(s), as determined in accordance with generally accepted accounting principles applied by that party on a consistent basis.


"Development Plan" shall have the meaning as set forth in Section 3.1.


"Development Program" shall have the meaning as set forth in Section 3.1.


"Effective Date" shall have the meaning as set forth in the Preamble.


"FDA" means the U.S. Food and Drug Administration or any corresponding foreign regulatory authority.


"Field" shall mean glucose monitoring utilizing Interstitial Fluid Samples.


"Integ" shall have the meaning as set forth in the Preamble.


"Integ Know How" shall mean any unpatented and/or non-patentable technical data, materials, samples and other information other than technical data, materials, samples and other information relating to infrared technology (A) which are owned or controlled by Integ during the term of the Agreement, or (B) which Integ has the right to license or sublicense, including information or materials developed by Integ in the Development Program, and which in either case (C) is useful in the Field. Integ Know-How shall not include the Integ Patent Rights.


"Integ Patent Rights" shall mean (i) the U.S. and foreign patent applications and patents listed on Exhibit C; (ii) any U.S. or foreign patent or patent application which claims an invention (other than an invention relating to infrared technology) made or conceived and reduced to practice by one or more employees, agents or consultants of Integ or of a Integ Affiliate in the Development Program and useful in the Field; and (iii) any substitution, continuation, continuation-in-part, or divisional application of any of the preceding, and any patent issuing thereon, including any reissue, reexamination, renewal or extension thereof.


"Integ Technology" shall mean the Integ Patent Rights and Integ Know How.


"Interstitial Fluid Samples" means interstitial fluid samples containing, at most, contaminating amounts of other substances, including without limitation, blood.


-2-


"Manufacturing Plan" shall have the meaning as set forth in Section 5.1


"Meters" shall mean any device for measuring glucose in Interstitial Fluid Samples.


"Party" shall mean Integ or Amira, as the case may be.


"Parties" shall mean Integ and Amira.


"Product(s)" shall mean Meters, Samplers, and Test Strips.


"Sampler(s)" shall mean any device for extracting an Interstitial Fluid Sample which incorporates a means for delivering such sample to a Test Strip, and may include a component for incorporation into Meters.


"Territory" shall mean worldwide.


"Test Strip(s)" shall mean any device to which an Interstitial Fluid Sample is applied, which incorporates a means for delivering such sample to a specific area for analysis by a Meter.


"Third Party(ies)" shall mean any person or entity other than Amira, Integ and their respective Affiliates.


2. OPTION


As a condition and inducement to Amira's and Integ's entering into this Agreement and incurring the obligations set forth herein, concurrently with the execution and delivery of this Agreement, Amira and Integ are entering into an Option Agreement (the "Option Agreement") in the form of Exhibit A hereto.


3. DEVELOPMENT PROGRAM


3.1 Development Program Activities. Subject to the terms and conditions set forth herein, the Parties shall perform research, conduct development, and commercialize Products pursuant to the Development Plan. Such activities shall comprise the "Development Program" and shall be conducted primarily at Integ's facility. The Parties shall use reasonable efforts to conduct the Development Program in accordance with the Development Plan set by the Development Committee, and shall use reasonable efforts to comply with all submission procedures to the appropriate regulatory authorities, to respond timely to inquires of said regulatory authorities and to maintain submissions and support new submissions. The Parties shall keep the Development Committee reasonably informed of the progress of the Development Program and shall provide the Development Committee a reasonable opportunity to review and comment on Product research and development, study designs, clinical trials, submissions, launch and other relevant factors.


-3-


3.2 Development Plan. The Parties will conduct the Development Program in accordance with a plan approved by the Development Committee (the "Development Plan"). The Development Plan shall establish: (i) a budget for the Development Plan and proposed funding, (ii) the scope of the development which will be performed including any Product development specifications, (iii) objectives, work plan activities and time schedules with respect to Product development, clinical trials, FDA submission and commercial launch; and (iv) the number of Integ and Amira employees necessary for the Development Plan, if different from the requirements of Sections 3.5.1 and 3.5.2. The Development Committee shall review the Development Plan on an ongoing basis and may make changes to the Development Plan then in effect as it deems appropriate. Each year during the Development Program prior to the end of the tenth month of such year, the Development Committee shall agree on an annual Development Plan for the following calendar year. During the term of the Development Program, the Development Committee may agree to change the activities of the Development Program. In such event, subject to the provisions of Section 3.5, the parties shall discuss and agree on (i) the objectives of the redirected Development Program, and (ii) additional funding, if any, which will be made by each Party in support of the Development Program. The Parties shall meet and negotiate in good faith, within ninety (90) days of the Effective Date, an initial Development Plan that shall include at least the following:


