1
Exhibit 10.2
IMPLANTABLE PUMP LICENSE AND DISTRIBUTION AGREEMENT
This IMPLANTABLE PUMP LICENSE AND DISTRIBUTION AGREEMENT ("Agreement")
is made as of this 1st day of September, 1998 by and between MINIMED INC.
("MiniMed"), a Delaware corporation, and MEDICAL RESEARCH GROUP, LLC ("MRG"), a
California limited liability company, with respect to the following facts:
RECITALS
A. MiniMed has developed and holds available for license or sub-license
programmable implantable insulin pump system technology based, in part, on
technology described and claimed in certain invention disclosures, patent
applications and issued patents owned by MiniMed, Xxxxxx Xxxxxxxxxx Ltd. and The
Xxxxx Xxxxxxx University, including technology relating to MiniMed's MIP 2001
pump. Some of this technology has been licensed to MiniMed by Xxxxxx Xxxxxxxxxx
Ltd. and The Xxxxx Xxxxxxx University. MiniMed also has development activities
in process relative to the development of a constant flow implantable pump.
B. MRG is developing and holds available for license or sub-license that
certain long-term glucose sensor system technology based, in part, on technology
described and claimed in certain invention disclosures, patent applications and
issued patents owned by MRG, the Regents of the University of California and the
Xxxxxx X. Xxxx Foundation (the "Xxxx Foundation"). Some of this technology has
been licensed or sublicensed to MRG by the Regents of the University of
California and the Xxxx Foundation.
C. MRG has a staff of professionals experienced in the development of
medical devices and has facilities for the development and testing of such
devices.
D. MRG is developing electronic enhancements for the pump system.
E. MRG has granted MiniMed an option to acquire exclusive marketing
rights in MRG's long-term glucose sensor system technology in the Glucose Sensor
Option Agreement between them dated the same date as this Agreement.
F. MRG desires to obtain certain rights with respect to MiniMed's
implantable pump system business pursuant to an Agreement Re Implantable Pump
Business dated the same date as this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, and the
representations, warranties and covenants contained herein, and for other good
and valuable
2
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINITIONS
1.1 AFFILIATE. A Person, including Subsidiaries, that directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, the designated Party, but only for as long as such
control relationship exists. For purposes of this definition, "control" shall
include (a) in the case of a corporation, ownership of more than fifty percent
(50%) of the shares of stock entitled to vote for the election of directors, and
(b) in the case of any other business entity, ownership of more than fifty
percent (50%) of the beneficial interest in capital or profits. 1.2 CONFIDENTIAL
INFORMATION. All information of MRG or MiniMed that (a) is generally not
available from public sources, although information shall not cease to be
Confidential Information if it becomes publicly available as a result of a
breach of this Agreement, and (b) is either designated as Confidential
Information or, is of such nature or is disclosed in such manner that the fact
that it is not publicly available would be obvious to a reasonable person under
the circumstances. 1.3 COVERED APPLICATIONS. Applications of Licensed Products
for which MRG appoints MiniMed as a distributor. These applications may specify
the use of a particular drug, the treatment of a particular condition and/or the
use of drugs manufactured by a particular company. As provided in this Agreement
Covered Applications may be modified from time to time and may be exclusive or
non-exclusive.
1.4 EFFECTIVE DATE. The Effective Date shall be the date of this
Agreement.
1.5 ENHANCED PUMP. An apparatus or system which utilizes Pump
Technology for diabetes or non-diabetes applications or both in conjunction with
Enhancement Technology.
1.6 ENHANCEMENT TECHNOLOGY. Electronic enhancements for Pump
Technology that MRG develops as set forth in Section 4 and any subsequent
Improvements thereto.
1.7 EXCLUDED APPLICATIONS. Applications of Licensed Products
expressly excluded from the Covered Applications pursuant to Section 5.1 and
applications which become Excluded Applications in accordance with the terms of
this Agreement. These applications may specify the use of a particular drug, the
treatment of a particular condition and/or the use of drugs manufactured by a
particular company.
1.8 FDA. The United States Food and Drug Administration or any
successor agency having substantially the same authority.
Page 2 of 40
3
1.9 GLUCOSE CONTROLLER. An apparatus or system which utilizes
Glucose Sensing Technology to control an insulin infusion device in a human or
in an animal.
1.10 GLUCOSE MONITOR. Any monitor product utilizing Glucose
Sensing Technology to provide indications of glucose concentration or changes in
glucose concentration in a human or in an animal.
1.11 GLUCOSE SENSING TECHNOLOGY. Technology relating to
implantable glucose sensors intended to be used in vivo in humans or in animals
for a period of at least forty-five days before replacement, including
Improvements thereto.
1.12 GLUCOSE SENSOR OPTION AGREEMENT. The Glucose Sensor Option
Agreement dated the same date as this Agreement by and between MiniMed and MRG.
1.13 IDE. Approval from the FDA to conduct a clinical trial of a
medical device in humans under the Investigational Device Exemption regulations
adopted by the FDA.
1.14 IMPROVEMENT. Any change, addition or deletion in the design,
configuration, formulation, ingredients, components, or software of an apparatus
or system, or in the formulas, processes, procedures, methods or techniques used
in its manufacture, production or assembly that enhances the performance of an
apparatus or system or that makes it quicker, easier or less expensive to
manufacture, assemble, distribute, store, use or dispose of.
1.15 XXXXX XXXXXXX RIGHTS. All rights which MiniMed now has to
Technical Information as a result of or relating to any contract or agreement
with The Xxxxx Xxxxxxx University, including but not limited to a License
Agreement which The Xxxxx Xxxxxxx University and Pacesetter Systems, Inc.
entered into on February 13, 1980, the Addenda thereto executed December 1, 1981
and December 8, 1982, the Agreement Constituting Consent to Assignment dated
February 28, 1995, the Amendment to the 1980 License Agreement dated March 8,
1990 and the Novation Agreement made April 29, 1992, by and between The Applied
Physics Laboratories of The Xxxxx Xxxxxxx University and Pacesetter Systems,
Inc. and its successors, Pacesetter Infusion, Ltd. and MiniMed Technologies,
Ltd.
1.16 LICENSED PRODUCTS. Implantable microinfusion pump systems
intended for in vivo use in humans or in animals, including all accessories,
utilizing in whole or in part MiniMed's Pump Technology and/or Improvements
thereof and any Enhancement Technology and/or other technology developed by MRG
and/or Improvements of either of the foregoing that is incorporated into such
Products. Glucose Controllers, Glucose Monitors, Long-Term Glucose Sensors and
the abdominal lead that connects the implantable pump to a Long-Term Glucose
Sensor are not Licensed Products.
1.17 LICENSED PUMP RIGHTS. MiniMed's rights to any patent or
Technology included within MiniMed's Pump Technology.
1.18 LICENSED PUMP SALES. The U.S. dollar amount of gross
revenues from sales of the Licensed Products to Third Parties who are not
Affiliates of MiniMed by MRG or
Page 3 of 40
4
any of its Affiliates, excluding any amount paid to MRG or its Affiliates by the
Third Party for transportation; shipping and mailing costs; sales, use or excise
taxes; custom duties; tariffs or insurance and reduced by all amounts refunded,
allowed, credited or discounted with respect to such sales, whether or not the
sale occurred in the same accounting period.
1.19 LIST PRICE The price generally published from time to time
for a product offered for sale in a particular market and in particular
quantities to Third Parties unrelated to either Party who are not sales agents,
sales representatives, dealers or distributors, but instead utilize the product
for themselves or in providing medical care to unrelated persons.
1.20 LONG-TERM GLUCOSE SENSOR. Any sensor, the principal purpose
of which is to detect the presence of, or to measure the quantity of, or any
change in the quantity of, glucose in the body of a human or animal subject that
is intended to be used in vivo with a Licensed Product for at least 45 days
before replacement, including Improvements thereto.
1.21 XXXX FOUNDATION RIGHTS. All rights which MRG now has to
Technical Information as a result of or relating to any contract or agreement
involving the Xxxx Foundation, including but not limited to all rights under a
License Agreement dated February 6, 1996 between MRG and the Xxxx Foundation, as
amended April 17, 1998.
1.22 MRG'S GLUCOSE SENSING TECHNOLOGY. All rights which MRG now
has and hereafter develops or acquires to Glucose Sensing Technology, including
but not limited to, Xxxx Foundation Rights and UC Rights as such rights relate
to Glucose Sensing Technology. MRG's Glucose Sensing Technology shall not
include any glucose sensing technology under development, developed or licensed
by MiniMed.
