Document:

ex10-2.htm

    Exhibit
      10.2

     

    
      

      

    

     

    
      INTELLECTUAL
        PROPERTY SECURITY AGREEMENT

       

      This
        INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of August 8, 2007, (the
        "Agreement") between BRIDGE BANK, NATIONAL ASSOCIATION ("Lender"), on the
        one
        hand, and TELANETIX, INC. (“Telanetix”), AVS INSTALLATIONS, LLC (“AVS”) and
        UNION LABOR FORCE ONE, LLC (“ULF,” which, collectively with Telanetix and AVS
        are herein collectively referred to as "Grantor") on the other hand, is made
        with reference to the Loan and Security Agreement, dated as of August 8,
        2007
        (as amended from time to time, the "Loan Agreement'), between Lender and
        Grantor.  Terms defined in the Loan Agreement have the same meaning
        when used in this Agreement.

       

      For
        good
        and valuable consideration, receipt of which is hereby acknowledged, Grantor
        hereby covenants and agrees as follows:

       

      To
        secure
        the Obligations under the Loan Agreement, Grantor grants to Lender a security
        interest in all right, title, and interest of Grantor in any of the following,
        whether now existing or hereafter acquired or created in any and all of the
        following property (collectively, the "Intellectual Property
        Collateral"):

       

      (a)    copyright
        rights, copyright applications, copyright registrations and like protections
        in
        each work or authorship and derivative work thereof, whether published or
        unpublished and whether or not the same also constitutes a trade secret,
        now or
        hereafter existing, created, acquired or held (collectively, the "Copyrights"),
        including the Copyrights described in Exhibit A;

       

      (b)    trademark
        and
        servicemark rights, whether registered or not, applications to register and
        registrations of the same and like protections, and the entire goodwill of
        the
        business of Borrower connected with and symbolized by such trademarks
        (collectively, the "Trademarks"), including the Trademarks described in Exhibit
        B;

       

      (c)    patents,
        patent applications and like protections including without limitation
        improvements, divisions, continuations, renewals, reissues, extensions and
        continuations-in-part of the same (collectively, the "Patents"), including
        the
        Patents described in Exhibit C;

       

      (d)    mask
        work or
        similar rights available for the protection of semiconductor chips or other
        products (collectively, the "Mask Works");

       

      (e)    trade
        secrets, and any and all intellectual property rights in computer software
        and
        computer software products;

       

      (f)    design
        rights;

       

      (g)   claims
        for damages
        by way of past, present and future infringement of any of the rights included
        above, with the right, but not the obligation, to sue for and collect such
        damages for said use or infringement of the intellectual property rights
        identified above;

       

      (h)    licenses
        or
        other rights to use any of the Copyrights, Patents, Trademarks, or Mask Works,
        and all license fees and royalties arising from such use to the extent permitted
        by such license or rights;

       

      (i)    amendments,
        renewals and extensions of any of the Copyrights, Trademarks, Patents, or
        Mask
        Works; and

       

      (j)    proceeds
        and
        products of the foregoing, including without limitation all payments under
        insurance or any indemnity or warranty payable in respect of any of the
        foregoing.

       

      Grantor
        shall indicate the Grantor entity owning or holding title to each item of
        Intellectual Property Collateral when setting it forth or describing it as
        provided for herein.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      The
        rights and remedies of Lender with respect to the security interests granted
        hereunder are in addition to those set forth in the Loan Agreement, and those
        which are now or hereafter available to Lender as a matter of law or
        equity.  Each right, power and remedy of Lender provided for herein or
        in the Loan Agreement, or now or hereafter existing at law or in equity shall
        be
        cumulative and concurrent and shall be in addition to every right, power
        or
        remedy provided for herein, and the exercise by Lender of any one or more
        of
        such rights, powers or remedies does not preclude the simultaneous or later
        exercise by Lender of any other rights, powers or remedies.

       

      IN
        WITNESS WHEREOF, the parties have executed this Agreement as of the date
        first
        written above.