3.2.1 Integ Development Responsibilities. Integ shall be responsible for:


(a) development of the Sampler;


(b) design and manufacturing development of a means to integrate the
Sampler and Test Strips;


(c) mechanical design of the interface of the Meter system with the
Sampler;


(d) manufacture of the packaged and sterile Sampler, including a Sampler
incorporating the Test Strip; and


(e) payment of all royalties due any Third Parties with respect to Integ
Technology in existence as of the Effective Date necessary for the
manufacture, use or sale of the Products.


3.2.2 Amira Development Responsibilities. Amira shall be responsible for:


(a) development and calibration of a sterilizable Test Strip;


(b) Test Strip manufacturing and scale-up and bulk shipping system
development;


(c) defining Test Strip environmental and packaging requirement inputs for
the Sampler;


(d) development of Meter electronics, optics, calibration and software;


(e) management of ongoing Meter contract manufacturing;


-4-


(f) if required under Section 6.3, manufacture of the Sampler, including
Samplers which incorporate the Test Strip;


(g) filing and holding title to all regulatory submissions in its name in
connection with the Development Program;


(h) labeling and packaging the Products for final sale;


(i) marketing, sales, distribution and customer service of the Products;
and


(j) payment of all royalties due any Third Parties with respect to Amira
Technology, or Integ Technology developed after the Effective Date,
necessary for the manufacture, use or sale of the Products.


3.3 Development Committee.


3.3.1 Membership. The Development Committee shall be comprised of two representatives from Amira and two representatives from Integ. Amira and Integ may replace its Development Committee representatives at any time, with written notice to the other party. Amira may also have one additional representative with visitation rights to the Development Committee.


3.3.2 Decisions. Each representative of Amira and Integ shall have one vote on the Development Committee, which vote may be cast by proxy. Decisions of the Development Committee shall be made by majority vote. A unanimous vote of the Development Committee shall be required for the following: (i) the selection of milestones with respect to research regarding Product manufacture development; and (ii) any redirection or expansion of the Development Program beyond those activities and responsibilities described in the initial Development Plan, which by their actions cause the Parties to spend unforeseen amounts. In the event that the Development Committee fails to reach a majority (or, if applicable, unanimous) consensus on a decision required pursuant to this Agreement, the Development Committee shall notify the Chairman of the Board of Directors of each of Integ and Amira in writing of such failure and of all information relevant to such decision. The respective Chairmen shall then attempt in good faith to reach a unanimous consensus on such decision. Failure of the Development Committee or the parties' respective Chairmen to reach a consensus on any such decision shall not be considered a breach of this Agreement.


3.3.3 Responsibilities. It will be the responsibility of the Development Committee, among other things, to (i) oversee the conduct of the Development Program, and (ii) prepare and approve the Development Plan and the detailed working program (including timetables) to be carried out. The activities conducted in connection with the Development Plan shall be monitored by the Development Committee and periodically reviewed.


3.3.4 Meetings. During the term of this Agreement, the Development Committee shall meet quarterly, or more often as may be necessary, to discharge its


-5-


responsibilities. Such meetings shall take place in St. Paul, Minnesota, or such other locations as the parties agree, or by way of video or telephone conference if practicable. Each Party will pay its own expenses in connection with these meetings. Amira shall prepare minutes of the Development Committee meetings covering all essential points discussed, which minutes shall be approved and signed by a Development Committee representative of each Party.


3.4 Records; Exchange of Information.


3.4.1 Records. The Parties shall maintain (i) financial records in sufficient detail to establish how the budgeted Development Program funds are expended, and (ii) scientific records as will properly reflect all work done and results achieved in the performance of the Development Plan (including all data in the form required under any applicable governmental regulations). During the term of this Agreement, the Parties shall provide each other access to such records, upon reasonable prior request, during ordinary business hours.


3.4.2 Reports. The Development Committee shall periodically and not less often than semiannually during the term of the Development Program, request and the Parties shall have the obligation to prepare and provide to the Development Committee written reports summarizing the progress of the research performed pursuant to the Development Plan during the preceding half-year.