1.23 MINIMED'S PUMP TECHNOLOGY. All rights which MiniMed has to
Pump Technology, including but not limited to, Xxxxx Xxxxxxx Rights and Xxxxxx
Xxxxxxxxxx Rights, as such rights relate to Pump Technology.
1.24 OPTION. The option granted by MRG to MiniMed to purchase
marketing rights to the Long-Term Glucose Sensor granted pursuant to Section 5.1
of the Glucose Sensor Option Agreement.
1.25 OTHER APPLICATIONS. Applications of Licensed Products which
are not Covered Applications or Excluded Applications. As provided in this
Agreement Other Applications may be modified from time to time.
1.26 PARTY. Either entity that is a signatory to this Agreement.
1.27 PMA. Approval from the FDA to commercially distribute a
medical device under the Pre Market Approval regulations.
1.28 PERSON. Any individual, partnership, association, joint
stock company, joint venture, limited liability company, corporation, trust,
unincorporated organization, other entity or government, or agency or political
subdivision, economic unit or entity thereof,
Page 4 of 40
5
including without limitation, each of the Parties to this Agreement and their
respective Affiliates.
1.29 PUMP TECHNOLOGY. Technology relating to implantable infusion
pumps developed or sold by MiniMed, as of the date of this Agreement, including
(i) MiniMed's MIP 2001 pump and successor products, and any subsequent
Improvements thereto, including accessories thereto, and (ii) a constant flow
pump under development by MiniMed.
1.30 REGULATORY APPROVAL. Approval by appropriate authorities to
allow commercial sale of any Licensed Products in a certain country or
countries, for example the FDA PMA or 510(k) approval in the United States.
1.31 RETAINED PHARMACEUTICAL COMPANIES. Those companies listed on
Exhibit 1.31.
1.32 SUBSIDIARIES. Means entities of which a designated Party
owns the equity interests specified in 1.1(a) or (b), either directly or
indirectly through other entities so owned.
1.33 TECHNICAL INFORMATION. Any information reasonably relevant
to the Licensed Products or otherwise pertaining to the design, manufacture,
assembly, production, operation, performance or use of the Licensed Products or
any component of Licensed Products, including but not limited to invention
disclosures, patent applications, issued patents, feasibility study information,
testing and reliability information, specifications, documentation, drawings,
computer programs, software, prototypes, and the like.
1.34 TECHNOLOGY. Any invention, development or Improvement, and
any trade secret, "know-how", manufacturing formula, process, procedure, method
or technique, whether or not patentable, copyrightable or otherwise protectable
by law.
1.35 THIRD PARTY. Any Person other than the legal entities that
are Parties to this Agreement.
1.36 TRANSFER PRICE. The price charged for any product by MRG to
MiniMed.
1.37 UC RIGHTS. All rights which MRG now has to Technical
Information as a result of or relating to any contract or agreement involving
the Regents of the University of California, including the Exclusive License
Agreement for Glucose Sensors and Systems, effective February 28, 1990, U.C.
Agreement Control No. 90-04-0104.
1.38 XXXXXX XXXXXXXXXX RIGHTS. All rights which MiniMed now has
to Technical Information as a result of or relating to any contract or agreement
involving Xxxxxx Xxxxxxxxxx Ltd., including but not limited to a License
Agreement and a Supply Agreement, each made as of the 1st day of October, 1993,
and any amendments thereto.
Page 5 of 40
6
2. CONFIDENTIAL INFORMATION
2.1 TREATMENT OF CONFIDENTIAL INFORMATION. MiniMed and MRG shall
maintain all Confidential Information disclosed by the other Party pursuant to
or during the performance of this Agreement in strict secrecy and confidence,
and not disclose such Confidential Information to any Third Party, nor make any
use of such Information for its own benefit or gain except as is mutually agreed
between the Parties or is otherwise provided for and permitted under this
Agreement and the Glucose Sensor Option Agreement. No Confidential Information
or materials pertaining to Licensed Products or MiniMed's Pump Technology will
be disclosed to any other Person other than those approved in writing by MiniMed
with respect to Confidential Information disclosed by it to MRG and by MRG with
respect to Confidential Information disclosed by it to MiniMed, except
disclosure to sublicensees, potential distributors and contractors with a need
to know and bound by confidentiality agreements and to the FDA and similar
regulatory agencies of information relative to obtaining regulatory approval.
Nothing in this Section 2.1 shall apply, however, to any disclosure of
Confidential Information that may be required by applicable law, including
without limitation disclosures (to the extent they may be legally required) in
documents filed with the Securities and Exchange Commission and private
placement memoranda used in connection with the sale of securities. MRG
acknowledges its understanding and agreement that as a public company MiniMed
has responsibilities to disclose certain information about its affairs and will
be required to publicly disclose the existence of this Agreement and its
material terms as well as future developments in the portion of its business to
which this Agreement relates. MiniMed likewise acknowledges its understanding
and agreement that MRG may be required to make similar disclosure in connection
with its capital raising efforts.
2.2 REQUESTED DISCLOSURE OF CONFIDENTIAL INFORMATION. In the
event either Party is requested pursuant to, or required by, applicable law or
regulation or by legal process to make any disclosure otherwise prohibited
hereunder, the Party that is required to make disclosure (the "Disclosing
Party") shall, to the extent reasonably practicable, provide the other Party
with prompt notice of such requests or requirements prior to disclosure so that
(a) the other Party may seek an appropriate protective order or other remedy
and/or (b) the Disclosing Party and the other Party can seek in good faith to
consult with the Disclosing Party on the appropriate scope and approach to
disclosure. In the event that such protective order or other remedy is not
obtained, the Disclosing Party shall furnish only that portion of the
Confidential Information which the Disclosing Party reasonably believes may be
legally required and, to the extent reasonably practicable, use reasonable
efforts to obtain confidential treatment for the Confidential Information
disclosed.
2.3 LIMITED RELEASE. MiniMed and MRG shall be released from the
obligations of Sections 2.1 and 2.2 to the extent that any of the disclosed
information: (a) was already part of the public domain at the time of the
disclosure by the other Party or (b) becomes publicly available through no fault
of the receiving Party (but only after and only to the extent that it becomes
publicly available.
Page 6 of 40
7
2.4 TERM OF CONFIDENTIALITY. The obligation of MiniMed and MRG to
receive and hold information disclosed by the other Party in confidence, as
required by Section 2.1, shall terminate three (3) years after termination of
this Agreement or ten years after the Effective Date of this Agreement,
whichever is later, except that such obligations shall not terminate as to
Technical Information which constitutes a trade secret until such time as that
information has become publicly available.
3. LICENSE OF PATENT RIGHTS AND MINIMED'S PUMP TECHNOLOGY
3.1 GRANT OF LICENSE. Subject to Section 3.2, MiniMed hereby
grants to MRG and MRG hereby accepts from MiniMed, the worldwide right to
manufacture, cause to be manufactured, promote, sell, market, distribute and use
the Pump Technology, whether or not in conjunction with the Long-Term Glucose
Sensor. The rights granted MRG shall be exclusive except (a) to the extent
MiniMed's rights to the Pump Technology depend upon licenses which do not give
MiniMed exclusive rights, (b) nothing herein shall limit the rights of MiniMed
with respect to any Technology or to license others with respect to Technology
insofar as such rights relate to external infusion pumps or any other
application not constituting an implantable infusion pump and (c) nothing herein
is intended to limit the rights of MiniMed under Section 5 or 8. Notwithstanding
the foregoing, the Xxxxxx Xxxxxxxxxx Rights are being assigned to MRG pursuant
to the Assignment and Assumption Agreement being executed concurrently with this
Agreement.
3.2 MINIMED'S DISTRIBUTION AND MANUFACTURING RIGHTS.
Notwithstanding anything to the contrary set forth in Section 3.1, MRG agrees
not to engage in any commercial distribution or commercial exploitation of the
Pump Technology or to manufacture any Licensed Product that would violate this
Agreement or MiniMed's rights under Section 5 of this Agreement.
3.3 PROVIDING OF INFORMATION. MiniMed shall provide to MRG access
to all documentation relating to the design, manufacture, testing and regulatory
approval of its implantable pumps.
