EXHIBIT 99.3
AGREEMENT FOR GLOBAL RESOLUTION AND
MUTUAL RELEASE OF ALL CLAIMS
This Agreement for Global Resolution and Mutual Release of All Claims
(the "Global Resolution Agreement") is made and entered into as of December 23,
2003, by and between Cygnus, Inc., a Delaware Corporation with its principal
place of business at 000 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000
("Cygnus") and Sankyo Pharma Inc., a Delaware Corporation with its principal
place of business at Xxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 ("Sankyo
Pharma"). Cygnus and Sankyo Pharma may be referred to herein individually as a
"Party" and collectively as the "Parties."
RECITALS
WHEREAS:
A. On or about November 28, 2001, Sankyo Pharma and Cygnus entered into a
contract creating a business relationship between the Parties;
B. On or about October 6, 2003, Cygnus filed a complaint in the Superior
Court for the State of California for the County of San Mateo, captioned Cygnus,
Inc. v. Sankyo Pharma Inc. and Sankyo Co. Ltd., Case No CIV 434656 (the
"Matter"). Sankyo Pharma filed an answer and cross-claims against Cygnus in the
Matter. The complaint and the allegations, causes of action, and claims for
relief alleged, or which could have been alleged, in the Matter or as
cross-claims to the Matter are collectively referred to as the "Action";
C Cygnus and Sankyo Pharma each desire to resolve finally all asserted or
potential disputes or claims that did, could or might arise from or relating to
their business relationship or the Action on the terms and conditions set forth
below, and each desires to obtain full, final and mutual releases from the other
regarding any and all claims related to or that might have arisen from the
Action or as a result of the business relationship by and between Cygnus and
Sankyo Pharma;
NOW, THEREFORE, in consideration of the terms and conditions set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby stipulate and agree as
follows:
1. Dismissals. Upon the full execution of this Global Resolution
Agreement, Cygnus shall deliver to Sankyo Pharma an executed dismissal with
prejudice of all claims in the Matter ("Cygnus Dismissal") that shall be
complete in all respects and ready for filing with the Superior Court of
California for the County of San Mateo, and Sankyo Pharma shall deliver to
Cygnus a dismissal with prejudice of all claims in the Matter ("Sankyo Pharma
Dismissal") that shall be complete in all respects and ready for filing with the
Superior Court of California for the County of San Mateo, both dismissals shall
be made consistent with Section 581 of the California Code of Civil Procedure.
The dismissals shall be held by counsel for each Party until completion of
payment as set forth in Paragraph 11 has occurred and been confirmed in writing
by Cygnus, at which time the dismissals shall be
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filed with the Superior Court of California for the County of San Mateo. Each
Party shall bear its own attorneys' fees and costs incurred in the Action.
2. Termination of Agreements. As of the date of the full
execution of this Global Resolution Agreement, the Parties acknowledge and agree
that the Sales, Marketing and Distribution Agreement executed by Cygnus and
Sankyo Pharma on or about July 8, 2002 ("Sales, Marketing and Distribution
Agreement"), the First Amendment to the Sales, Marketing and Distribution
Agreement executed on January 23, 2003, the Memorandum of Understanding
(TheraCom) executed on January 23, 2003, the Supply Agreement executed by Cygnus
and Sankyo Pharma on or about January 23, 2003 ("Supply Agreement"), and the
letters dated March 19, 2003, concerning purchases and deferrals, and any and
all licenses to patents and other licenses granted in such agreements, and any
and all other contracts, agreements, purchase orders, obligations, promises or
other purported basis of obligation (collectively, the "Sankyo Pharma-Cygnus
Agreements"), except as expressly set forth in Paragraphs 16 and 17 of this
Global Resolution Agreement, are hereby unequivocally terminated and rendered
without validity, force or effect (specifically including all provisions
relating to any rights or obligations that may survive termination of any of the
Sankyo Pharma-Cygnus Agreements). Any use of text, terms or language, sections
or sub-sections derived from the Sankyo Pharma-Cygnus Agreements in this Global
Resolution Agreement or elsewhere shall in no way be deemed a resurrection or
incorporation into this Global Resolution Agreement of any aspect of the Sankyo
Pharma-Cygnus Agreements for any reason, absent an express intent to do so set
forth in this Global Resolution Agreement.
3. Sales, Marketing and Distribution Activity. Concurrent with
the full execution of this Global Resolution Agreement, Sankyo Pharma shall
discontinue all sales, marketing, distribution, including but not limited to
distribution of Product by the Sankyo Pharma sales force, promotion, educational
or other related activities for any of Cygnus' reverse iontophoresis (i.e.,
using electric current for sampling substance from a human) glucose monitoring
products, including, but not limited to, the GlucoWatch G2(R) Biographer
approved by the FDA on March 21, 2002 (the primary, re-usable glucose monitoring
component), the AutoSensor (the disposable, glucose monitoring component, sold
either alone or in combination with another product), and other accessories that
specifically relate to the GlucoWatch G2(R) Biographer, and upgrades thereto
(the "Product"), or any other Cygnus product, except as is expressly set forth
in this Global Resolution Agreement.
4. Distribution and Customer Services. Commencing with the full
execution of this Global Resolution Agreement, Sankyo Pharma agrees to provide
those certain services set forth in Exhibit A until the earlier of: (1) June 30,
2004, or (2) written notice from Cygnus to discontinue any service or obligation
that is set forth in Exhibit A (at which time Sankyo Pharma may discontinue
providing the service or obligation set forth in the written notice). If, at any
time before June 30, 2004, Cygnus determines that Sankyo Pharma may discontinue
providing all services and obligations set forth in Exhibit A, Cygnus shall send
Sankyo Pharma written notice that it may discontinue providing all services set
forth in Exhibit A (the "Cessation Notice"). The period of time between the full
execution of this Global Resolution Agreement and the earlier of (1) June 30,
2004, or (2) Sankyo Pharma's receipt of the Cessation Notice, shall constitute
the term of this agreement ("Term"). During the Term, Cygnus will undertake to
implement an alternative sales, marketing and
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distribution arrangement that would replace the services set forth in Exhibit A.
In all events, Sankyo Pharma shall discontinue performing all services set forth
in Exhibit A on or before July 1, 2004, and shall return to Cygnus all Product
remaining in its possession or control on that date, pursuant to Exhibit A.
5. Proceeds from Sales. The price for the sale of Product by
Sankyo Pharma to TheraCom is set forth in Exhibit E ("Price"). The Price shall
not be modified by Sankyo Pharma by more than 10% (higher or lower) without
prior written consent of Cygnus. For all Product sold by Sankyo Pharma to
TheraCom during the Term, Sankyo Pharma shall retain 70% and shall pay Cygnus
30% of all monies from such sales of Product. Within the first 7 calendar days
of every month during the Term, Sankyo Pharma shall provide Cygnus with a sales
report identifying the amount and type of Product sold to TheraCom for the
previous month, and shall pay Cygnus all amounts owed to Cygnus for sales made
during such month. In addition, Sankyo Pharma shall provide Cygnus with weekly
sales reports identifying the amount of sales, number of units sold each week,
and lot numbers for all such sales from Sankyo Pharma to TheraCom, as well as
the amount of sales and number of units sold from TheraCom to end-users of the
Product.
6. Licenses. Cygnus shall grant all necessary licenses or rights,
on a non-exclusive basis, to Sankyo Pharma sufficient to allow Sankyo Pharma to
fulfill the limited obligations set forth in Exhibit A. All licenses and rights
granted under this Paragraph will terminate at the end of the Term. No other
licenses or rights, whether express or implied, in Cygnus' intellectual property
are granted by Cygnus to Sankyo Pharma or its affiliates.