       

      
        	
                GRANTOR:

              	
                LENDER:

              
	
                TELANETIX,
                  INC., a California corporation

                 

                 

                By                                                               
                                      
                                                                                 

                Name:                                                                              
                                                                                   

                Title:                                                                                
                   
                                                                                 

              	
                BRIDGE
                  BANK, NATIONAL ASSOCIATION

                 

                 

                By                                                                                   

                Name:                                                                          

                Title:                                                                            

              
	 	 
	
                UNION
                  LABOR FORCE ONE LIMITED LIABILITY COMPANY, a New Jersey Limited
                  Liability
                  Company,

                By:  Telanetix,
                  Inc., its sole member

                 

                By                                                                                                                                                 

                Name:                                                                                                                                      

                Title:                                                                                                                                             

              	 
	 	 
	
                AVS
                  INSTALLATION LIMITED LIABILITY COMPANY, a New Jersey Limited Liability
                  Company,

                By:  Telanetix,
                  Inc., its sole member

                 

                By                                                                                                                                                    

                Name:                                                                                                                                  

                Title:                                                                                                                                             

              	 
	 	 
	
                Address
                  for Notices:

                6197
                  Cornerstone Ct. E, Suite 108

                San
                  Diego, CA 92121

                Attn:
                  Mr. Rick Ono

                Tel:
                  (858) 362-2250

                Fax:
                  (858) _________

              	
                Address
                  for Notices:

                Attn:
                  Michael Field

                55
                  Almaden
                  Blvd.                                                 

                San
                  Jose, CA 95113

                Tel:
                  (408) 556-6501

                Fax:(408)
                  423-8520

              
	 	 

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        A

       

      COPYRIGHTS

       

      
        	
                Description

              	
                Registration/

                Application

                Number

              	
                Registration/

                Application

                Date

              
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

      

      

       

      

       

      
        	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      EXHIBIT
        B

       

      TRADEMARKS

       

      
        	
                Description

              	
                Registration/

                Application

                Number

              	
                Registration/

                Application

                Date

              
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

      

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        C

       

      PATENTS

       

      
        	
                Description

              	
                Registration/Application

                Number

              	
                Registration/

                Application

                DateExhibit 10.133

    
      

    

    Exhibit
      10.133

    

    LABORATORY
      CORPORATION OF AMERICA HOLDINGS

    and
      

    VYTERIS,
      INC.

    

    PRODUCT
      MARKETING AGREEMENT 

    
      

    

    

    This
      Agreement between Vyteris, Inc. (“Vyteris”) and Laboratory Corporation of
      America Holdings and its subsidiaries, (“LabCorp”) is entered into effective as
      of June 5, 2007 and sets forth the terms and conditions upon which Vyteris
      and
      LabCorp will work together on the marketing of Vyteris’s LidoSiteÒ
      product
      (the “Product”) to certain markets as further described herein. The parties
      agree as follows:

    

    
      	
              A.

            	
              The
                specific terms and conditions of Phase I (also referred to as the
“Market
                Uptake Phase”) of the business relationship contemplated by this Agreement
                are set forth in Exhibit A attached hereto. Additional terms and
                conditions applicable to Phase II (also referred to as the “Expanded
                Market Phase”) of the business relationship contemplated by this Agreement
                are subject to negotiation by both parties during the negotiation
                period
                described in Exhibit A. Any such additional terms and conditions
                will set
                forth in an Addendum to this Agreement or other written agreement
                signed
                by authorized representatives of both parties.

            
	 	 
	
              B.

            	
              Neither
                party shall assign or transfer this Agreement without the consent
                of the
                other party, which consent shall not be unreasonably withheld or
                delayed.

            
	 	 
	
              C.

            	
              Notices
                and other communications permitted or required under this Agreement
                will
                be deemed to be properly given if in writing and either delivered
                by hand
                or mailed by First Class U.S. Mail, postage prepaid, addressed to
                the
                parties as follows:

            

    

    

    
      	 	
              Vyteris :
                

            	
              Vyteris,
                Inc.