3.4 ROYALTIES. The license granted pursuant to Section 3.1 shall
be a fully paid-up license with no obligation on the part of MRG to pay
royalties to MiniMed except as follows:
3.4.1 ROYALTIES FOR INSULIN APPLICATIONS. If MiniMed does
not exercise its Option to acquire the worldwide marketing rights to MRG's
Long-Term Glucose Sensor pursuant to the Glucose Sensor Option Agreement or
those rights of MiniMed expire or terminate for any reason or MRG converts
MiniMed's rights under Section 5.1 to Covered Applications to a non-exclusive
basis pursuant to Section 7, then thereafter MRG will pay to MiniMed a royalty
of ten percent (10%) of Licensed Pump Sales from the sale, lease, sublicensing
or other commercial exploitation of Licensed Products that are for the delivery
of insulin during the term of this Agreement until aggregate royalties in the
amount of $5 million
Page 7 of 40
8
have been paid and thereafter a royalty equal to three percent (3%) of such
Licensed Pump Sales. For purposes of this Section 3.4.1 Licensed Products do not
include the abdominal lead connecting MRG's Long-Term Glucose Sensor to an
implantable pump. Notwithstanding the foregoing, in the event the Licensed
Products include the Enhancement Technology, the applicable royalty rates
pursuant to the preceding sentence will be reduced to five percent (5%) of
Licensed Pump Sales instead of ten percent (10%) and two percent (2%) of
Licensed Pump Sales instead of three percent (3%). Whether or not MRG
establishes separate prices for the Licensed Products and the Long-Term Glucose
Sensor, for purposes of this Section 3.4.1 the portion of total revenues from
Licensed Products distributed together with MRG's Long-Term Glucose Sensor shall
be equal to:
(a) if MiniMed then has List Prices for the Licensed
Product, then MiniMed's applicable List Price;
(b) if (a) does not apply and MRG is then regularly
publishing List Prices for the Licensed Product, then MRG's applicable
List Price but not less than manufacturing cost plus 30% thereof;
(c) whether or not (a) or (b) applies, if MRG sells any
Licensed Product directly to those who utilize the Licensed Products
themselves or in providing medical care to an unrelated person, then the
actual sale prices of such Licensed Products but in no event less than
the manufacturing cost plus 50% thereof.
In no event, however, shall more than 70% of the aggregate revenues received for
the Licensed Product and the Long-Term Glucose Sensor be allocated to the
Licensed Product for purposes of this Section 3.4.1.
3.4.2. ROYALTIES ON EXCLUDED APPLICATIONS. If MRG pursues
commercial development of Licensed Products for any Excluded Applications or for
the Covered Applications referred to in Section 5.1 other than the delivery of
insulin, then MRG will pay to MiniMed a royalty of three percent (3%) of
Licensed Pump Sales during the term of this Agreement from such applications if
the Licensed Products are programmable implantable pump systems that do not use
the Enhancement Technology, two percent (2%) if the Licensed Products are
programmable implantable pump systems that use the Enhancement Technology and
one and one-half percent (1.5%) of such Licensed Pump Sales from Licensed
Products that are constant flow implantable pump systems.
3.4.3 ROYALTIES TO XXXXX XXXXXXX AND XXXXXX XXXXXXXXXX. In
addition to the royalties provided for in Section 3.4.1 MRG shall pay to MiniMed
all royalties relating to all applications payable by MiniMed pursuant to the
agreements relating to the Xxxxx Xxxxxxx Rights and the Xxxxxx Xxxxxxxxxx Rights
not less than five (5) days prior to the date MiniMed is obligated to pay such
payments to the licensor under those agreements. In addition, MRG will perform
on behalf of MiniMed all of MiniMed's obligations under the agreements, addenda
and amendment evidencing the Xxxxx Xxxxxxx Rights and the Xxxxxx Xxxxxxxxxx
Rights arising after the date of this Agreement except as otherwise agreed to in
Page 8 of 40
9
writing and will not take any action or omit to take any action which would
constitute a default under any such agreement, addendum or amendment.
3.5 EXCLUSIONS. Notwithstanding anything to the contrary
contained in this Section 3.5, in the event any tax is imposed on MRG with
respect to the payment of any royalty set forth in Section 3.4, MRG shall, at
its sole expense, have the right to withhold from such royalty the amount of
such tax actually paid by it; provided, however, that MRG shall execute and
deliver such documents and take such other actions as MiniMed reasonably may
request in connection with disputing such tax or obtaining a credit or refund
thereof.
3.6 PAYMENT
3.6.1 DATES OF PAYMENT. The royalties payable by MRG to
MiniMed pursuant to Section 3.4 shall be paid on or before the forty-fifth
(45th) day following the end of each calendar quarter and shall be computed with
respect to all Licensed Pump Sales during such quarterly period.
3.6.2 DOCUMENTATION. MRG shall deliver to MiniMed,
together with each payment of royalties payable by MRG to MiniMed under Section
3.4, a written statement, verified as to correctness by the Manager or the Chief
Financial Officer of MRG, setting forth for each Licensed Product a detailed
calculation of the amount of royalties then due to MiniMed and such information
as MiniMed reasonably shall require to verify the accuracy of such computation.
3.6.3 CURRENCY OF PAYMENT. All amounts payable by MRG
under Section 3.4 shall be paid in United States dollars; provided, however,
that any such amounts payable with respect to Licensed Products invoiced by MRG
in a currency other than United States dollars shall be converted into United
States dollars at the selling price for such foreign currency published by
Citibank N.A. as the Selling Price for Bank Transfers in the United States for
Payment Abroad at the close of business on the last business day of the calendar
quarter with respect to which such royalty relates.
3.7 LATE FEE. In the event any payment payable by MRG to MiniMed
pursuant to Section 3.4 shall not be paid promptly when due, the unpaid balance
thereof shall bear interest at the lesser of (a) the prime rate of Citibank N.A.
from time to time in effect plus 1% or (b) the maximum rate permitted by
applicable law.
3.8 BOOKS AND RECORDS. MRG shall establish and maintain at its
principal places of business in the United States, or at such other place as to
which MiniMed may consent in writing, true and complete books of account,
records and other data, containing all particulars necessary for an exact
determination of the royalties payable by MRG to MiniMed pursuant to Section
3.4. During the term of this Agreement, and for three (3) years thereafter, MRG
and its employees and agents, including but not limited to, accountants and
attorneys, shall have the right, during normal business hours, on forty-eight
(48) hours prior written notice, to inspect, copy and make extracts from all
such books of account, records and other data to verify the accuracy of any
royalties paid pursuant to Section 3.4, or any statements furnished in
accordance with Section 3.6.2. In the event any examination by MiniMed of MRG's
books and records discloses underpayments to MiniMed of the royalties
theretofore
Page 9 of 40
10
actually paid by MRG with respect to such quarter, MRG shall pay to MiniMed such
deficiency plus interest pursuant to Section 3.7, and, if the deficiency exceeds
five percent (5%) for the relevant calendar quarter, MRG shall further reimburse
MiniMed on demand for all of MiniMed's reasonable and documented out-of-pocket
costs and expenses, including, but not limited to, all professional fees,
incurred in connection with any such examination.
4. DEVELOPMENT OF ENHANCEMENT TECHNOLOGY
4.1 SCOPE OF DEVELOPMENT
4.1.1 MRG is developing and shall make commercially
reasonable efforts to complete the development of the Enhancement Technology
contemplated by the specifications referred to in Section 4.1.2 and to
incorporate it into the programmable implantable pump between the Effective Date
and April 30, 1999 (the "Performance Period") in accordance with the terms and
conditions as set forth herein (the "Enhancement Technology Development").
4.1.2 MRG has delivered to MiniMed revised specifications
for the Enhancement Technology.
4.1.3 MRG shall make commercially reasonable efforts to
develop, by January 1, 1999, at MRG's sole expense, a battery in accordance with
the specifications referred to in Section 4.1.2 to this Agreement.
4.1.4 MRG shall perform the Enhancement Technology
Development consistent with MiniMed's design control requirements under ISO 9001
and EN 46001.
4.2 OVERSIGHT COMMITTEE. Upon execution of this Agreement,
MiniMed and MRG shall establish a committee (the "Oversight Committee")
consisting of 4 members comprised of an equal number of representatives from
each of MiniMed and MRG, which representatives shall be subject to the approval
of the other party and such approval will not be unreasonably withheld or
delayed by the other Party. The Oversight Committee shall have the general
responsibility for monitoring the progress of the Enhancement Technology
Development and ensuring that such Development is completed satisfactorily and
that the time set forth herein for completion of the Development is met. The
parties acknowledge and agree, however, that MRG is responsible for using
commercially reasonable efforts to complete the Enhancement Technology and to
incorporate it into the programmable implantable pump in accordance with the
terms of this Agreement.