7. Inventory and Reports. Within a commercially reasonable period
of time after the full execution of this Global Resolution Agreement (not to
exceed 21 days), and again at the end of the Term, Sankyo Pharma will provide to
Cygnus the results of a physical inventory of all Product in its possession or
control. Each such inventory shall identify the type and amount and lot numbers
of all such Product as of the date of this Global Resolution Agreement and the
end of the Term, respectively. Upon receipt and review of either or both of the
inventory reports permitted herein, Cygnus shall have the right to audit, or
cause an independent auditor or other qualified agent to audit, at Cygnus'
expense, Sankyo Pharma's physical inventory and inventory records for the
Products to verify the inventory reports provided by Sankyo Pharma. Sankyo
Pharma agrees to cooperate in good faith with any such audit. Effective as of
the date of the full execution of this Global Resolution Agreement, title to all
Product in Sankyo Pharma's possession or control shall hereby transfer from
Sankyo Pharma to Cygnus. After title in such Product has transferred to Cygnus,
no Product may be shipped from CORD to TheraCom unless such shipment has been
approved in writing by Cygnus, which approval shall not be unreasonably
withheld, and in any case such approval shall be deemed granted 3 business days
after Sankyo delivers a written request for shipment to the person so designated
by Cygnus to receive such notice. Upon written request by Cygnus, Sankyo Pharma
will dispose of any AutoSensors that have become stale dated at Sankyo Pharma's
sole cost. Cygnus shall be under no obligation to replace any such stale-dated
AutoSensors. On or before January 15, 2004, Sankyo Pharma will provide Cygnus
with a written report of all Product sold during the fourth quarter of 2003.
Sankyo Pharma shall have until February 29, 2004, to collect all new and unused
Product in the possession of its sales force, and return such product to Sankyo
Pharma's inventory, and shall destroy all used Product in the
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possession of its sales force.
8. Contact Information. Within 30 calendar days of the full
execution of this Global Resolution Agreement, Sankyo Pharma will use
commercially reasonable efforts to provide Cygnus with a list of those
physicians and other medical personnel Sankyo Pharma, or anyone acting on Sankyo
Pharma's behalf or direction, has contacted regarding the Product. Sankyo Pharma
will provide, if possible, the name and address, the insulin-prescribing
category and the Product prescribing history for each such individual. Within 30
calendar days of the full execution of this Global Resolution Agreement, Sankyo
Pharma will also provide Cygnus with a list of all outside vendors and the
respective services Sankyo Pharma uses or has used to provide distribution and
customer service activities in connection with the Sankyo Pharma-Cygnus
Agreements, including a description of the services provided by each such
vendor. Additionally, within 14 calendar days of the full execution of this
Global Resolution Agreement, Sankyo Pharma and Cygnus will each provide the
other with a designated contact person in the event that there are issues to be
resolved with the distribution and customer service activities set forth in
Exhibit A.
9. Medical Reimbursements. Within 30 calendar days of the full
execution of this Global Resolution Agreement, Sankyo Pharma will provide Cygnus
with a written report of the status of its efforts to secure medical
reimbursement for purchase of the Product, including the names and contact
information for each of the medical and government plans Sankyo Pharma has
contacted.
10. No Assumption of Obligations. To the extent any Party entered
into any contract or arrangement with any third party in connection with any
obligations arising out of or relating to the Sankyo Pharma-Cygnus Agreements,
no other Party shall be required to assume any obligations pursuant to such
contract or arrangement. To the extent any Party who entered into any such
contract or arrangement with a third party is obligated to pay any money or take
any other action as a result of this Global Resolution Agreement, that Party is
solely responsible for undertaking the required action, and nothing in this
Global Resolution Agreement may be used to attempt to transfer that obligation
to any other Party.
11. Payment. Sankyo Pharma agrees to pay via wire transmission to
Cygnus the cash sum of $30,000,000 at the time that the Parties exchange the
dismissals required under Paragraph 1, and the executed signature pages of this
Global Resolution Agreement. The Parties expressly agree that no additional
payments of any type are due or owing by any Party pursuant to the Sankyo
Pharma-Cygnus Agreements (except for payments that may arise as contemplated in
this Global Resolution Agreement).
12. Release by Cygnus. For and in consideration of the terms and
provisions of this Global Resolution Agreement, Cygnus, on behalf of itself and,
as applicable, each of its employees, agents, attorneys, insurers, accountants,
heirs, executors, administrators, conservators, successors, assigns, current and
former directors and officers, stockholders and direct and indirect parents,
subsidiaries and affiliates, hereby fully and forever releases and discharges
Sankyo Pharma , each of its employees, agents, attorneys, insurers, accountants,
heirs, executors, administrators, conservators, successors, assigns, current and
former directors and officers, stockholders and direct and indirect parents,
subsidiaries and affiliates from and against any and all liability, claims,
demands, contracts, debts, obligations,
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damages, losses, actions, causes of action, or suits of whatever kind or nature,
whether known or unknown, that arise out of or relate to the Action, or the
business relationship by and between Cygnus and Sankyo Pharma (other than this
Global Resolution Agreement), as well as the causes of action that Cygnus has
asserted, or could have asserted, in the Action, and Cygnus covenants not to xxx
or otherwise institute or prosecute any legal, administrative or other
proceeding against Sankyo Pharma except as may be necessary to enforce the
provisions of this Global Resolution Agreement.
13. Waiver of Section 1542 of the Civil Code by Cygnus. Cygnus
expressly waives any and all rights and benefits conferred upon it by Section
1542 of the California Civil Code and any comparable provisions under the laws
of any other state with respect to the claims released in Paragraph 6 of this
Global Resolution Agreement. Section 1542 provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
Cygnus acknowledges that this knowing and voluntary waiver of Section 1542 and
any comparable provisions under the law of any other state is an essential and
material term of this Global Resolution Agreement, and that without such a
waiver this Global Resolution Agreement would not have been entered into.
14. Release by Sankyo Pharma. For and in consideration of the
terms and provisions of this Global Resolution Agreement, Sankyo Pharma, on
behalf of itself and, as applicable, each of its employees, agents, attorneys,
insurers, accountants, heirs, executors, administrators, conservators,
successors, assigns, current and former directors and officers, shareholders and
direct and indirect subsidiaries and affiliates, hereby fully and forever
releases and discharges Cygnus, each of its employees, agents, attorneys,
insurers, accountants, heirs, executors, administrators, conservators,
successors, assigns, current and former directors and officers, stockholders and
direct and indirect parents, subsidiaries and affiliates from and against any
and all liability, claims, demands, contracts, debts, obligations, damages,
losses, actions, causes of action, or suits of whatever kind or nature, whether
known or unknown, that arise out of or relate to the Action, or the business
relationship by and between Cygnus and Sankyo Pharma (other than this Global
Resolution Agreement), as well as the causes of action that Sankyo Pharma has
asserted, or could have asserted, in the Action, and Sankyo Pharma covenants not
to xxx or otherwise institute or prosecute any legal, administrative or other
proceeding against Cygnus, except as may be necessary to enforce the provisions
of this Global Resolution Agreement.
15. Waiver of Section 1542 of the Civil Code by Sankyo Pharma.
Sankyo Pharma expressly waives any and all rights and benefits conferred upon it
by Section 1542 of the California Civil Code and any comparable provisions under
the laws of any other state with respect to the claims released in Paragraph 6
of this Global Resolution Agreement. Section 1542 provides:
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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
Sankyo Pharma acknowledges that this knowing and voluntary waiver of Section
1542 and any comparable provisions under the law of any other state is an
essential and material term of this Global Resolution Agreement, and that
without such a waiver this Global Resolution Agreement would not have been
entered into.