            
	 	 	
              13-01
                Pollitt Drive

            
	 	 	
              Fair
                Lawn, New Jersey 07410

            
	 	 	
              Attention:
                Timothy J. McIntyre

            
	 	 	 
	 	 	 
	 	
              LabCorp:

            	
              Laboratory
                Corporation of America Holdings

            
	 	 	
              430
                South Spring Street

            
	 	 	
              Burlington,
                North Carolina 27215

            
	 	 	
              Attention:
                Law Department

            

    

     

    
      	
              D.

            	
              This
                Agreement may not be amended or modified except by written agreement
                of
                both of the parties. 

            
	 	 
	
              E.

            	
              Neither
                party will be liable for any failure to perform under this Agreement
                due
                to strikes, fire, explosion, flood, riot, lock-out, injunction,
                interruption of transportation, unavoidable accidents, inability
                to obtain
                supplies at reasonable prices necessary to produce the Product or
                other
                reasons beyond the reasonable control of such party.

            
	 	 
	
              F.

            	
              Vyteris
                guarantees that the Product shall not be adulterated or misbranded
                within
                the meaning of the U.S. Food, Drug, and Cosmetic Act.

            
	 	 
	
              G.

            	
              If
                any terms of this Agreement are materially breached by either party
                and
                the parties cannot agree on a resolution, the non-breaching party
                may
                terminate this Agreement upon thirty (30) days prior, written notice
                to
                the breaching party, unless such breach has been cured to the reasonable
                satisfaction of the non-breaching party within such thirty (30) day
                period.

            

    

     

    
      
        
        

      

      
        Page
          1 of
          12

        
          

        

      

      
        
        

      

    

    
      LABORATORY
        CORPORATION OF AMERICA HOLDINGS 

      VYTERIS,
        INC.

      
        
          

        

         

      

    

    
      	
              H.

            	
              Vyteris
                warrants that during their applicable shelf life, the Product will
                conform
                with the Specifications set forth in the package insert. Furthermore,
                Vyteris hereby represents and warrants that, to its knowledge, the
                practice of any technology or patents licensed hereunder is and will
                be
                free of any infringement of patents of other persons. Vyteris hereby
                represents and warrants that, to its knowledge, the use or sale of
                any
                Product covered by this agreement is and will be free of any infringement
                of patents of other persons. Except as expressly set forth in this
                Agreement, neither party makes any representations or warranties
                with
                respect to the Product or otherwise in connection with this Agreement,
                and
                hereby expressly disclaims any implied warranties of merchantability
                and
                fitness for a particular purpose.

            
	 	 
	
              I.

            	
              Vyteris
                shall give LabCorp a 90 day written notification of any Product changes
                (or if such notice is not feasible, as much notice as is practicable
                under
                the circumstances).

            
	 	 
	
              J.

            	
              Vyteris
                agrees to defend, indemnify, and hold LabCorp and subsidiaries, directors,
                officers, employees, and agents wholly harmless from and against
                third-party claims, losses, lawsuits, settlements, demands, causes,
                judgments, expenses, and cost (including reasonable attorney fees),
                in
                each case in connection with any third party claims to the extent
                arising
                under or in connection with this Agreement in the event that such
                cost and
                liabilities are caused by a) Vyteris’ breach of any of its warranties in
                this Agreement, b) the failure of the Product to function in accordance
                with any written materials provided therewith or c) any negligence
                or
                willful misconduct of Vyteris. However, the foregoing rights to indemnity
                shall not apply to the extent that such claim, loss, lawsuit, or
                settlement results from LabCorp’s negligence or willful misconduct
                including, without limitation, the negligence of LabCorp’s employees, or
                from the modification of any Product of Vyteris by a third party
                not
                within Vyteris’ control or without Vyteris’ permission. In the event of a
                lawsuit or other action in connection with which LabCorp is seeking
                indemnification from Vyteris hereunder, LabCorp agrees to give timely
                notice of the lawsuit or action to Vyteris and to cooperate with
                Vyteris
                in the defense of the lawsuit or action.

            
	 	 
	
              K.