4.3 REGULATORY APPROVAL. MRG shall make commercially reasonable
efforts to deliver, by April 30, 1999 to MiniMed all information necessary to
comply with FDA regulatory requirements, and the regulatory requirements of any
foreign jurisdiction designated by MiniMed. MiniMed shall use commercially
reasonable efforts to obtain Regulatory Approval of an implantable pump for
insulin delivery incorporating the Enhancement Technology. MRG shall reasonably
cooperate with MiniMed in obtaining such approvals, including cooperation in
connection with clinical trials.
Page 10 of 40
11
4.4 REPORTING OF DEVELOPMENT PROGRESS TO THE OVERSIGHT COMMITTEE.
MRG shall inform the Oversight Committee of the progress of the Enhancement
Technology Development in the following manner:
(a) By informal verbal reports to all members of the
Oversight Committee, monthly;
(b) By providing written reports at the reasonable
request of MiniMed, which in no event shall be
required to be delivered more frequently than
every three (3) months.
4.5 OWNERSHIP OF DEVELOPED TECHNOLOGY.
4.5.1 IMPROVEMENTS BY MRG. The Enhancement Technology and
any other Improvements to the Technology, Technical Information or Confidential
Information developed by MRG relating to the Licensed Products during the term
of this Agreement are, as between MRG and MiniMed, owned by MRG. MiniMed may
make use and sell these Improvements without additional royalty to the extent
that they are incorporated into a Licensed Product MiniMed has the right to
make, use or sell under this Agreement.
4.5.2 IMPROVEMENTS BY MINIMED. Any Improvements developed
by MiniMed to the Enhancement Technology or any other Improvements to the
Technology, Technical Information or Confidential Information relating to the
Licensed Products shall be owned by MiniMed; however, MRG will have the right to
make, use and sell the Improvements, and sublicense others to do so, subject to
payment by MRG to MiniMed of a reasonable royalty to be agreed upon by the
parties or, if the Parties cannot agree within a reasonable time, by arbitration
pursuant to Section 28. No such royalty shall be payable, however, with respect
to any Licensed Products including such Improvements sold by MRG to MiniMed.
4.5.3 JOINT IMPROVEMENTS. Any patented Improvement jointly
owned by the Parties shall not be licensed to any Third Party without the
written consent of both parties.
4.5.4 TERM OF LICENSES. Any licenses granted under
Sections 4.5.1 through 4.5.3 will survive until the last of the patents on the
Improvements, if any, which are the subject of the license, which may be a date
after the termination of this Agreement. If there are not such patents or when
the last of such patents expires, any such license will continue for as long as
is legally permissible. MiniMed agrees to assist MRG in filing any patent
applications and obtaining any patents (including execution of assignments and
other documents and instruments necessary or proper) to carry out the provisions
of these Sections.
4.5.5 UNITED STATES PATENT PROTECTION. Should any
Enhancement Technology or the Improvements referred to in Section 4.5.1 through
4.5.3 of this Agreement be reasonably deemed to be suitable for protection under
the patent laws of the United States, then the Party developing the Improvements
shall prepare and file patent application(s) on the
Page 11 of 40
12
invention(s) in the United States, and shall bear all of the costs and expenses
associated with obtaining and maintaining such patents. The Party developing the
Improvement shall be identified as the owner in any such patent applications. In
the event the developing Party elects not to seek patent protection on any
invention, the other Party shall have the right to prepare and file patent
application(s) for which all the costs and expenses associated with obtaining
and maintaining such patents shall be borne by such Party and such patents shall
be jointly owned by both Parties.
4.5.6 FOREIGN COUNTRY PATENT PROTECTION. Neither Party
developing Improvements shall be obligated to file for or to obtain patent
protection for any Enhancement Technology or any Improvements referred to in
Section 4.5.1 through 4.5.3 in any foreign country, but if the developing party
does file for or obtain any such patent protection, the developing Party shall
bear all of the costs and expenses associated with obtaining and maintaining
such patent protection. If the developing Party elects not to file for or to
obtain patent protection for any Enhancement Technology or any such Improvements
in any foreign country, then the other Party may elect to file for or to obtain
patent protection for such Enhancement Technology or Improvement, at its sole
expense, and any such patent application or patent obtained therefrom shall be
jointly owned by both parties.
4.5.7 USE OF ENHANCEMENT TECHNOLOGY. Subject to Section 7
and notwithstanding any other provision of this Section 4, MRG has not and will
not license any Enhancement Technology for use in implantable pumps to any Third
Party during the term of this Agreement for a Covered Applications, unless
MiniMed's rights to Covered Applications cease to be exclusive as provided
herein.
5. APPOINTMENT OF MINIMED AS DISTRIBUTOR.
5.1 APPLICATIONS. As of the Effective Date, Covered Applications
will include the use of Licensed Products for delivery of insulin or any other
compound for the treatment of diabetes and for the treatment of HIV and/or AIDS.
Covered Applications shall also include the delivery of medications,
pharmaceuticals or other compounds manufactured, developed or distributed by any
of the Retained Pharmaceutical Companies, except for the treatment of pain,
spasticity, cardiovascular, or otological conditions. As of the Effective Date,
Excluded Applications will include the use of Licensed Products for the
treatment of pain, spasticity, cardiovascular or otological conditions. If
MiniMed's Option to acquire the distribution rights to MRG's Long-Term Glucose
Sensor expires without being exercised, then the use of the Licensed Products
with MRG's Long-Term Glucose Sensor shall cease to be a Covered Application and
shall become an Excluded Application but MiniMed will nonetheless be entitled to
payment of the royalty contemplated by Section 3.4.1. Nothing in this Agreement
shall limit the right of MiniMed to distribute the Licensed Products with
Long-Term Glucose Sensors or any other products offered by parties other than
MRG for the treatment of diabetes or any other Covered Application.
5.2 APPOINTMENT. MRG hereby appoints MiniMed as its exclusive
distributor throughout the world of all Licensed Products now or hereafter
owned, acquired or
Page 12 of 40
13
developed by MRG to be used for a Covered Application. Nothing in this Agreement
shall give MiniMed the right to distribute implantable pump systems for any
other application.
5.3 EXCLUSIVITY. During the term set forth in Section 5.5 MRG
will not (a) appoint any other distributor for the Licensed Products to be used
for the Covered Applications, (b) sell, lease or otherwise transfer for
consideration the Licensed Products to any Third Party for distribution for
Covered Applications or (c) itself sell, lease or otherwise commercially exploit
the Licensed Products for Covered Applications (other than pursuant to this
Agreement). During the term of this Agreement MRG will forward to MiniMed all
inquiries received from potential purchasers of the Licensed Products for the
Covered Applications. MRG shall expressly restrict by contract all of its sales
agents, distributors and other third parties from participating in the
commercial distribution of the Licensed Products for the Covered Applications.
If MRG terminates the exclusivity of MiniMed's rights to Covered Applications
pursuant to Section 7, this paragraph will no longer apply.
5.4 SUBDISTRIBUTORS. MiniMed may appoint subdistributors, dealers
or agents for itself with respect to the sale of the Licensed Products for the
Covered Applications. Such subdistributors, dealers or agents of MiniMed shall
have no rights against MRG under this Agreement, and MiniMed shall continue to
be in all respects responsible for compliance with the terms and conditions of
this Agreement with respect to all activities and sales made by any
subdistributors and dealers.
5.5 TERM. The term of MiniMed's rights as distributor of the
Licensed Products (the "Term of the Distribution Rights") will commence on the
date hereof and will continue until December 31, 2003 and shall be deemed to be
extended automatically thereafter on a year-to-year basis unless MiniMed
terminates the Term of the Distribution Rights effective at the end of the
initial term or any time thereafter by giving not less than six (6) months'
prior written notice to MRG. This Agreement is also subject to premature
termination as provided in Section 11.
6. PRICE AND TERMS OF SALE TO MINIMED.
6.1 PRICES UNTIL DECEMBER 31, 2000. From time to time during the
Term of the Distribution Rights, MiniMed will purchase Licensed Products from
MRG by placing written orders therefor using a purchase order in the form of
Exhibit 6(A) attached to this Agreement. For the period from the date of this
Agreement through December 31, 1998, the Transfer Price payable by MiniMed for
the Licensed Products ordered will be $10,800 for a complete implantable pump
system (including a program communicator unit). During the period from January
1, 1999 through December 31, 2000 the Transfer Price payable by MiniMed shall be
MiniMed's List Price (as established by MiniMed) for the Licensed Products less
20%.