16. Indemnification by Cygnus. Cygnus agrees that its obligation
to indemnify, hold harmless and defend that exists in Paragraph 12.1 of the
Sales, Marketing and Distribution Agreement of July 8, 2002 survives that
Agreement and continues forward consistent with this Global Resolution
Agreement. Additionally, Cygnus agrees to indemnify, hold harmless and defend
Sankyo Pharma, its affiliates and their respective officers, directors,
employees, agents and representatives from and against any and all liabilities,
losses, suits, claims, damages and expenses (including, without limitation,
attorneys' fees, expert fees and other disbursements) (collectively,
"Liabilities") asserted against or incurred by Sankyo Pharma arising from (a)
the use, distribution by Cygnus, marketing by Cygnus, field sales activity by
Cygnus, sale by Cygnus, repair or replacement, manufacture and/or supply of the
Product (including, without limitation, Liabilities relating to product
liability, product deficiencies and/or personal injury); (b) the breach by
Cygnus of any of its representations, warranties or other obligations under this
Global Resolution Agreement; (c) a claim by a third party that the marketing,
sales, use, offer for sale or sale of the Product in the Territory during the
Term or use of sales and marketing material created by Cygnus related to the
Product in the Territory during the Term infringes any patent, trademark,
copyright or other intellectual property rights of such third party; and/or (d)
any negligence or willful misconduct of Cygnus; except to the extent any such
Liabilities set forth above result from the breach by Sankyo Pharma of its
representations, warranties or obligations under this Global Resolution
Agreement or its negligence or willful misconduct, or its sale, marketing or
distribution of Product in a manner which is inconsistent with the terms of this
Global Resolution Agreement. THE INDEMNIFICATION PROVIDED HEREBY SHALL NOT BE
DEEMED TO INCLUDE INDEMNIFICATION FOR LOST PROFITS OR INDIRECT OR CONSEQUENTIAL
DAMAGES OF SANKYO. Any indemnification hereunder shall be net of any insurance
proceeds recovered by Sankyo Pharma. This indemnification obligation shall
survive the termination of this Global Resolution Agreement.
17. Indemnification by Sankyo Pharma. Sankyo Pharma agrees that
its obligation to indemnify, hold harmless and defend that exists in Paragraph
12.2 of the Sales, Marketing and Distribution Agreement of July 8, 2002 survives
that Agreement and continues forward consistent with this Global Resolution
Agreement. Additionally, Sankyo Pharma agrees to indemnify, hold harmless and
defend Cygnus, its affiliates and their respective officers, directors,
employees, agents and representatives from and against any Liabilities asserted
against or incurred by Cygnus, arising out of or relating to (a) the
distribution by Sankyo Pharma, marketing by Sankyo Pharma, field sales activity
by Sankyo Pharma, sale by Sankyo Pharma of Product; (b) the breach by Sankyo
Pharma of any of its
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representations, warranties or other obligations under this Global Resolution
Agreement; (c) a claim by a third party that use of sales and marketing material
created by Sankyo Pharma related to the Product in the Territory during the Term
infringes any patent, trademark, copyright or other intellectual property rights
of such third party; and/or (d) any negligence or willful misconduct of Sankyo
Pharma; except to the extent any such Liabilities set forth above result from
the breach by Cygnus of its representations, warranties or obligations under
this Global Resolution Agreement or its negligence or willful misconduct, or its
sale, marketing or distribution of Product in a manner which is inconsistent
with the terms of this Global Resolution Agreement. Sankyo Pharma further agrees
to indemnify, hold harmless, and defend Cygnus from any lawsuit or legal action
initiated by Sankyo Co., Ltd. arising out of or relating to the Action or the
business relationship between and among Cygnus, Sankyo Pharma and/or Sankyo Co.
Ltd. through the date of the full execution of this Global Resolution Agreement.
THE INDEMNIFICATION PROVIDED HEREBY SHALL NOT BE DEEMED TO INCLUDE
INDEMNIFICATION FOR LOST PROFITS OR INDIRECT OR CONSEQUENTIAL DAMAGES OF CYGNUS.
Any indemnification hereunder shall be net of any insurance proceeds recovered
by Cygnus. This indemnification obligation shall survive the termination of this
Global Resolution Agreement.
18. Non-Assignment of Claims. Each Party hereto represents and
warrants to each other Party hereto that no portion of any claim, right,
interest, demand, debt, liability, account, obligation or cause of action
released herein has been assigned, conveyed or transferred, by operation of law
or otherwise, to any other person or entity. In the event that any claim, demand
or suit should be made or instituted against any Party hereto because of any
such purported assignment, conveyance or transfer, the Party from whom such
assignment, conveyance or transfer was alleged to have occurred agrees to
indemnify and hold harmless the other Party against such claim, suit or demand
and to pay and satisfy any such claim, suit or demand, including all expenses of
investigation, attorneys' fees and costs.
19. Authority to Enter into Global Resolution Agreement. All
individuals signing this Global Resolution Agreement warrant and represent that
they have full authority to execute the same on behalf of the Party on whose
behalf each signs. Each Party hereto warrants and represents that it has full
power and authority to perform all obligations set forth in this Global
Resolution Agreement, and agrees to execute all documents and instruments
necessary to implement this Global Resolution Agreement.
20. Later Discovered Facts. The Parties are aware that they may
hereafter discover claims or facts in addition to or different from those they
now know or believe to be true with respect to the Matter, the Action, or any
aspect of the business relationship by or between the Parties. Nevertheless, it
is the Parties' intention to fully, finally, and forever settle and release all
such matters and all claims within the scope of the above releases that may
exist or may heretofore have existed.
21. Integrated Instrument. This Global Resolution Agreement
(including all Exhibits attached hereto) constitutes a single, integrated
written contract expressing the entire agreement of the Parties. No covenants,
agreements, representations, or warranties of any kind whatsoever, whether
express or implied in law or fact, have been made by any Party to this Global
Resolution Agreement, except as specifically set forth in this Global Resolution
Agreement. All prior or contemporaneous discussions or negotiations have been
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and are merged and integrated into, or are superseded by, this Global Resolution
Agreement.
22. No Oral Modification. This Global Resolution Agreement may not
be altered, amended, or extinguished except by a writing which expressly refers
to this instrument and is signed subsequent to the date of this instrument by
duly authorized representatives of the respective Parties.
23. Severability. If any provision of this Global Resolution
Agreement is held to be invalid, void, or unenforceable for any reason, the
balance of the provisions shall nevertheless remain in full force and effect and
shall in no way be affected, impaired, or invalidated.
24. Full Satisfaction. The consideration to be paid under this
Global Resolution Agreement, the releases of liability herein, and the
obligations required under this Global Resolution Agreement are acknowledged by
the Parties to be in full and complete settlement and satisfaction of all
claims, as released above.
25. No Admissions. The Parties understand and acknowledge that
this Global Resolution Agreement constitutes a compromise and settlement of
disputed claims and is not an admission of liability or wrongdoing by any Party.
The Parties agree that neither this Global Resolution Agreement nor any of its
terms shall be offered or received as evidence in any proceeding in any forum as
an admission or as other evidence of any liability or wrongdoing.
26. Counterparts. This Global Resolution Agreement may be executed
in counterparts and by facsimile signature, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
27. Headings. The headings and captions used in this Global
Resolution Agreement are for convenience only and shall not be deemed to affect
in any way the language of the provisions to which they refer.
28. Voluntary Execution. The Parties respectively represent and
warrant that:
28.1 No Party has made any statement or representation to
any other Party regarding any fact relied upon in entering into this
Global Resolution Agreement. This Global Resolution Agreement is made
without reliance upon any inducement, statement, promise, or
representation other than those contained within this Global Resolution
Agreement.
28.2 This Global Resolution Agreement is executed
voluntarily and without any duress or undue influence on the part of or
on behalf of the Parties hereto, with the full intent of releasing all
claims, except as expressly reserved herein.
28.3 The Parties have read this Global Resolution
Agreement.
28.4 The terms of this Global Resolution Agreement have
been reviewed by the respective counsel for the Parties prior to
signing, and each Party has had an
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opportunity to fully discuss the terms with counsel. The Parties agree
that, in any subsequent interpretation and construction of this
agreement, California Civil Code Section 1654 and any comparable
provisions under the laws of any other state shall not apply, and the
provisions of this Global Resolution Agreement shall not be construed
against any Party by virtue of its participation in the drafting of
this Global Resolution Agreement.
28.5 The Parties understand the terms and consequences of
this Global Resolution Agreement and of the releases it contains.
28.6 The Parties are fully aware of the legal and binding
effect of this Global Resolution Agreement.
29. Governing Law. This Global Resolution Agreement shall be
governed, construed and enforced in accordance with the laws of the State of
California, without giving effect to its choice of law provisions.
30. Dispute Resolution. The Parties agree that any dispute arising
from or relating to this Global Resolution Agreement shall be brought in the
Superior Court of California for the County of San Mateo if such court has
proper jurisdiction over the matter or property at issue or, in the event such
dispute must be resolved in federal court, the United States District Court for
the Northern District of California, San Francisco Division. In the event of any
legal action arising out of or relating to this Global Resolution Agreement, the
prevailing Party shall be entitled to a full recovery of its attorneys' fees
from the non-prevailing Party.