            	
              LabCorp
                agrees to defend, indemnify, and hold Vyteris and subsidiaries, directors,
                officers, employees, and agents wholly harmless from and against
                third-party claims, losses, lawsuits, settlements, demands, causes,
                judgments, expenses, and cost (including reasonable attorney fees),
                in
                each case in connection with any third party claims to the extent
                arising
                under or in connection with this Agreement in the event that such
                cost and
                liabilities are caused by a) LabCorp’s breach of any of its warranties in
                this Agreement, or b) negligence or willful misconduct of LabCorp.
                However, the foregoing rights to indemnity shall not apply to the
                extent
                that such claim, loss, lawsuit, or settlement results from Vyteris’s
                negligence or willful misconduct including, without limitation, the
                negligence of Vyteris’s employees, or from the modification of any Product
                of LabCorp by a third party not within LabCorp’s control or without
                LabCorp’ permission. In the event of a lawsuit or other action in
                connection with which Vyteris is seeking indemnification from LabCorp
                hereunder, Vyteris agrees to give timely notice of the lawsuit or
                action
                to LabCorp and to cooperate with LabCorp in the defense of the lawsuit
                or
                action.

            
	 	 
	
              L.

            	
              Either
                party may issue a press release or make public statements regarding
                this
                Agreement and the relationship between the parties. The parties shall
                mutually agree on the content of any press release. The initial press
                release to be issued by Vyteris upon signing of this Agreement is
                attached
                as Exhibit
                B,
                which press release has been approved by LabCorp. Any public statements
                made by either party shall generally match the content of an approved
                press release; to the extent that a public statement is to be made
                prior
                to approval of a press release, or if a public statement will differ
                materially from the content of an approved press release, the parties
                shall make good-faith efforts to reach prior agreement as to the
                content
                of such public statement.

            

    

     

    
      
        
        

      

      
        Page
          2 of
          12

        
          

        

      

      
        
        

      

    

    
      LABORATORY
        CORPORATION OF AMERICA HOLDINGS 

      VYTERIS,
        INC.

      
        
          

        

         

      

    

    
      	
              M.

            	
              NEITHER
                PARTY WILL BE LIABLE TO THE OTHER PARTY (NOR TO ANY PERSON CLAIMING
                RIGHTS
                DERIVED FROM SUCH OTHER PARTY’S RIGHTS) FOR CONSEQUENTIAL, PUNITIVE OR
                EXEMPLARY DAMAGES OF ANY KIND (INCLUDING WITHOUT LIMITATION LOST
                REVENUES
                OR PROFITS, LOSS OF USE, LOSS OF COST OR OTHER SAVINGS OR LOSS OF
                GOODWILL
                OR REPUTATION) WITH RESPECT TO ANY CLAIMS BASED ON CONTRACT, TORT
                OR
                OTHERWISE (INCLUDING NEGLIGENCE AND STRICT LIABILITY) ARISING FROM
                OR
                RELATING TO THE PRODUCT, OR OTHERWISE ARISING FROM OR RELATING TO
                THIS
                AGREEMENT, REGARDLESS OF WHETHER SUCH PARTY WAS ADVISED, HAD OTHER
                REASON
                TO KNOW, OR IN FACT KNEW OF THE POSSIBILITY THEREOF.

            
	 	 
	
              N.

            	
              Unless
                otherwise agreed to by the parties in writing, neither party transfers
                or
                licenses to the other party any rights in or to its patents, patent
                applications, copyrights, trademarks, trade secrets or other intellectual
                property rights. 

            

    

    

    

    
      	LABORATORY
              CORPORATION OF AMERICA HOLDINGS and its subsidiaries	 	
              VYTERIS,
                INC.

            
	 	 	 	 	 
	By:
              /s/ Benjamin
              R. Miller	 	By:
              /s/ Timothy
              J. McIntyre
	 	
              Benjamin
                R. Miller

            	 	 	
              Timothy
                J. McIntyre 

            
	Title:	
              Executive
                Vice President, Sales, Marketing and Managed Care

            	 	Title:	
              President
                and CEO

            
	 	 	 	 	 
	 	 	 	 	 
	Date:
              6/5/2007	 	Date:
              6/5/2007

    

    

    
      
        
        

      

      
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          3 of
          12

        
          

        

      

      
        
        

      

    

    LABORATORY
      CORPORATION OF AMERICA HOLDINGS 

    VYTERIS,
      INC.