6.2 PRICES AFTER DECEMBER 31, 2000. For Licensed Products ordered
after December 31, 2000, the Transfer Price will be equal to the average of
MRG's manufacturing cost (determined in accordance with generally accepted
accounting principles consistently
Page 13 of 40
14
applied) and MiniMed's List Price (as established by MiniMed) at the time the
Licensed Products are ordered. In no event, however, will the Transfer Price
exceed MiniMed's List Price less 15% thereof or be less than MRG's manufacturing
cost plus 30%. If no Transfer Price satisfies the foregoing requirements, the
price shall be determined by arbitration in accordance with Section 6.3. For
Licensed Products intended for use with MRG's Long-Term Glucose Sensor, the
price of Licensed Products shall include the related Glucose Controller, Glucose
Monitor and the abdominal lead connecting the sensor to the pump. Abdominal
leads sold separately from Licensed Products as replacements shall have a
Transfer Price to be established by MRG that will not exceed the greater of
$1,000 or 25% of the Transfer Price of the Long-Term Glucose Sensor. Each of the
Parties will afford the other the right to examine its books and records and
cause an audit thereof (at the cost of the examining party) in order to verify
List Price and cost figures. The Parties anticipate that MRG will have achieved
reductions in its manufacturing cost as a result of economies of scale and
reduced costs of components no later than December 31, 2000 and that the Parties
will be better able to project at that time the increase in sales volumes that
is expected to occur. As a result, the Transfer Prices of the Licensed Products
are expected to be substantially less for systems ordered after December 31,
2000 than the price applicable to systems ordered prior to that date.
6.3 ADJUSTMENT IN PRICES. If at anytime after December 31, 2000
either Party believes that the Transfer Price arrangement is materially unfair
to it, the Parties will meet and seek in good faith to agree on revised prices
that are agreeable to both Parties and approximate pricing structures that are
customary for other comparable distribution arrangements involving high
technology products. If the Parties are unable to agree on price, the matter
shall be resolved by arbitration in accordance with Section 28.
6.4 DELIVERY AND PAYMENT. The prices payable by MiniMed shall be
F.O.B. MRG's place of manufacture with export packing to be furnished at MRG's
expense. Payment will be made by MiniMed in United States dollars within thirty
(30) days after shipment. If any invoice is not paid by MiniMed in accordance
with its terms and within thirty (30) days of notice of late payment, MRG may
cancel or delay further shipments until such payment is made. In the event any
payment payable by MiniMed to MRG shall not be paid promptly when due, the
unpaid balance thereof shall bear interest at the lesser of (a) the prime rate
of Citibank N.A. from time to time in effect plus 1% or (b) the maximum rate
permitted by applicable law. All sales will be final, and no returns will be
allowed except as set forth below in Section 12 for products not complying with
MRG's warranty or the inspection specifications. MiniMed shall be responsible
for clearing all Licensed Products through customs and shall pay any and all
taxes or duties imposed by any governmental authority on importation or sale of
the Licensed Products.
6.5 TIME FOR DELIVERY. MiniMed and MRG will cooperate to ensure
that MiniMed receives the quantities of pumps that it requires throughout the
term referred to in Section 11.1. MiniMed will place a firm purchase order with
MRG for the quantity of pumps it requires over the next six month period
following the Effective Date within ten (10) days after the Effective Date.
Promptly after delivery of that purchase order, MiniMed and MRG will meet to
review and agree to MiniMed's initial requirements. Thereafter, commencing on
the
Page 14 of 40
15
first day of the third full calendar month commencing after the Effective Date
MiniMed will provide supplemental purchase orders periodically, but at least
every two months, specifying the quantity of pumps MiniMed will require over the
next six month period. MRG will have the right to refuse any purchase order that
would exceed MRG's manufacturing capacity; however MRG may not refuse a purchase
order for a monthly requirement of 10% or less of MiniMed's minimum annual
purchases required to maintain exclusivity as provided in section 7. If
MiniMed's requirements for pumps increase or decrease such that MiniMed would
like to amend these purchase orders MRG will attempt to accommodate those
changes, but MRG may request additional payment from MiniMed beyond the agreed
Transfer Prices if changes to purchase orders increase MRG's costs. Such
additional payment will equal MRG's reasonably estimated additional cost and
will be requested, if at all, within thirty (30) days of MRG's receipt of any
such change. In the event of any disagreement as to whether the additional
charges reflect MRG's costs, the matter shall be settled by arbitration pursuant
to Section 28.
6.6 ADDITIONAL OBLIGATIONS OF MRG. Throughout the term of this
Agreement, MRG will do each of the following:
(a) provide such technical training for MiniMed's
personnel as MiniMed may reasonably request together with copies of all
manuals, product specifications and performance data and other materials
as MiniMed may reasonably request, at MRG's cost and expense (except for
travel cost);
(b) provide all current packaging material for the
Licensed Products;
(c) provide necessary documentation to assist MiniMed in
meeting requirements to register Licensed Products in various
jurisdictions where they are to be sold and to comply with all laws and
regulations applicable to the Licensed Products; and
(d) provide MiniMed with copies of all correspondence with
the FDA and other regulatory authorities after the date of this
Agreement pertaining to the Licensed Products.
6.7 ADDITIONAL OBLIGATIONS OF MINIMED. MiniMed will do each of
the following:
(a) provide to MRG, all current packaging material for the
Licensed Products in MiniMed's possession on the date of this Agreement
or delivered to MiniMed after the date of this Agreement pursuant to
orders placed before the date of this Agreement;
(b) throughout the term of this Agreement provide MRG with
copies of all correspondence with the FDA and other regulatory
authorities after the date of this Agreement pertaining to the Licensed
Products, and
Page 15 of 40
16
(c) produce, at MiniMed's expense, the English language
version of all required labeling of implantable pumps using the
Enhancement Technology, including patient and clinician instruction
manuals.
7. MINIMUM PURCHASE REQUIREMENTS.
7.1 REQUIRED MINIMUM PURCHASES. MiniMed agrees to purchase the
following minimum quantities of programmable implantable pump systems for the
calendar year as specified:
Systems Purchased During No. of Systems
------------------------ --------------
1998 and 1999 433
2000 600
2001 117.5% of the amount of programmable
implantable pump systems purchased during 2000
7.2 MINIMUM PURCHASES NECESSARY TO KEEP EXCLUSIVE RIGHTS. In
furtherance of the sales and distribution, the Parties agree that if MiniMed
purchases the following minimum quantities of programmable implantable insulin
pump systems in each of the respective calendar years (the "Minimum Sales
Quotas"), its exclusive distribution rights will not be subject to termination
as provided below:
Year Minimum Sales Quotas
---- --------------------
2002 10% of external insulin pumps actually sold
by MiniMed during 2001
2003 15% of external insulin pumps actually sold
by MiniMed during 2002
2004 and following years 20% of external insulin pumps actually sold
by MiniMed during the preceding year
7.3 DATES WHEN PUMP SYSTEMS DEEMED PURCHASED. For purposes of
this Section 7, programmable implantable pump systems will be deemed to have
been purchased when they are delivered by MRG to MiniMed or its designee, except
that Licensed Products delivered by MRG at a date later than the delivery date
specified in MiniMed's order will be deemed, solely for purposes of this Section
7, to have been purchased when they should have been delivered. If MiniMed does
not accept any Licensed Products delivered to it in accordance with its right to
do so under this Agreement, such products shall be deemed to have been purchased
for purposes of this Section 7 but MiniMed shall be obligated to accept delivery
Page 16 of 40
17
of substitute Licensed Products if the Licensed Products not accepted were
necessary to meet the minimum purchase requirements set forth above, provided
that MiniMed's obligation to accept
such substitute Licensed Products is subject to the condition that MRG deliver
such Licensed Products meeting the requirements of this Agreement within 90 days
after the date MiniMed has declined acceptance of the Licensed Products
previously delivered.
7.4 TERMINATION OF EXCLUSIVE DISTRIBUTION RIGHTS. If MiniMed
fails to purchase the applicable Minimum Sales Quota during the period after
December 31, 2001, MRG's sole and exclusive remedy shall be to terminate the
exclusivity feature of MiniMed's distribution rights under Section 5.1 of this
Agreement (subject to MiniMed's right to pursue arbitration set forth below) by
delivering written notice of its election to do so to MiniMed within one hundred
eighty (180) days after the end of any calendar year in which MiniMed has failed
to purchase the required number of pump systems.