31. Publicity, News or Press Releases. The Parties expressly agree
and make a material part of the consideration for the benefit of the bargain
between or among the Parties for this Global Resolution Agreement that no Party,
or other entity or person under the direction or control of any Party
(including, but not limited to, any agent, employee, contractor, business
entity, and service provider under the control of any Party) shall publish,
display, or issue to any non-Party any statement, news release, press release,
publicity release, website posting, Internet communication, or other method of
dispersing information regarding the existence or any term or condition of this
Global Resolution Agreement, or any facts, opinions or circumstances related
thereto ("Published Release"), whether intentional, accidental or otherwise,
unless and until the Parties have arrived at an agreed upon text for such
Published Release, or for each of several Published Releases as the case may be.
Each such Published Release shall be attached in Exhibit D hereto and Exhibit D
shall set forth the time, manner, medium and proposed audience for each such
release as agreed to by the Parties.
31.1 After or simultaneous with the Published Releases set
forth in Exhibit D have been published, the Parties may find themselves
in need of generating additional statements to the public, specifically
to the U.S. Securities and Exchange Commission, market analysts, or the
Party's relevant marketplace. No such statement published to any
non-Party ("Individual Release") may contradict the letter, meaning or
spirit of any of the Published Releases, nor may any such Individual
Release incorporate language reasonably interpretable as aggressive,
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demeaning, disparaging, negative (whether under the aegis of opinion or
fact), impugning or otherwise derogatory to any other Party, its
people, culture, business, products or services, nor may it disclose or
state, or purport to disclose or state, any facts, circumstances,
assertions or opinions regarding the Matter, the Action, the business
relationship of the Parties or this Global Resolution Agreement in any
manner inconsistent with the Published Releases, absent agreement from
writing of the Parties.
31.2 The Parties agree that given the context of the
underlying dispute and issues raised therein, that breach of this
Paragraph or any of its subparts shall be deemed a conclusive material
breach of this Global Resolution Agreement, and shall entitle the
non-breaching Party to seek and obtain upon application injunctive
relief against such an Individual Release and against the breaching
Party, and the non-breaching Party shall be entitled to fully avail
itself of all other remedies that may be available under the law as
against the breaching Party.
32. Assignment. This Global Resolution Agreement shall not be
assignable by any Party without the prior written consent of the other Parties.
33. Change of Control. In the event of a Change of Control of
Cygnus at any time during the Term, all obligations, duties or responsibilities
owed by Sankyo Pharma under this Global Resolution Agreement shall become
immediately nullified and unenforceable.
34. For purposes of this Global Resolution Agreement, a "Change of
Control" shall mean an event where:
(i) any "Person(s)", meaning any natural person(s),
corporation(s), general partnership(s), limited
partnership(s), joint venture(s), proprietor-ship(s)
or business organization(s), acquires beneficial
ownership of capital stock of Cygnus entitling the
holder(s) thereof to at least fifty-one percent (51%)
of the voting power of the then outstanding capital
stock of Cygnus with respect to the election of
directors of Cygnus; or
(ii) Cygnus enters into a binding written agreement for a
merger, consolidation or similar transaction with
another Person (the "Acquiring Corporation") in
which:
(A) Cygnus is not the surviving corporation in
such transaction; or
(B) the members of the Board of Directors of
Cygnus prior to such transaction constitute
less than one-half of the members of the
Board of Directors of the Acquiring
Corporation following such transaction; or
(C) at least fifty-one percent (51%) of the
voting power of the outstanding capital
stock of the Acquiring Corporation with
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respect to the election of directors
following such transaction is held by
Persons who were shareholders of the
Acquiring Corporation prior to such
transaction; or
(iii) Cygnus enters into a binding written agreement for
the sale to any Person(s) in one or more related
transactions, properties or assets representing at
least fifty-one percent (51%) of Cygnus' consolidated
total assets as reflected on its most recent Annual
Report on Form 10-K or Quarterly Report on Form 10-Q,
provided that all or substantially all of the
properties and assets used in connection with Cygnus'
business are included in such transaction(s).
35. Confidentiality. Each Party agrees that any Proprietary
Information it has obtained or will obtain from any other Party is the
confidential property of the disclosing Party, and may not be used by the
receiving Party other than in connection with the activities contemplated under
this Global Resolution Agreement. Except as expressly permitted in this Global
Resolution Agreement, the receiving Party will hold in confidence and not use or
disclose any Proprietary Information of the disclosing Party and shall obtain
the prior written permission of the other party before releasing such
Proprietary Information to a third party. If such permission is granted, the
releasing Party shall ensure that the third party is bound to the same
obligations of confidentiality. The restrictions on use and disclosure of
Proprietary Information imposed upon a receiving Party under this Paragraph
shall continue in full force and effect during the Term and for a period of 5
years thereafter.
35.1 "Proprietary Information" of a Party means:
(i) all inventions, processes, materials, know-how, and
ideas of such Party;
(ii) non-public financial information concerning such
Party;
(iii) in the case of Cygnus, among other information,
Cygnus' research and development and new product
plans, and, in the case of Sankyo Pharma, among other
information, Sankyo Pharma's sales, marketing, and
distributions plans;
(iv) any other information designated as confidential by
such Party in writing; provided that Proprietary
Information shall not include any information that
is:
(A) already in possession of the receiving Party
at or before the time of disclosure
hereunder as shown by the receiving Party's
files existing at the time of disclosure
antedating the date of disclosure; or
(B) now or hereafter publicly known or otherwise
known by the receiving party through no
wrongful act of the receiving party
(provided that if Proprietary Information
becomes publicly
- 11 -
known, this shall not excuse a prior
disclosure by the receiving Party); or
(C) lawfully received by the receiving Party
from a third party without obligation of
confidence; or
(D) developed by the receiving Party or its
affiliates independent of any disclosure
made hereunder as shown by the receiving
Party's files; or
(E) required by law to be disclosed by the
receiving party, provided that the
disclosing party is given at least 10
calendar days written notice of the legal
requirement.
36. Force Majeure. No liability or loss of rights hereunder shall
result to any Party from delay or failure in performance (other than payment of
money) caused by governmental actions or restrictions (provided that any such
governmental action or restriction was not the result of actions of a Party to
this Global Resolution Agreement), war, terrorist activities, civil commotion,
riots, strikes, power outages, lock outs and acts of God such as fire, flood,
earthquakes, lightning, drought or other similar or dissimilar causes that are
beyond the control of the Parties (each, a "Force Majeure Act").
37. Nonemployment. During the Term and for a period 1 year
thereafter, no Party will employ any current employee of any other Party unless
agreed to in writing by such other Party.
38. Interpretation. The Parties agree that the rule of
construction to the effect that any ambiguities are resolved against the
drafting Party shall not be employed in the interpretation of this Agreement and
that the terms and conditions of this Agreement shall be construed fairly with
respect to the Parties hereto and shall not be construed in favor or against any
one Party, regardless of which Party was generally responsible for the
preparation of this Agreement.
IN WITNESS WHEREOF, this Global Resolution Agreement is hereby executed
as of the dates set forth below.
CYGNUS, INC. SANKYO PHARMA INC.
By : /s/ Xxxx X Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
------------------------------- ___________________________________
Print Name: Xxxx X Xxxxxxx Print Name: Xxxxxx X. Xxxxxxx
___________________________
Title: Chairman, President and CEO Title: President
_________________________________
Date: December 23, 2003 Date: December 23, 2003
__________________________________
- 12 -
Exhibit A to Global Resolution Agreement:
Distribution and Customer Services To Be Provided By Sankyo Pharma
1) Sankyo Pharma will continue to distribute the Product for the Term in
the Territory (defined as the United States and its territories and commonwealth
possessions only and does not include any other countries), from the existing
inventory as of the date of full execution of this Global Resolution Agreement,
and provide customer services, and otherwise comply with the obligations set
forth herein, specifically including, but not limited to:
a) fulfilling orders for Product from new or existing users of
the Product, and
b) issuing refunds for sales made prior to the end of the Term
using the same practices in effect on September 30, 2003.