    
      
        

      

       

    

    Exhibit
      A - Terms and Conditions for Phase I - Market Uptake Phase

    

    
      	
               

              Certain
                Definitions

               

            	
               

              “M.D.
                Office Market”
                means all medical doctor’s offices located in the Territory.
                Notwithstanding the foregoing, the M.D. Office Market does not include:
                (i) the offices of dermatologists, rheumatologists, oncologists,
                or
                orthopedic surgeons, (ii) ambulatory care centers or (iii) the in-patient
                hospital market. The M.D. Office Market also includes facilities
                which
                provide blood collection services (“Contracted Draw Sites”) but which are
                not physician’s offices or in-patient hospitals, to the extent that
                applicable regulations permit such facilities to administer the
                Product.

               

              LabCorp
                Rights Re: Rheumatology and Oncology Office Markets:
                During Phase I (as defined below), LabCorp may include any rheumatology
                or
                oncology office in its specific assessment areas. Any such office
                will be
                “carved out” of any Vyteris commercial arrangement during Phase I. If
                Vyteris receives a bona fide commercial offer with respect to the
                rheumatology or oncology office market during Phase I, Vyteris will
                offer
                LabCorp a “matching offer” option with 30 day trigger. Rights to this
                market will be mutually agreed to by the parties for Phase II.
                

               

              “Territory”
                means the United States and its territories and possessions.

               

            
	
               

              Overview

               

            	
               

              LabCorp
                will represent, market, and facilitate the selling of the Product
                in the
                M.D. Office Market for the indicated use of the Product as a local
                anesthetic prior to blood draws and/or venipuncture. 

               

              LabCorp
                will receive reimbursement for its time, energy and efforts to introduce
                the Product to the M.D. Office Market as provided herein.

               

              This
                Agreement provides for an initial “Market
                Uptake Phase”
                (also referred to as “Phase
                I”).
                Subject to mutual agreement, the parties may enter into an addendum
                to
                this Agreement covering a “Phase
                II”
                term (also referred to as the “Expanded
                Market Phase”),
                which will provide for an expanded marketing and supply arrangement
                to
                commence upon termination of Phase I. 

               

            
	
               

              Term
                and Termination

               

            	
               

              Phase
                I will have a term ending May 31, 2008, which term may be extended
                by
                mutual agreement of the parties. 

               

              The
                term of Phase II, and any renewals thereof, will be subject to the
                mutual
                agreement of the parties.

               

              The
                parties will have reciprocal rights to terminate this Agreement in
                the
                event of material breach by the other party, following written notice
                and
                opportunity to cure.

               

            

    

     

     

    
      
        
        

      

      
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    LABORATORY
      CORPORATION OF AMERICA HOLDINGS 

    VYTERIS,
      INC.

    
      
        

      

       

    

    
      	
               

              Phase
                I

               

               

              (Market
                Uptake Phase)

               

            	
               

              The
                primary purpose of the Phase I is to allow for mutual evaluation
                of the
                “in-market” clinical experience, projected full market demand, and
                reimbursement rates of the Product in the M.D. Office Market.

               

              Attached
                hereto as Exhibit
                A-1
                is
                the timetable of Phase I activities that is currently contemplated
                by the
                parties (the “Phase
                I Timetable”).
                Pursuant to the Phase I Timetable, the parties will introduce the
                Product
                into specific segments of the M.D. Office Market, selected by LabCorp.
                The
                parties will cooperate in good faith regarding any necessary adjustments
                to the Phase I Timetable; provided,
                however,
                that in no event will Phase I extend beyond May 31, 2008 unless agreed
                to
                by the parties in writing in their sole discretions.