3.5 Development Program Contributions and Funding. Each Party shall independently bear the costs and contribute the necessary resources for the development activities for which each party is responsible, including (i) the necessary resources to most efficiently execute clinical trials, and (ii) the resources required for integration of their respective technologies into a Product and (iii) the resources required to complete its requirements under the Development Plan as set forth in Section 3.2.1 or 3.2.2 as the case may be. It shall be agreed that in no event shall Integ's contribution exceed its capital or resources existing as of the Effective Date. In the event that Integ exhausts its resources on the development of Products, satisfaction of current financial commitments, and maintenance of its public reporting responsibilities during the Development Program, (a) Amira shall not be entitled to conduct Integ's responsibilities under the Development Program primarily at Amira's facilities and (b) Amira will lend Integ the minimum funding required for Integ to produce annual audited and quarterly unaudited financial statements, file reports required under the Securities Exchange Act of 1934, comply with annual meeting requirements and comply with requirements of The Nasdaq Stock Market to retain a listing on one of Nasdaq's markets. Any such loan will be unsecured, will bear interest at the minimum rate necessary to avoid imposed interest and will be due 10 years after being loaned except that if Integ terminates this Agreement pursuant to Section 11.2, no amounts shall be payable to Amira under this loan.


3.5.1 Integ Employees. Integ shall devote the number of full time employees to work on the Development Program, primarily on-site at the Integ facility, as the Development Committee determines is necessary to effect the Development Plan. These employees will


-6-


remain full time employees of Integ and shall be 100% dedicated to the Development Program. Amira shall have the right, at its option and as approved by the Development Committee, to pay bonuses directly to key Integ employees. Such bonuses will be measured against development milestones to be defined in the Development Plan for the purpose of effecting the most rapid Product development.


3.5.2 Amira Employees. Amira shall devote the number of full time employees to work on the Development Program, on-site at Amira's facilities, as the Development Committee determines is necessary to effect the Development Plan. Amira shall also devote two (2) full time employees to work on the Development Program, primarily on-site at the Integ facility, for the purpose of completing the Development Plan. If the Development Committee determines that the Development Plan may proceed more expeditiously with the supply of additional Amira employees at Integ's facilities to conduct the Research Program, Amira shall devote more employees to work on the Development Program on-site at the Integ facility for the purpose of completing the Development Plan. All such employees will remain full time employees of Amira.


3.5.3 Non-solicitation. During the Development Program, Amira shall not, without Integ's prior written consent, directly or indirectly solicit (or attempt to solicit) Integ employees to leave their employment with Integ or hire any Integ employees.


4. LICENSE GRANTS


4.1 Integ License Grants.


4.1.1 Integ License to Amira.


(a) Integ hereby grants to Amira a non-transferable, exclusive
license, to use the Integ Technology for commercialization (including the
right to import, have imported, use, offer for sale, and sell products
which incorporate the Integ Technology) in the Field in the Territory.


(b) Integ hereby grants to Amira a non-transferable exclusive license,
with right of sublicense, under the Integ Technology to make and have made
products which incorporate the Integ Technology, including the Products, in
the Field in the Territory. Amira agrees not to exercise its rights under
Section 4.1.1(b) with regard to Samplers and Samplers integrated with Test
Strips, unless and until Amira has given Integ written notice pursuant to
Section 6.3 below, that Amira wishes to manufacture the Sampler, and
Samplers integrated with the Test Strip.


(c) The licenses granted to Amira pursuant to this Section 4.1.1 shall
terminate upon the occurrence of the events set forth in Section 4.4.3
hereof.


-7-


4.1.2 Sublicenses. Amira may sublicense the rights granted in Section 4.1.1 to its Affiliates and to Third Parties only in order to effectuate the manufacture and distribution of the Products. Each such sublicense shall be consistent with all the terms and conditions of this Agreement, and in particular Amira shall cause each sublicensee to agree not to exercise its rights under Section 4.1.1(b) unless and until Amira can exercise its rights under Section 4.1.1(b). Amira shall remain responsible to Integ for all of each such sublicensee's applicable financial and other obligations under the sublicense.


4.2 Amira License Grant.


4.2.1 Amira hereby grants to Integ a license, which shall be co-exclusive with Amira, with no right of sublicense, under the Amira Technology for research and development in the Field.


4.2.2 Amira hereby grants to Integ a license, which shall be co-exclusive with Amira, with no right of sublicense, under the Amira Technology to make, have made, use, import, have imported, or otherwise transfer physical possession of (bu ...