During the Term, Sankyo Pharma will not sell or distribute any glucose
monitoring product of a party other than Cygnus, and shall comply with the
Quality Agreement attached to this Global Resolution Agreement as Exhibit F.
2) Distribution and customer service activities that Sankyo Pharma will
provide, or ensure the provision of, during the Term include but are not limited
to: Product storage at CORD, Product shipments from CORD to TheraCom, Product
order fulfillment to end-user customers by TheraCom, maintenance of the IVR
system by Intelemedia (provided that any changes to the IVR system must be first
approved in writing by Cygnus), maintenance of the xxxxxxxxxx.xxx website by N8
(provided that any changes to the website must be first approved in writing by
Cygnus), release of Product information from Saddle River, response to
healthcare professionals by PPD, and, on or before January 15, 2004, mailing of
the letter identified in Exhibit D to the same healthcare professionals who
received Sankyo Pharma's October 7, 2003 letter.
3) Sankyo Pharma shall not decrease either the range of services provided
or the level of resources dedicated to performing such distribution and customer
service activities during the Term. Furthermore, Sankyo Pharma shall only sell
Product to TheraCom and shall not supply or distribute Product through any other
source unless authorized in writing by Cygnus. Sankyo Pharma shall not
distribute any practice or sample Biographers unless so authorized in writing by
Cygnus.
4) Any and all costs associated with Sankyo Pharma's distribution and
customer service activities relating to the Product, as set forth in this
Exhibit A, shall be borne exclusively by Sankyo Pharma.
5) Within 15 calendar days of receiving written notice from Cygnus to
discontinue distribution of the Product, Sankyo Pharma shall return all Product
and any new and unused advertising, marketing, and promotional materials for the
Product maintained at the Sankyo Pharma distribution center, at Sankyo Pharma's
cost. All other materials will be destroyed by Sankyo Pharma.
6) To the extent Cygnus later distributes or causes to distribute any of
these returned Products or advertising, marketing, or promotional materials, and
such Products or materials
- 13 -
identify or reference Sankyo Pharma, Cygnus will either remove all such
references to Sankyo Pharma, or will provide written notice with all such
Products and materials that Sankyo Pharma is no longer distributing the Product.
7) Sankyo Pharma and Cygnus will each, at its sole cost and expense:
(a) comply with good business practices and all applicable laws
and regulations;
(b) promptly notify the other Party or its designee of any Product
complaints or adverse patient reactions and any
actual or potential governmental actions relevant to
any Product;
(c) not make any false claims, representations, warranties or
guarantees to any third party with respect to the
specifications, features, capabilities or intended
use of the Product; and
(d) keep for 5 years after termination of this Global Resolution
Agreement records of information relating to the
Product.
8) Adverse Event Reporting ("AER"). Sankyo Pharma shall report all
suspected AERs to Cygnus' Regulatory Department or its designee, via telephone
at 0-000-XXXXXXX or to such other number as Cygnus may designate, as soon as
possible but in no event later than 2 business days of receipt of such
information by any employee of Sankyo Pharma. AER shall mean any adverse medical
event in or complaint by a patient who uses the Product (as defined by Parts 803
and 820 of the U.S. Code of Federal Regulations Chapter 21 and any other
applicable definitions in regulations promulgated by the FDA) that require
reporting by Cygnus to the FDA. If requested, Sankyo Pharma will make reasonable
efforts to assist Cygnus, or its designee, in obtaining AER follow-up
information from reporters initially identified by Sankyo Pharma. Cygnus shall
retain responsibility for all FDA reporting requirements, and Sankyo Pharma
shall have no responsibility to report any AER to the FDA.
9) Regulatory Notification to Sankyo Pharma. Cygnus shall notify Sankyo
Pharma promptly (and in any event within two 2 business days) of its receipt of
information from the FDA:
(a) that raises any material concerns regarding the safety or
effectiveness of the Product or would affect Product labeling;
(b) that indicates a material liability for any Party arising in
connection with the Product;
(c) that, in Cygnus' opinion, is reasonably likely to lead to a
recall or market withdrawal of the Product;
(d) of any materially adverse action of the FDA or any other
governmental or regulatory authority relating to:
(i) inspections of manufacturing, distribution or other
related facilities;
- 14 -
(ii) inquiries concerning clinical investigation
activities (including inquiries of investigators,
clinical monitoring organizations and other related
parties); and
(iii) any communication specifically involving the
manufacture, marketing, sale, or distribution of the
Product or any other reviews or inquiries relating to
the Product;
(e) of a receipt of a "Warning Letter" or other correspondence
relating to the Product from the FDA or any other governmental
or regulatory authority in the Territory; and
(f) of an initiation of any governmental or regulatory authority
investigation, detention, seizure or injunction concerning the Product.
10) Prior to January 31, 2004, Cygnus shall place a written order for
2,880 (15 pallets) of GlucoWatch G2(R) Biographer Starter Kits, 46,080 (4
pallets) AutoSensors from lot # 50637, and 544 (2 pallets) Analyzers (Version
3.1) for distribution outside the United States, or for clinical trials
conducted by Cygnus at its sole expense, or for business evaluation by third
parties anywhere in the world. Within 7 days of receiving such order, Sankyo
Pharma shall ship the ordered Product to a location in the Territory specified
by Cygnus in the written order. The shipping cost for such Product shall be
borne by Cygnus. The order shall be placed with the contact person or other such
person so designated by Sankyo Pharma to receive such order.
- 15 -
Exhibit B to Global Resolution Agreement:
License From Cygnus of Requisite Rights
1) "Cygnus Know-How" shall mean all information and data, technical
information, trade secrets, specifications, instructions, processes, formulae,
materials, expertise and information (whether or not patentable) relating to the
Product, processes for its manufacture, its manufacture, development, use or
marketing or methods of using the Product known to Cygnus, an affiliate,
designee, licensee or sublicensee thereof as of the effective date of the Sales,
Marketing and Distribution Agreement or developed or acquired by Cygnus, an
affiliate, designee, licensee or sublicensee thereof at any time during the term
of either the Sales, Marketing and Distribution Agreement or this Global
Resolution Agreement.
2) "Cygnus Patent Rights" shall mean all U.S. patent rights owned or
controlled by or licensed to Cygnus or an affiliate thereof, as of the effective
date of the Sales, Marketing and Distribution Agreement or at any time during
the term of either the Sales, Marketing and Distribution Agreement or this
Global Resolution Agreement, relating to the Product, including, but not limited
to, its development, processes for its manufacture, use of the Product or
methods of using the Product as well as any improvements thereof. Cygnus Patent
Rights shall include all U.S. patents and U.S. patent applications, all U.S.
divisionals, U.S. continuations, U.S. substitutions, U.S. continuations-in-part,
U.S. re-examinations, U.S. reissues, U.S. extensions, U.S. registrations and the
like of the foregoing. Cygnus Patent Rights shall also include Cygnus', or any
affiliate's share of any U.S. patent rights relating to the Product jointly
owned by Cygnus or such affiliate of Cygnus. Attached hereto as Exhibit C is a
list of U.S. patents owned by Cygnus or licensed by Cygnus relating to the
Product as of the date of the full execution of this Global Resolution
Agreement. Cygnus Patent Rights shall not include any patent rights outside of
the United States.
3) Cygnus hereby grants to Sankyo Pharma the right to sell and market the
Product during the Term in the Territory under the terms and conditions set
forth herein. Cygnus also grants to Sankyo Pharma a non-exclusive license during
the Term in the Territory under all patents, know-how, trademarks, copyrights,
trade secrets, and all other intellectual property of any nature whatsoever
relating to the Product, including but not limited to Cygnus Patent Rights,
Cygnus trademarks, Cygnus copyrights, and Cygnus Know-How required to make, use,
sell, or offer for sale the Product. All such rights shall terminate at the
conclusion of the Term.