               

              The
                parties will capture and measure key metrics during Phase I, as outlined
                in Exhibit
                A-2
                attached hereto (the “Phase
                I Metrics”),
                to predict future market adoption and penetration rates, and aid
                in
                determining Phase II commercial options and terms, in particular
                exclusivity minimums. Promptly after the date of this Agreement,
                the
                parties will work together to develop the methodology for collecting
                and
                measuring the Phase I Metrics, with the plan to be finalized in accordance
                with the timelines set forth in Exhibit
                A-1.

               

              [*]

               

            
	
               

              Phase
                II

               

               

              (Expanded
                Market Phase)

               

            	
               

              Upon
                compilation and review of all relevant Phase I Metrics and other
                Phase I
                data [*], the parties will enter into a 60 day negotiation period
                for the
                terms and conditions of an addendum to this Agreement covering Phase
                II
                with the following options: (i) terminate commercial activity, (ii)
                trigger a market exclusivity arrangement based on minimum purchases
                of
                Product or (iii) continue with a non-exclusive arrangement, subject
                to
                mutual agreement as to terms and conditions. [*]
                The parties acknowledge that this model may be in the form of a licensing
                arrangement, or an arrangement whereby LabCorp purchases the product
                from
                Vyteris for distribution to its clients and/or PSCs, subject to relevant
                regulatory and legal guidelines.

               

            

    

     

     

    

       

      *
        CERTAIN
        CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
        WITH
        THE SECURITIES AND EXCHANGE COMMISSION.

       

    

     

    
      
        
        

      

      
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          5 of
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      LABORATORY
        CORPORATION OF AMERICA HOLDINGS 

      VYTERIS,
        INC.

      
        
          

        

         

      

    

    
      	
               

              M.D.
                Office Market Exclusivity

               

            	
               

              Phase
                I Exclusivity.
                During Phase I, Vyteris will not permit any third party to market
                the
                Product in the M.D. Office Market. 

               

              §
                Vyteris
                Specialty Sales Initiative.
                For the avoidance of doubt, Vyteris’s in-house sales force will be free to
                conduct marketing and sales activity in accordance with Vyteris’s
                Specialty Sales Initiative (consisting of approximately 12 sales
                people
                covering: (i) medical specialties not included in the M.D. Office
                Market
                and/or (ii) geographical areas not covered by LabCorp sales
                representatives in Phase I. Vyteris will keep LabCorp informed of
                any
                leads in the M.D. Office Market for LabCorp services in geographical
                areas
                covered by Vyteris sales representatives, and will provide LabCorp
                with
                the opportunity to follow up on such leads. Vyteris will share data
                with
                LabCorp regarding its Specialty Sales Initiative experiences during
                Phase
                I as an additional data point for consideration by the parties in
                their
                negotiations regarding Phase II.

               

              Phase
                II Exclusivity.
                If
                the parties enter into an exclusive relationship for Phase II, LabCorp
                will maintain full exclusivity in the M.D. Office Market, subject
                to
                LabCorp committing to certain annual purchase order amounts and paying
                certain license fees, all to be specified in an Addendum to this
                Agreement
                to be agreed to by the parties in writing (the “Exclusivity
                Conditions”). [*]
                 If exercised, the exclusivity would continue on a year-to-year
                basis, subject to non-renewal by Vyteris each year if LabCorp has
                failed
                to meet the Exclusivity Conditions applicable to the preceding year.
                LabCorp may also elect to not renew exclusivity. If either party
                elects to
                non-renew exclusivity, it shall provide written notice to the other
                party
                not less than thirty (30) days prior to the anniversary renewal date.
                LabCorp will not have any rights to reinstate exclusivity in the
                event
                exclusivity is not renewed.

               

              General.
                The parties agree and understand that exclusivity will only apply
                to the
                marketing of the Product in and to the M.D. Office Market, and that
                Vyteris will not enter into a Market Evaluation or Marketing and
                Supply
                Agreement with any other individual or entity for the Product for
                the M.D.
                Office Market. 

               

            

    

     

    

       

      *
        CERTAIN
        CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
        WITH
        THE SECURITIES AND EXCHANGE COMMISSION.