7.4.1 Notwithstanding the preceding paragraph, MiniMed's
exclusive distribution rights shall not be terminated for any calendar year or
longer period referred to below prior to the date (the "One-Year Expiration
Date") of expiration of one year after the first Regulatory Approval in the U.S.
or the EU (by obtaining the CE Xxxx) of a system in which an MRG fully implanted
Long-Term Glucose Sensor provides a significant portion of the control of
insulin delivery by the Licensed Products if:
(i) MiniMed has purchased one-half of the applicable
Minimum Sales Quota during the year in question or longer period
referred to below, except that for 2002 said one-half amount shall be
deemed to be 1,200 and
(ii) MiniMed has used commercially reasonable efforts
during the year in question to promote and sell the Licensed Products.
7.4.2 For the calendar year in which the One-Year
Expiration Date occurs, the Minimum Sales Quota shall be divided by 365 (rounded
to the nearest one-thousandth) to establish a daily average, and the Minimum
Sales Quota for the fractional calendar year prior to the One-Year Expiration
Date (the daily average multiplied by the number of days in the year prior to
the One Year Expiration Date) shall be added to the Minimum Sales Quota for the
prior calendar year. MRG shall have the right to terminate MiniMed's exclusive
distribution rights for the failure to purchase the Minimum Sales Quota for such
fractional year only if MiniMed has failed to purchase one-half of the combined
Minimum Sales Quota for the combined period as contemplated by 7.4.1(i) above
and it has not used commercially reasonable efforts during the combined period
to promote and sell the Licensed Products as contemplated by 7.4.1(ii) above.
7.4.3 The determination of whether or not MiniMed used
such efforts as required by 7.4.1(ii) above shall be made by arbitration
commenced by MiniMed in accordance with Section 28 except that discovery shall
be limited to 60 days. MiniMed may only commence such an arbitration if it does
so within thirty (30) days after receipt of MRG's written notice of termination
of exclusivity. In the arbitration the arbitrators will determine whether or not
the requirement of 7.4.1(ii) has been met. Pending a final determination,
MiniMed's distribution rights shall continue to be exclusive.
Page 17 of 40
18
7.4.4 If MiniMed does not commence such an arbitration or
if the arbitrators determine that the requirement of 7.4.1(ii) above has not
been met, (A) MRG will have the right to distribute pumps through its own sales
organization or to designate other parties as distributors of the Licensed
Products for the Covered Applications on a non-exclusive basis, (B) MiniMed will
have the right to continue to purchase Licensed Products for any Covered
Applications on the terms set forth above and to distribute them throughout the
world on a non-exclusive basis during the balance of the Term of the
Distribution Rights, including any extension thereof, with no minimum purchase
obligations and (C) MiniMed will have right to manufacture the Licensed Products
for the Covered Applications or contract with others to do so provided that it
gives MRG written notice of its intention to do so at least two years before it
commences manufacturing Licensed Products for commercial distribution. If
MiniMed commences manufacturing Licensed Products as provided above, it will be
obligated to pay the royalties as provided in Section 8.1.2 and it will have the
right to use the Technology relating to the Licensed Products as provided in
Section 8.1.2.
7.5 ADJUSTMENTS IN MINIMUM SALES QUOTAS.
7.5.1 If MRG fails to establish the capability to
manufacture Licensed Products in accordance with MiniMed's quality
specifications, meeting the inspection requirements and warranty set forth in
Section 12 and in the quantities and within the delivery times contemplated by
Section 6.5, the Minimum Sales Quotas shall be adjusted so that they begin to
apply for the first full 12 calendar month period when such capability is
established as if that had been 1998 and shall progress as provided above
substituting each such successive twelve calendar month period for each full
calendar year referred to above. In such event, the Minimum Sales Quota for 1998
shall be deemed to be 250 for the full calendar year. For example, if MRG's
manufacturing capability is not established until August 15, 1999, the first
performance period would be the twelve months ended August 31, 2000 and the
Minimum Sales Quota for that period would be 250. The Minimum Sales Quotas for
the twelve months ended August 31, 2001 and 2002 would be 350 and 600, and the
pattern would continue. Minimum Sales Quotas which depend upon the amount of
implantable or external pump systems purchased in particular years shall be
determined based upon the years specified above even though the twelve calendar
month periods for which they will constitute the Minimum Sales Quotas may be
substantially later. For example, if there is a delay of exactly 24 months, in
establishing manufacturing capability, the Minimum Sales Quota for 2003 would be
117.5% of the amount of programmable implantable pump systems purchased in 2000.
Likewise, if MRG loses said manufacturing capability the obligation to meet
Minimum Sales Quotas shall be suspended until such time as either MRG or MiniMed
or a Third Party with whom either of them contracts begins manufacturing and the
Minimum Sales Quota for the first twelve calendar month period thereafter shall
be the same as the Minimum Sales Quota for the calendar year in which MRG lost
the manufacturing capability. The Minimum Sales Quotas for subsequent 12
calendar month periods shall be equal to the Minimum Sales Quotas for the
calendar years subsequent to the year in which manufacturing capability was
lost.
Page 18 of 40
19
7.5.2 Likewise, if MRG loses said manufacturing capability
or if MRG fails to deliver, or MiniMed is unable to manufacture or distribute
Licensed Products as a result of an injunction obtained by a Third Party
asserting any right to the Technology associated with the Licensed Products,
then the obligation to meet the Minimum Sales Quota shall be suspended until
such time as either MRG or MiniMed or a Third Party with whom either of them
contracts begins manufacturing or, in the case of the assertion of Third Party
rights to the Technology, the inability of MRG to deliver or MiniMed to
manufacture or distribute Licensed Products is eliminated (as a result of legal
proceedings or otherwise) and such delivery, manufacturing or distribution, as
the case may be, begins. The Minimum Sales Quota for the first twelve calendar
month period commencing thereafter shall be the same as the Minimum Sales Quota
for the calendar year in which Minimum Sales Quotas were suspended. The Minimum
Sales Quota for each subsequent twelve calendar month period shall be equal to
the Minimum Sales Quota for the calendar years subsequent to the year in which
Minimum Sales Quotas were suspended.
7.5.3 If during any calendar year (a) MRG fails to deliver
to MiniMed within the times required by this Agreement, all of the Licensed
Products (determined without regard to the doctrine of substantial performance
and without regard to the 10% requirement set forth in Section 6.5) ordered by
MiniMed for delivery during that year in accordance with the terms of this
Agreement, or not ordered in accordance with the terms of this Agreement but as
to which MRG accepts the order (the "Number of Units Ordered") or (b) any such
Licensed Products delivered during the calendar year fail to meet all of the
requirements of this Agreement (including without limitation those set forth in
Sections 12.1, 12.2 and 14.2), then the Minimum Sales Quota for that calendar
year will be reduced by the number of Licensed Products which are not so
delivered plus those that do not meet such requirements (the "Shortfall"). In
addition, the Minimum Sales Quota for each subsequent calendar year will be
reduced by the percentage that the Shortfall represents of the Number of Units
Ordered. Such reduction shall be made whether or not the Number of Units Ordered
exceeds the 10% limitation set forth in Section 6.5.
7.5.4 In no event shall MiniMed's marketing rights be
converted to non-exclusive rights pursuant to Section 7.4, if the failure of
MiniMed to meet the Minimum Sales Quota for any calendar year is caused by (a)
the failure of MRG to deliver, in accordance with the terms of this Agreement
(and without regard to the doctrine of substantial performance and to the 10%
limitations set forth in Section 6.5), the Number of Units Ordered or (b) the
failure of MRG to establish or maintain the capability to manufacture Licensed
Products or continuously maintain that capability or (c) MiniMed's inability to
manufacture or distribute as a result of an injunction obtained by a Third Party
asserting rights in the Technology associated with the Licensed Products. The
parties acknowledge that in the case of (b) or (c) MiniMed will not be obligated
to place orders for Licensed Products and therefore (b) and (c) will apply even
if (a) does not.
7.5.5 Notwithstanding anything to the contrary above, if
MRG has not developed the Enhancement Technology and incorporated it into
Licensed Products that are available for commercial distribution in the US or
the EU by January 1, 2000, the Minimum
Page 19 of 40
20
Sales Quota for 2001 and all calendar years thereafter until that requirement is
met shall be the lesser of the amount set forth in Section 7.1 (as adjusted
pursuant to Section 7.5) or 750. Commencing with the first full twelve calendar
month period after that requirement is met the Minimum Sales Quotas shall be
reinstated except that the Minimum Sales Quotas set forth above for 2000 shall
apply to the first 12 calendar month period after the requirement is met and the
Minimum Sales Quotas for 2001 and subsequent years set forth above shall apply
to the second and subsequent 12 calendar month periods. As provided above,
Minimum Sales Quotas which depend upon the amount of implantable or external
pump systems purchased in particular years shall be determined based upon the
amounts for the years specified above even though the 12 calendar month periods
for which those members will constitute Minimum Sales Quotas may be
substantially later.