4) If Sankyo Pharma or Cygnus receives a claim that any Product infringes
upon a patent or copyright in the U.S., or that any Cygnus trademarks employed
with a Product infringe upon a registered trademark, service xxxx, logo or
protectable trade-dress of a third party in the U.S., ("Receiving Party"), the
Receiving Party will notify the other Party promptly in writing to ensure that
Cygnus has all necessary information and assistance and the authority to
evaluate and defend such claim. Cygnus, at its sole and absolute discretion,
shall determine what course of action it wishes to take in defending such a
claim including but not limited to litigation, license and the like. Cygnus
shall indemnify, defend and hold harmless Sankyo Pharma, and its officers,
directors, employees and agents with respect to such claims in accordance with
the terms and conditions of this agreement.
- 16 -
5) Cygnus and Sankyo Pharma each will purchase and maintain in full force
and effect, with a responsible insurance carrier, the insurance coverage and
amounts typical in the medical devices industry for the type of activities
performed by each of the Parties for similarly positioned and sized companies.
Specifically, Cygnus will be solely responsible for insuring against product
liability claims arising from, or relating to, Product in the Territory, and for
otherwise insuring the Product to which it takes title as a result of this
Global Resolution Agreement. Cygnus shall maintain product liability insurance
throughout the Term in an amount of at least ten million dollars ($10,000,000)
on a "per occurrence" basis with an insurance company rated at least A-3 by
Best's rating guide. Sankyo Pharma shall be added as an additional insured on
such insurance policy. Cygnus shall also maintain adequate property insurance
throughout the Term applicable to the Product to which Cygnus takes title as a
result of this Global Resolution Agreement. Sankyo Pharma shall maintain all
insurance necessary for its obligations throughout the Term in the Territory in
an amount of at least ten million dollars ($10,000,000) on a "per occurrence"
basis with an insurance company rated at least A-3 by Best's rating guide.
Cygnus shall be added as an additional insured of Sankyo Pharma's insurance
policy. Each Party shall provide the other with a certificate of each such
policy of insurance and shall keep such policy current. Each such insurance
policy shall provide for at least 30 calendar days prior written notice to
Cygnus and Sankyo Pharma of the cancellation or any substantial modification of
the terms of coverage.
- 17 -
Exhibit C to Global Resolution Agreement:
Cygnus' U.S. Patent List
- 18 -
EXHIBIT C
CYGNUS, INC.
U.S. PATENTS
(DECEMBER 15, 2003)
Owned by Cygnus:
U.S. 5,735,273, "Chemical Signal-Impermeable Mask," issued April 7, 1998
U.S. 5,771,890, "Device and Method for Sampling of Substances Using Alternating
Polarity," issued June 30, 1998
U.S. 5,827,183, "Method of Measuring Chemical Concentration Iontophoretically
Using Impermeable Mask," issued October 27, 1998
U.S. 5,954,685, "Electrochemical Sensor with Dual Purpose Electrode," issued
September 21, 1999
U.S. 5,989,409, "Method for Glucose Sensing," issued November 23, 1999
U.S. 6,023,629, "Method of Sampling Substances Using Alternating Polarity of
Iontophoretic Current," issued February 8, 2000
U.S. 6,141,573, "Chemical Signal-Impermeable Mask," issued October 31, 2000
U.S. 6,144,869, "Monitoring of Physiological Analytes," issued November 7, 2000
U.S. 6,180,416, "Method and Device for Predicting Physiological Values," issued
January 30, 2001
U.S. 6,201,979, "Chemical Signal-Impermeable Mask," issued March 13, 2001
U.S. 6,233,471, "Signal Processing for Measurement of Physiological Analysis,"
issued May 15, 2001
U.S. 6,272,364, "Method and Device for Predicting Physiological Values," issued
August 7, 2001
U.S. 6,298,254, "Device for Sampling Substances Using Alternating Polarity of
Iontophoretic Current,' issued October 2, 2001
U.S. 6,299,578, "Methods for Monitoring a Physiological Analyte," issued
October 9, 2001
U.S. 6,309,351, "Methods for Monitoring a Physiological Analyte," issued
October 30, 2001
-18a-
U.S. 6,326,160, "Microprocessors for Use in a Device for Predicting
Physiological Values," issued December 4, 2001
U.S. 6,341,232, "Methods for Producing Collection Assemblies, Laminates, and
AutoSensor Assemblies for Use in Transdermal Sampling Systems," issued
January 22, 2002
U.S. 6,356,776, "Device for Monitoring Physiological Analytes," issued March
12, 2002
U.S. 6,370,410, "Method of Producing an Assembly for Use in a Monitoring
Device," issued April 9, 2002
U.S. 6,391,643, "Kit and Method for Quality Control Testing of a Iontophoretic
Sampling System," issued May 21, 2002 (and U.S. Design Patent 438,807,
issued March 13, 2001)
U.S. 6,393,318, "Collection Assemblies, Laminates, and AutoSensor Assemblies
for Use in Transdermal Sampling Systems," issued May 21, 2002
U.S. 6,398,562, "Device and Methods for the Application of Mechanical Force to
a Gel/Sensor Assembly," issued June 4, 2002 (and U.S. Design Patent
437,603, Issued February 13, 2001)
U.S. 6,438,414, "Collection Assembles, Laminates, and AutoSensor Assemblies for
Use in Transdermal Sampling Systems," issued August 20, 2003
U.S. 6,529,755, "Chemical Signal-Impermeable Mask," issued March 4, 2003
U.S. 6,546,269, "Method and Device for Predicting Physiological Values," issued
April 8, 2003
U.S. 6,553,244, "Analyte Monitoring Device Alarm Augmentation System," issued
April 22, 2003
U.S. 6,561,978, "Devices and Methods for Frequent Measurement of an Analyte
Present in a Biological System," issued May 13, 2003
U.S. 6,587,705, "Biosensor, Iontophoretic Sampling System, and Methods of Use
Thereof," issued July 1, 2003
U.S. 6,594,514, "Device for Monitoring of Physiological Analytes," issued July
15, 2003
U.S. 6,595,919, "Device for Signal Processing for Measurement of Physiological
Analytes," issued July 22, 2003
U.S. 6,615,078, "Methods and Devices for Removing Interfering Species," issued
September 2, 2003
-18b-
U.S. 6,633,772, "Formulation and Manipulation of Databases of Analyte and
Associated Values," issued October 14, 2003
U.S. 6,653,091, "Method and Device for Predicting Physiological Values," issued
November 25, 2003
Exclusively Licensed from University of California:
U.S. 5,279,543, "Device for Intophoretic Non-Invasive Sampling or Delivery of
Substances," issued January 18, 1994
U.S. 5,362,307, "Method for the Iontophoretic Non-Invasive-Determination of the
In Vivo Concentration Level of an Inorganic or Organic Substance," issued
November 8, 1994
U.S. 5,730,714, "Method for the Iontophoretic Non-Invasive Determination of the
In Vivo Concentration Level of Glucose," issued March 24, 1998
U.S. 6,542,765, "Method for the Iontophoretic Non-invasive Determination of the
In Vivo Level of an Inorganic or Organic Substance," issued April 1, 2003
-18c-
Exhibit D to Global Resolution Agreement
Published Releases
(1) Joint press release
(2) Cygnus press release
(3) Joint letter to healthcare professionals who previously received
correspondence concerning the dispute between Sankyo Pharma and Cygnus
- 19 -
Sankyo Pharma contacts: Cygnus contact:
Xxxxxxxx Xxxxx Xxxxxxxx Xxxxx Corporate Communications
Hill & Xxxxxxxx Xxxx & Xxxxxxxx 000-000-0000
000-000-0000 000-000-0000
SANKYO PHARMA INC. AND CYGNUS, INC. ANNOUNCE GLOBAL RESOLUTION AGREEMENT
REGARDING DISTRIBUTION AND MARKETING OF GLUCOWATCH G2(R) BIOGRAPHER
PARSIPPANY, NJ and REDWOOD CITY, CA - December 23, 2003 - Sankyo Pharma Inc. and
Cygnus, Inc. (OTC Bulletin Board: CYGN) today jointly announced that an
agreement has been reached on the future distribution and marketing of Cygnus'
GlucoWatch G2(R) Biographer products in the United States. The agreement is
effective immediately and provides for Sankyo Pharma to pay Cygnus $30 million
and transfer title to Cygnus of all GlucoWatch G2 Biographer products currently
owned by Sankyo Pharma (approximately 20,000 G2 Biographers and 1 million
AutoSensors). In addition, Sankyo Pharma will provide transition services
related to distribution for up to six months. Patients and health care
professionals will continue to be able to obtain GlucoWatch G2 Biographer
products and support by calling 1-866-GLWATCH. The agreement between Cygnus and
Sankyo Pharma resolves all litigation between them and ensures an uninterrupted
supply of GlucoWatch G2 Biographer products and services.