       

    

     

    
      
        
        

      

      
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          6 of
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    LABORATORY
      CORPORATION OF AMERICA HOLDINGS 

    VYTERIS,
      INC.

    
      
        

      

       

    

    
      	
               

              Option
                to Add PSC Market Exclusivity

               

            	
               

              In
                addition to the M.D. Office Market, at
                such time as applicable regulations permit, LabCorp may elect to
                exercise
                an option for the exclusive right to offer the Product to the Patient
                Service Center market (the “PSC
                Market”)
                and to Contracted Draw Sites which would be permitted to administer
                the
                device pursuant to applicable regulations. This option will expire
                unless
                LabCorp elects to exercise the option by written notice to Vyteris
                on or
                before the end of the 60 day negotiation period for Phase II terms
                (noted
                above), (the “PSC
                Market Option End Date”),
                even if the required regulatory approvals have not been obtained
                by that
                date. 

               

              [*]

               

            
	
               

              LabCorp
                Responsibilities 

               

            	
               

              During
                Phase I:

               

              ·     
                LabCorp
                will provide Vyteris with adequate commitment, management support,
                and
                resources to insure an initial market entry program to enable a proper
                evaluation of a potential full market roll out.

               

              ·     
                LabCorp
                will assign a member of the LabCorp Executive Committee (Executive
                Vice
                President Sales and Marketing or delegate) to work with the Vyteris
                President (or delegate) co-chairing monthly operational reviews of
                the
                project and its progress.

               

              ·     
                LabCorp
                will identify medical doctor office practices which LabCorp sales
                management indicate are viable locations for use and evaluation of
                the
                Product (“Market
                Evaluation Sites”).

               

              ·     
                LabCorp
                sales staff and, where applicable, in-office phlebotomists, will
                work with
                Vyteris to introduce the Product to the Market Evaluation Sites and
                to
                facilitate the use and evaluation of the Product in those sites.
                The
                parties agree and acknowledge that LabCorp’s in-office phlebotomists will
                not administer the Product, but will work with the office staff to
                incorporate the Product into the specimen collection process.

               

              ·     
                LabCorp
                will regularly communicate with Vyteris re: customer inquiries, feedback
                from customers and third-party payors and other issues relevant to
                distribution and use of the Product.

               

            

    

     

    

       

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      LABORATORY
        CORPORATION OF AMERICA HOLDINGS 

      VYTERIS,
        INC.

      
        
          

        

         

      

    

    
      	
               

              Vyteris
                Responsibilities

               

            	
               

              During
                Phase I:

               

              ·     
                Vyteris
                will provide the Product to the Market Evaluation Sites. 

               

              ·     
                All
                distribution, billing, and customer service will be provided by a
                3rd
                party distribution company under Vyteris management.

               

              ·     Vyteris
                will provide commercially reasonable training and support of LabCorp
                phlebotomists and sales force and applicable office practice staff
                in the
                Market Evaluation Sites, consisting of:

               

              - “Live”
                training sessions,

               

              - In-practice
                training sessions, 

               

              - Evaluation
                Packets of the Product to Market Evaluation Sites, which will contain
                a
                limited supply of Product samples, and

               

              - Support
                Website with training videos.

               

              ·      
                Vyteris
                will provide a 24/7 support hotline for LabCorp phlebotomists, LabCorp
                sales force, office practice staff, and consumers.

               

              ·     
                Vyteris
                will provide all FDA required support and reporting (ADR’s), sample
                tracking, etc.

               

              ·     
                Vyteris
                will maintain product liability insurance coverage in the amount
                of
                $5,000,000 per incident.

               

              ·     
                Vyteris
                will regularly communicate with LabCorp re: customer inquiries, feedback
                from customers and third-party payors and other issues relevant to
                distribution and use of the Product.

               

              ·     
                Vyteris
                will provide a reimbursement “hotline” to triage reimbursement questions
                and issues, and will be responsible for guidance to Market Evaluation
                Sites on such issues.

               

              ·     
                Vyteris
                will provide “on the ground” executive management support on each of the
                regions to work with LabCorp regional management.