7.6 MRG'S REGULATORY ACCESS AND INSULIN RIGHTS. In the event MRG
has the right to sell implantable pump systems for insulin, MiniMed shall make
commercially reasonable efforts to allow MRG to make sell and use Licensed
Products under any PMA or similar authority that MiniMed may have, including
access to appropriate clinical data, and shall provide MRG with reference rights
to any PMA or similar approval. MiniMed will also use commercially reasonable
efforts to allow MRG the ability to purchase insulin from MiniMed for
implantable pump use for resale to the extent MiniMed itself has such rights,
either directly from Third Parties or from MiniMed. If MiniMed sells insulin to
MRG the price will be set to be the average of MiniMed's manufacturing or
acquisition cost plus 35%. MRG will reimburse MiniMed for all direct
out-of-pocket costs and expenses incurred pursuant to this Section 7.6.
8. MANUFACTURING AND RIGHTS TO OTHER APPLICATIONS.
8.1 MANUFACTURE OF LICENSED PRODUCTS.
8.1.1 From the date of execution of this Agreement, MRG
shall have the capability to manufacture Licensed Products in accordance with
MiniMed's quality specifications meeting the inspection, requirements and
warranty set forth in Section 12, in the quantities and within the delivery
times contemplated by Section 6.5. If MRG fails to establish the capability to
manufacture Licensed Products in accordance with the requirements of the
preceding sentence or thereafter loses that capability or fails to manufacture
the Licensed Products to be sold to MiniMed as contemplated by this Agreement,
MiniMed will have the right, in addition to all other rights and remedies
MiniMed may have under applicable law, to itself undertake the manufacture of
the Licensed Products for the Covered Applications or contract with others to do
so. Such right may only be exercised by giving written notice to MRG of
MiniMed's intention to do so, and thereafter MRG will have 360 days in which to
cure its failure to perform. Such cure shall be deemed effective only if MRG
manufactures and delivers to MiniMed 80% of the number of units of Licensed
Products which MiniMed had ordered and MRG had failed to deliver and at least
that number of units meets the inspection requirements and warranty referred to
in Section 12. If, however, MRG fails to deliver in any three-year period (based
on the number of days elapsed, not calendar years) 80% or more of the number of
units ordered by MiniMed which meet the inspection requirements and warranty
Page 20 of 40
21
referred to in Section 12, then there shall be no right to cure and MiniMed may
exercise its right to undertake manufacturing the Licensed Products or contract
with others to do so as provided above.
8.1.2 If MiniMed undertakes to manufacture the Licensed
Products as provided in Section 8.1.1 or Section 7 as a result of its
distribution rights becoming nonexclusive, it will have the right to do so
thereafter throughout the balance of the Term of the Distribution Rights.
MiniMed will, however, pay a royalty to MRG equal to 6% of MiniMed Licensed Pump
Sales from the sale, lease or other commercial exploitation of the Licensed
Products manufactured by it. If, however, at the time MiniMed begins
manufacturing, MRG has not developed the Enhancement Technology and incorporated
it into a commercially available Licensed Product, MiniMed shall not be
obligated to pay the royalty provided above. If MiniMed incorporates any
Technology developed by MRG, including Enhancement Technology which is not
commercially available when MiniMed begins manufacturing, MiniMed will pay MRG a
reasonable royalty but in no event to exceed 6% of MiniMed Licensed Pump Sales
for all such Technology in the aggregate. "MiniMed Licensed Pump Sales" for this
purpose shall have the same meaning as Licensed Pump Sales except that it will
apply to sales by MiniMed and its Affiliates. If MiniMed elects to exercise the
right to manufacture the Licensed Products pursuant to this Agreement, MiniMed
will have the right to use all Technology owned by or licensed to MRG relating
to the Licensed Products for the purpose of manufacturing, distributing and
selling Licensed Products (provided that MiniMed complies with any requisite
obligations owed by MRG under any license to a Third Party), and MRG will
cooperate with MiniMed in providing such technical information and assistance as
MiniMed may reasonably require.
8.1.3 Nothing in this Section 8.1 shall limit or otherwise
affect the rights of MiniMed to recover damages or seek any other right or
remedy MiniMed has against MRG for its failure to manufacture and sell Licensed
Products to MiniMed as provided in this Agreement. In no event shall any failure
or delay in the development or FDA approval of a solution to the existing
compliant catheter problem be considered to be a failure of MRG to establish
manufacturing capability for purposes of this Agreement.
8.2 RIGHTS OF MINIMED TO OTHER APPLICATIONS. At such time as MRG
is ready to commit to pursue the development or evaluation of the Licensed
Products for any Other Application either through a Third Party or its own
direct distribution organization, it will first notify MiniMed in writing and
will not enter into any agreement with any Third Party for any such distribution
or itself undertake any distribution activities for a period of 45 days after
sending such notice. If MRG and MiniMed do not enter into an agreement for
MiniMed to distribute the Licensed Products for the Other Application within the
said 45-day period, MRG shall be completely free to proceed with such
distribution, either through a Third Party or its own direct distribution
organization, and said application shall become an Excluded Application. If,
however, MRG has not entered into a definitive distribution agreement with a
third party or spent or contracted to spend at least $250,000 in establishing
its own distribution organization within six months after the expiration of the
45-day period, MRG will not enter into any distribution agreement with any third
party or commence distribution through its own
Page 21 of 40
22
distribution organization without first notifying MiniMed again of its
intention to do so pursuant to this Section 8.2 in order to afford another
opportunity for MiniMed to negotiate an agreement to become the distributor of
the Licensed Products for the Other Applications.
8.2.1 OTHER RIGHTS OF MINIMED TO OTHER APPLICATIONS MiniMed may,
at any time, request that MRG enter into an exclusive or non-exclusive agreement
to distribute pumps for any Other Application that MiniMed does not have rights
to, and MRG agrees to negotiate in good faith to establish an equitable
agreement in regard to such Other Application under which MRG would be an OEM
manufacturer for MiniMed.
8.2.2 OTHER RIGHTS OF MINIMED TO EXCLUDED APPLICATIONS. MiniMed
may, at any time, request that MRG enter into an exclusive or non-exclusive
agreement to distribute pumps for any Excluded Application, and MRG may, at its
sole discretion, negotiate to establish an equitable agreement in regard to such
Excluded Application under which MRG would be an OEM manufacturer for MiniMed.
8.2.3 TERMINATION OF RIGHTS TO OTHER APPLICATIONS. If MiniMed's
rights to Covered Applications are reduced to non-exclusive rights, MiniMed's
rights under Section 8.2 to be notified with respect to Other Applications will
terminate.
9. TRADEMARKS, TRADENAMES AND COPYRIGHTS.
9.1 LIMITED RIGHT TO USE TRADEMARKS AND TRADENAMES. All
trademarks and tradenames developed during the term of this Agreement shall
remain the sole property of the developing Party. MiniMed will have the right to
use its own trademarks and tradenames in connection with the advertising,
promotion, distribution and sale of the Licensed Products and MRG will
incorporate such trademarks and tradenames into the Licensed Products and the
packaging therefor as reasonably requested by MiniMed. During the term of this
Agreement, MiniMed may, in its sole and absolute discretion, use the trademarks
and tradenames of MRG applicable to the Licensed Products, but only in
connection with the advertising, promotion, distribution and sale of the
Licensed Products for the Covered Applications that it purchases from MRG and
provided that it properly uses such trademarks and tradenames. Such use of MRG's
trademarks and tradenames will not give rise to any rights of MiniMed therein.
The design and printing of the packaging will be determined by MiniMed, and
MiniMed will have the responsibility to be sure that all legal requirements with
respect thereto are satisfied. The right to use the MiniMed trademarks and
tradenames by MRG will be only with the written consent of MiniMed and for
Licensed Products for Covered Applications. Upon termination of the exclusivity
of MiniMed's distribution rights, the limited right of MRG to use MiniMed
trademarks and tradenames shall be limited to use in connection with Licensed
Products sold to MiniMed.
9.2 COPYRIGHTS. Any technical manuals relating to the Licensed
Products translated into a language other than English and printed by MiniMed
shall be copyrighted in the name and ownership of MiniMed, with the cost of such
translation and printing to be paid by MiniMed.