"We believe a rapid settlement is in the best interests of people with diabetes
who are current or future users of the GlucoWatch G2 Biographer, as well as our
shareholders," stated Xxxx X Xxxxxxx, Chairman, CEO and President of Cygnus,
Inc.
"Patients are our number one priority so we are very pleased that this
settlement will enable those with diabetes who use the GlucoWatch G2 Biographer
to continue doing so," said Xxxxxx X. Xxxxxxx, President of Sankyo Pharma Inc.
ABOUT CYGNUS, INC.
Cygnus (xxx.xxxx.xxx and xxx.xxxxxxxxxx.xxx), founded in 1985 and headquartered
in Redwood City, California, develops, manufactures and commercializes new and
improved glucose-monitoring devices. The GlucoWatch G2(R) Biographer provides
frequent, automatic
-19a-
and non-invasive measurement of glucose levels. The Biographer is a prescription
device and is indicated as an adjunctive device to supplement blood glucose
testing to provide more complete, ongoing information about glucose levels.
SANKYO PHARMA INC.
Sankyo Pharma Inc. is dedicated to developing and marketing important
pharmaceutical products for the U.S. market. A national sales force of 550
representatives promotes Sankyo Pharma products, and they are supported by
dedicated managed care personnel.
Some of the statements in this news release, including in the documents
incorporated by reference, are forward-looking statements that involve risks and
uncertainties. These forward-looking statements include statements about Cygnus'
plans, objectives, expectations, intentions and assumptions and other statements
contained in this news release, including in the documents incorporated by
reference, that are not statements of historical fact. Forward-looking
statements include, but are not limited to, statements about the Cygnus'
capabilities and potential of the GlucoWatch G2 Biographer business; Cygnus'
ability to manufacture and commercially scale up the GlucoWatch G2 Biographer;
Cygnus' plans for commercialization alliances; Cygnus' ability to achieve market
acceptance of the GlucoWatch G2 Biographer; and the speed and potential results
of the regulatory process. In some cases, you can identify these statements by
words such as "may," "will," "should," "estimates," "predicts," "potential,"
"continues," "strategy," "believes," "anticipates," "plans," "expects,"
"intends" and similar expressions. Cygnus cannot guarantee future results,
levels of activity, performance or achievements. The actual results and the
timing of certain events may differ significantly from the results and timing
discussed in this news release.
NOTE: "GlucoWatch" and "G2" are registered trademarks of Cygnus, Inc.
END
-19b-
Cygnus, Inc.
Corporate Communications
000-000-0000
CYGNUS, INC. AND SANKYO PHARMA INC. SETTLE LAWSUIT REGARDING DISTRIBUTION AND
MARKETING OF GLUCOWATCH G2(R) BIOGRAPHER IN THE UNITED STATES
Redwood City, CA - December 23, 2003 - Cygnus, Inc. (OTC Bulletin Board: CYGN)
today announced a Global Resolution Agreement with Sankyo Pharma Inc. relating
to the future distribution and marketing in the United States of Cygnus'
GlucoWatch G2(R) Biographer. The agreement provides, upon execution, for Sankyo
Pharma to pay Cygnus $30 million in cash and transfer to Cygnus title of all
GlucoWatch G2 Biographer products currently owned by Sankyo Pharma
(approximately 20,000 G2 Biographers and 1 million AutoSensors). In addition,
Sankyo Pharma will provide transition services related to distribution of the
GlucoWatch G2 Biographer products for up to six months. Patients and health care
professionals will continue to be able to obtain GlucoWatch G2 Biographer
products and support by calling 1-866-GLWATCH. The agreement between Cygnus and
Sankyo Pharma is effective immediately and resolves all litigation between
Cygnus and Sankyo Pharma and ensures an uninterrupted supply of GlucoWatch G2
Biographer products and services to patients and healthcare professionals.
"Cygnus is dedicated to making the GlucoWatch G2 Biographer available for people
with diabetes because we believe that the information provided by frequent,
noninvasive and automatic glucose monitoring can be of great assistance in
improving diabetes management," stated Xxxx X Xxxxxxx, Chairman, CEO and
President of Cygnus, Inc. "We are convinced that a rapid settlement is in the
best interests of people with diabetes who are current or future users of the
GlucoWatch G2 Biographer, as well as our stockholders. We are currently in
discussions with companies regarding alternative sales, marketing and
distribution approaches in the United States and/or worldwide, and other
strategic alternatives. This agreement gives us a significant cash infusion,
reduces our liabilities by up
-19c-
to $48 million, and provides us with an adequate period of time in which to
pursue future arrangements," Xx. Xxxxxxx added.
ABOUT CYGNUS, INC.
Cygnus (xxx.xxxx.xxx and xxx.xxxxxxxxxx.xxx), founded in 1985 and headquartered
in Redwood City, California, develops, manufactures and commercializes new and
improved glucose-monitoring devices. Cygnus' products are designed to provide
more data to individuals and their physicians and enable them to make
better-informed decisions on how to manage diabetes. The GlucoWatch(R)
Biographer was Cygnus' first approved product. The device, its second-generation
model, the GlucoWatch G2(R) Biographer, and, in November 2003, the
third-generation Biographer, are the only products approved by the FDA that
provide frequent, automatic and non-invasive measurement of glucose levels. The
Biographer is a prescription device and is not intended to replace the common
"finger-stick" testing method, but is indicated as an adjunctive device to
supplement blood glucose testing to provide more complete, ongoing information
about glucose levels.
Some of the statements in this news release, including in the documents
incorporated by reference, are forward-looking statements that involve risks and
uncertainties. These forward-looking statements include statements about our
plans, objectives, expectations, intentions and assumptions and other statements
contained in this news release, including in the documents incorporated by
reference, that are not statements of historical fact. Forward-looking
statements include, but are not limited to, statements about the capabilities
and potential of the GlucoWatch Biographer business; our ability to manufacture
and commercially scale up the GlucoWatch G2 Biographer; our plans for
commercialization alliances; our ability to achieve market acceptance of the
GlucoWatch G2 Biographer; and the speed and potential results of the regulatory
process. In some cases, you can identify these statements by words such as
"may," "will," "should," "estimates," "predicts," "potential," "continues,"
"strategy," "believes," "anticipates," "plans," "expects," "intends" and similar
expressions. We cannot guarantee future results, levels of activity, performance
or achievements. Our actual results and the timing of certain events may differ
significantly from the results and timing discussed in this news release.
NOTE: "GlucoWatch" and "G2" are registered trademarks of Cygnus, Inc.
END
-19d-
December XX, 2003
Dear Health Care Professional,
We are writing to inform you that Sankyo Pharma Inc. and Cygnus, Inc. have
reached an agreement regarding the continued sales, marketing and distribution
of the GlucoWatch G2(R) Biographer in the United States. As part of a settlement
agreement that resolves all litigation between the parties, Cygnus will assume
responsibility for sales, marketing and distribution, and Sankyo Pharma will
provide distribution and customer services for the GlucoWatch G2(R) Biographer
for up to a six-month transition period as Cygnus develops an alternative sales,
marketing and distribution arrangement in the U.S. As a result of the settlement
agreement, Sankyo Pharma's sales force will no longer be supporting the
Biographer.
Please see our joint press release on this matter, attached for your
convenience.
You and your patients will continue to be supported by Cygnus via the toll-free
telephone number (0-000-XXXXXXX). There is a substantial inventory of G2(R)
Biographers and AutoSensors available by prescription so there should be no
interruption in supply for you or your patients.
At Sankyo Pharma, we are proud of the work we have done to help Cygnus introduce
the innovative GlucoWatch G2(R) Biographer. Sankyo Pharma is committed to the
discovery and development of important pharmaceutical products for the U.S.
market.