               

            

    

     

    
      
        
        

      

      
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      LABORATORY
        CORPORATION OF AMERICA HOLDINGS 

      VYTERIS,
        INC.

      
        
          

        

         

      

    

    
      	
               

              Product
                Pricing; Distribution

               

            	
               

              ·     
                Estimated
                Market Pricing:

                                
                

                            
                [*]

               

              ·     Sales
                Effort Fee Reimbursement to LabCorp: LabCorp
                will receive a payment of [*] for each physician office that agrees
                to
                participate in the Phase I Market Uptake evaluation, to compensate
                it for
                the time, effort and energy expended  [*]  The parties agree
                that this fee represents the Fair Market Value for such efforts by
                LabCorp.

               

              ·     
                Distribution:
                To
                be handled by third party distributor (e.g., Cardinal Health), per
                terms
                of agreement between Vyteris and the distributor.

               

              ·    
                Practice
                Billing for Product Provided in Evaluation Packet:
                Vyteris will provide guidance to Market Evaluation Sites regarding
                billing
                for administration of Product that was provided in the Evaluation
                Packet

               

            
	
               

              Training
                and Promotional Materials

               

            	
               

              Vyteris
                will pay for all base creative and training material creation and
                for
                direct costs of out-of-pocket reproduction of materials for phlebotomists,
                sales force, and/or any M.D. office materials with LabCorp brand.
                These
                budgets will be agreed to by LabCorp and Vyteris management committee
                before being expended.

               

            
	
               

              Branding

               

            	
               

              The
                Product will be Vyteris-branded. .
                LabCorp
                retains rights and option to elect LabCorp branding or co-branding
                with
                Vyteris if LabCorp moves to an exclusive status in Phase II. 

               

            
	
               

              Confidentiality
                of Terms

               

            	
               

              The
                financial terms of this Agreement shall remain confidential, except
                as
                disclosure may be required by applicable laws or to outside advisers
                with
                a reasonable need to know such information.

               

            

    

    

    

       

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        CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
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      LABORATORY
        CORPORATION OF AMERICA HOLDINGS 

      VYTERIS,
        INC.

      
        
          

        

         

      

    

    Exhibit
      A-1

    Phase
      I Timetable

    

    May
      16,
      2007: First Joint Sales/Operational Team Meeting

     

    May
      15 -
      June 15, 2007: Sales Advisory Meetings (Personal)

     

    June
      15:
      Assessment Accounts and Areas Identified

     

    July
      1:
      Metric Methodology Plan Finalized

     

    July
      15,
      2007: Initial Product Distribution Stocking

     

    August
      1,
      2007: Official MD Office Program Kick-off 

     

    [*]

     

    May
      1,
      2008 - Execution of Phase II agreement, commencement of Expanded Market
      Penetration Phase (or sooner upon completion of Phase II agreement)

    

     

    

       

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        CERTAIN
        CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
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        THE SECURITIES AND EXCHANGE COMMISSION.

       

    
      
        
          
          

        

        
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    LABORATORY
      CORPORATION OF AMERICA HOLDINGS 

    VYTERIS,
      INC

    
      
        

      

       

    

    Exhibit
      A-2

    Phase
      I Metrics

    

    The
      parties will work together to mutually agree on the methodology to identify
      and
      collect the quantitative data (“Metrics”) needed to fully evaluate the use and
      acceptance of the Product by the Market Evaluation Sites to determine whether
      and how to move forward into Phase II.

     

     

    
      	 	
              
                ·

              

            	
              Phase
                I Metrics:

            
	 	 	 	 [*]
	 	 	 	 

    

     

     

     

    

       

      *
        CERTAIN
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        WITH
        THE SECURITIES AND EXCHANGE COMMISSION.

       

    
      
        
          
          

        

        
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    LABORATORY
      CORPORATION OF AMERICA HOLDINGS 

    VYTERIS,
      INC.

    
      
        

      

       

    

    Exhibit
      B

    Initial
      Vyteris Press Release

    

    [To
      be
      finalized by mutual agreement of the parties]

    
 

     

     

     

     

     

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