As more information becomes available, Cygnus will continue to keep you
informed.
Sincerely,
Xxxxx X. Xxxxxxx Xxxx Xxxxxxxx
Chief Operating Officer Vice President, Marketing &
Chief Financial Officer Commercial Operations
Cygnus, Inc Sankyo Pharma Inc.
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Exhibit E to Global Resolution Agreement
Product Pricing Schedule
PRODUCT UNIT PRICE TO THERACOM
Biographer $698.00
Individual AutoSensor $7.50
Analyzer $60.00
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Exhibit F to Global Resolution Agreement
Quality Agreement
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QUALITY AGREEMENT BETWEEN
SANKYO PHARMA INC. AND CYGNUS, INC.
PURSUANT TO THE SUPPLY AGREEMENT DATED JANUARY 23, 2003
AND ATTACHED THERETO AS EXHIBIT C
DISTRIBUTOR: Sankyo Pharma Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
XXX
SUPPLIER: Cygnus, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxx Xxxx, XX 00000
XXX
DATE: January 23, 2003
This Quality Agreement, made between the above-referenced Distributor and
Supplier as an Exhibit to the Supply Agreement, outlines requirements and
responsibilities for handling key quality systems necessary to support the
manufacturing, testing, release and distribution of the Product by the Supplier
and Distributor. The following requirements will be in effect unless otherwise
agreed to in writing by both parties. Capitalized terms used herein shall be
defined in the Supply Agreement, dated January 23, 2003, and the Sales,
Marketing and Distribution Agreement, effective July 8, 2002, between the
parties.
I. PROCESS CONTROL:
A. The Distributor shall follow Product specifications used for storage as set
forth in Appendix 1 to this Quality Agreement.
B. The Distributor shall pick, pack and ship each order of Product in
accordance with the Distributor's written procedures.
I. CHANGE CONTROL
A. The Distributor shall notify the Supplier in writing in advance of any
proposed changes to the storage, handling, transport and return of Product.
B. The Distributor shall notify the Supplier in writing in advance of any
changes to the facility or equipment that may have an impact on the
performance of Product.
C. The Supplier shall notify the Distributor in writing in advance of any
proposed changes in Product specifications that affect the stability,
storage, handling, transport and return of Product.
D. The Supplier shall notify the Distributor in writing in advance of any
changes to the facility or equipment that may have an impact on the
performance of Product.
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II. DISTRIBUTOR QUALITY AND REGULATORY REQUIREMENTS
A. The Distributor shall comply with all applicable laws and regulations in
force from time to time relating to the sale or distribution of Product
including, without limitation, any federal laws or regulations in force
which implement the Quality System Regulation (QSR 21) (CFR - Part 820)
effective June 1, 1997 and any government, regulatory, or licensing
requirements for such sale and distribution of the Product in the Territory.
B. The Distributor shall train personnel involved in the processing of Product
in their job specific responsibilities and all such training shall be
documented.
C. The Distributor shall use good housekeeping practices in the environment
where the Distributor stores Product and shall provide commercially
reasonable security to Product at the Distributor's premises.
D. The Distributor shall maintain written documentation conforming to the
Distributor's procedures attesting to the proper receipt and storage of
Product.
E. The Distributor shall maintain an adequate Preventive Maintenance and
Calibration program for any equipment used in the handling and storage of
Product.
F. The Distributor shall communicate in writing to the Supplier within seven
(7) business days upon receipt of Product that appears to be damaged or
otherwise altered.
G. The Distributor shall not alter in any way the Product, the packaging for
the Product or any instructions for use or other associated documentation or
literature provided by the Supplier relating to the Product.
H. The Distributor shall utilize validated shipping containers when shipping
the Product and shall ship Product to third-party customers as set forth in
Appendix 1 to this Quality Agreement.
The Distributor shall within five (5) business days notify the Supplier or its
designee of Product quality complaints not classified as adverse or unexpected
reactions, results or experiences and shall keep records of such Product quality
complaints.
III. SUPPLIER QUALITY AND REGULATORY REQUIREMENTS
A. The Supplier shall comply with all applicable laws and regulations in force
from time to time relating to the manufacturing, testing, release and
shipping, including, without limitation, any federal laws or regulations in
force which implement the Quality System Regulation (QSR) (21 CFR- Part 820)
effective June 1, 1997 and any government, regulatory, or licensing
requirements for the such manufacturing, testing, release and shipping of
the Product in the Territory.
B. The Supplier shall train personnel involved in the manufacturing and testing
of Product in their job specific responsibilities and all such training
shall be documented.
-21b-
C. The Supplier shall use good housekeeping practices in the environment where
the Supplier manufacturers and tests Product and shall provide commercially
reasonable security to Product at the Supplier's premises.
D. The Supplier shall maintain written documentation conforming to the
Supplier's procedures attesting to the proper manufacturing and testing of
Product.
E. The Supplier shall maintain an adequate Preventive Maintenance and
Calibration program for any equipment used in the manufacturing and testing
of Product.
F. The Supplier shall utilize validated shipping containers when shipping the
Product to the Distributor and shall ship Product as set forth in Appendix 1
to this Quality Agreement.
G. The Supplier shall perform a product release review to ensure that each
production run, lot, or batch of Product meets all Supplier established
acceptance criteria and QSR requirements (21CFR Section 820) prior to
commercial distribution.
H. The Supplier shall review, approve and provide with each Product shipment a
Certificate of Conformance (C of C) on Supplier letterhead.
I. The Supplier's Certificate of Conformance shall include the expiration date
of the product (where applicable) and a statement that the Product has been
manufactured, tested and released in accordance with Supplier established
acceptance criteria and QSR requirements (21CFR Section 820).
IV. QUALITY AND REGULATORY REQUIREMENTS OF BOTH PARTIES
A. Both parties ("the Inspected Party") shall, at reasonable intervals, allow
the other party (the "Inspecting Party") to audit or inspect the Inspected
Party's facility and Quality Assurance systems and provide to the Inspecting
Party a written response within thirty (30) calendar days of receipt of
written deficiencies on the audit or inspection by the Inspecting Party; and
within a mutually agreed upon schedule between the Inspected Party and
Inspecting Party, of such audit or inspection, the Inspected Party will
close out to the Inspecting Party's satisfaction any deficiencies of actions
to be corrected. For FDA inspections, the other party will review all
responses that address any FDA 483 observations prior to the Inspected Party
submitting a response to the FDA.
B. The Distributor and Supplier shall maintain for a minimum of five (5) years
after termination of this Agreement and shall make available to either party
accurate books, records, and accounts relating to manufacturing, testing,
release, sale and distribution of the Product. Upon termination of the
Supply Agreement, the Distributor and Supplier shall make copies of any such
books, records, and accounts if so requested by either party.
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V. KEY CONTACTS AND SIGNATURES
Sankyo Pharma Inc. (Distributor)
Signature: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx, Ph.D.
Title: Vice President, Regulatory Affairs
Date: 28 Jan 2003
Signature: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: VP Marketing & Commercial Ops
Date: 1/29/03
Cygnus, Inc. (Supplier)
Signature: /s/ X.X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: VP, RA/QA & Analytical Sciences
Date: 1-23-03
Signature: /s/ Xxxx X Xxxxxxx
Name: Xxxx X Xxxxxxx
Title: Chairman, President & CEO
Date: 1/23/03
APPENDIX 1 TO QUALITY AGREEMENT
Description of Supplier Storage and Delivery Requirements
Supplier
Product UOM Description Storage Minimum Life
Number Temperature Required to Ship
----------------------------------------------------------------------------------------------
2335-XX EA Biographer Starter Kit Ambient N/A
1890-XX CT AutoSensor (1O/CT) 2-8(degree)C [36-46(degree)F] 2 Months
1890-XX CT AutoSensor (16/CT) 2-8(degree)C [36-46(degree)F] 2 Months
0000-XX XX XX Test Kit Ambient 2 Months
2017-XX EA Analyzer Ambient N/A
Additional Requirements:
1, Ambient Product storage will be at <30(degree)C [<86(degree)F],
2. Product shipments will be tracked at the lot number level.
-21d-