Page 22 of 40
23
10. REPORTS AND RECORDS.
10.1 MONTHLY REPORTS. On or before the 15th day of each calendar
month during the term of this Agreement, commencing with the first full calendar
month after the month in which this Agreement is executed and delivered, MiniMed
will deliver to MRG a written report setting forth the following:
(a) net sales of Licensed Products in units and MiniMed's
Licensed Pump Sales for the preceding calendar month, and the fiscal
year through end of such preceding months;
(b) the amount of remaining inventory of the Licensed
Products, if any;
(c) any material changes in government regulations known
to MiniMed affecting the importation, sale or use of the Licensed
Products in any jurisdiction where MiniMed is selling the Licensed
Products which has not previously been reported to MRG or is not known
to MRG; and
(d) a brief description of any litigation against MiniMed
relating to the Licensed Products and not previously disclosed to MRG as
well as any material developments in litigation previously disclosed.
For purposes of this Section 10.1, all references to "fiscal
year" refer to the then fiscal year of MiniMed. Net sales and units shall be
those sales invoiced by MiniMed net of returns credited by MiniMed during the
period.
10.2 RECORDS. MiniMed will retain a copy of each invoice
substantiating a sale as well as complete and accurate books of account and
records relating to purchases and sales of the Licensed Products. MiniMed will
provide MRG with such summaries and reports of such information as MRG may
reasonably request that MiniMed prepares for its own purposes. MiniMed shall
retain all invoices, books of account and records relating to purchases, sales
and inventories of the Licensed Products for a period of at least three years or
such longer periods as may be required by law. If MRG so requests, MiniMed shall
offer the records to MRG at no cost prior to disposing of them, except that MRG
will pay the actual costs necessary to retrieve and transport such records.
11. TERM AND TERMINATION
11.1 TERM. Unless otherwise terminated in accordance with Section
11.2, the term of the rights granted by MiniMed to MRG under Section 3.1 shall
continue until the expiration of the last of the patents on the MiniMed Pump
Technology. Thereafter MRG will have a fully paid-up, perpetual license and the
right to sublicense the MiniMed Pump Technology in the expired patents to the
extent MiniMed owns or has the right to license such Technology. In addition MRG
will have the right to continue to have the right to use the MiniMed Pump
Technology and make, use and sell Licensed Products to the extent such
Page 23 of 40
24
Technology is patented under other unexpired patents or constitutes a trade
secret, know how or other proprietary Technology and to the extent MiniMed owns
or has the right to license such Technology, provided that MRG pays to MiniMed a
reasonable royalty agreed to by the Parties (which shall not exceed the royalty
rate applicable pursuant to Section 3.4), or, failing such an agreement within a
reasonable time, by arbitration pursuant to Section 28. In determining the
amount of the reasonable royalty the parties acknowledge that the following
facts should be considered: (a) most of the value of the MiniMed Pump Technology
consists of Technology that is not patented, (b) MiniMed and its predecessors
have made very substantial investments in the development of the Technology over
many years and (c) significant value arises from the research and clinical data
relating to the MiniMed Pump Technology which either cannot be re-produced at
all or cannot be re-produced without significant expense and the passage of a
number of years. Nothing in this Section 11.1 shall limit or otherwise affect
the rights of MRG under Section 4.5.2 or 4.5.3.
11.2 TERMINATION FOR CAUSE. Either Party will have the right to
terminate this Agreement upon the occurrence of any of the events specified in
Sections 11.2.1 or 11.2.2. Any such termination may only be made by delivering
notice of intention to terminate to the other party specifying the effective
date of the termination, which shall be not less than thirty (30) days after the
delivery of the notice. Said thirty (30) day period shall be in addition to any
of the cure periods specified in Section 11.2.1.
11.2.1 MATERIAL DEFAULT. The other Party (the "defaulting
party") has failed to perform any material term, condition or obligation to be
performed by it under any of Sections 3 through 16 of this Agreement and such
failure remains uncured after written notice of default, specifying the nature
thereof in reasonable detail, has been given to the defaulting party unless, in
the case of default that does not involve the payment of money, prior to the
expiration of the applicable cure period, the defaulting party has commenced and
thereafter pursues and completes with due diligence those actions necessary to
cure such default within the applicable cure period. The applicable period for
the failure to make any payment due under this Agreement shall be thirty (30)
days, and the applicable cure period for any other default shall be sixty (60)
days but said 60 day cure period shall be subject to extension for a reasonable
period of time if the default is of such nature that it cannot reasonably be
cured with due diligence within sixty (60) days. A default in the payment of
money shall not be deemed material unless the amount thereof exceeds $100,000
and the non-performing Party believes in good faith that it is not legally
obligated to make the payment.
11.2.2 BANKRUPTCY OR INSOLVENCY. The other Party (an
"insolvent party") becomes bankrupt or insolvent or a receiver is appointed for
the business and/or assets of such other Party or an assignment is made by such
other Party for the benefit of its creditors, in each case whether by the
voluntary act or otherwise and, in the case of any such proceeding that is
involuntary, if such proceeding is not terminated within sixty (60) days
thereafter.
Page 24 of 40
25
11.3 RIGHTS AND DUTIES UPON TERMINATION. The termination of this
Agreement for any reason shall be without prejudice to the right of either Party
to receive any payments accrued under any provision of this Agreement prior to
the effective date of termination.
11.3.1 SALE OF INVENTORY. In the event of termination of
this Agreement, MRG shall nonetheless have the right for one year after the
effective date of termination to sell the inventory of Licensed Products in its
possession at the time of termination, except, however, that MiniMed shall have
the right but not the obligation to repurchase the Licensed Products in MRG's
inventory, if any, at the Transfer Price then in effect pursuant to Section 6.
11.3.2 EFFECT OF TERMINATION. The termination of this
Agreement for cause shall be without prejudice to (a) the rights of either Party
under Sections 2, 12.2, 14.5 through 14.9, 17, 22, 27, 28 and 33, all of which
shall survive such termination, or (b) any rights or remedies with respect to
defaults arising before such termination.
11.4 RIGHT TO RECOVER DAMAGES. Nothing in this Section 11 is
intended to limit the right of a Party to recover damages for any default of the
other Party, whether or not the nature of the default permits termination of
this Agreement pursuant to this Section 11.
11.5 SEPARATE AGREEMENTS. The Glucose Sensor Option Agreement,
the Agreement Re Implantable Pump Business between the Parties dated the same
date as this Agreement and the Secured Promissory Note and Security Agreement
referred to in Section 2.4, the Line of Credit Note referred to in Section 4.2
and the Lease referred to in Section 5 of the Agreement Re Implantable Pump
Business shall be considered completely separate from this Agreement and not a
part hereof. No default under such other documents shall affect the rights and
obligations of the Parties under this Agreement, and no default under this
Agreement shall affect the rights and obligations of the Parties under those
other documents.
12. INSPECTION, WARRANTY, REMEDIES
12.1 INSPECTION OF LICENSED PRODUCT. MiniMed shall have the right
but not the obligation to conduct inspection tests of Licensed Products to be
shipped to MiniMed at MRG's facility. Licensed Products reasonably rejected by
MiniMed as a result of such inspection shall not be shipped. In the event of any
shortage, damage or discrepancy in or to a shipment of Licensed Products or in
the event any Licensed Product fails to comply with the then current
specification for the Licensed Product, MiniMed will make a written claim within
two months from the date of delivery of the Licensed Products for problems that
are patent (i.e. readily discoverable from a customary physical inspection of
the shipment or MRG's manufacturing records maintained in accordance with
applicable regulatory requirements) and as promptly as practicable after
discovery for latent defects. MiniMed's claim will detail such shortage, damage
or discrepancy or failure and furnish such written evidence or other
documentation as MRG reasonably may deem appropriate. If such shortage, damage
or discrepancy or non-conformity with specifications existed at the time of
delivery of Licensed
Page 25 of 40
26
Product at the F.O.B. point, MiniMed may return the Licensed Product to MRG at
MRG's expense except that in no event shall MiniMed be entitled to return any
Licensed Product beyond the expiration date for its use if MRG could have
corrected the problem had it been discovered within two months after delivery.
Upon such return of a Licensed Product and, except as otherwise provided in
Section 7, MRG shall at MiniMed's option, either (a) promptly deliver a
substitute Licensed Product of the same or another acceptable design to MiniMed
in accordance with the delivery procedures set forth herein or (b) refund to
MiniMed MiniMed's cost of the Licensed Product including all costs of shipping,
handling, insurance, import and export taxes and other similar expenses incurred
by MiniMed. In no event shall the provisions of this Section 12.1 limit or
otherwise affect MRG's liability for any breach of the warranty set forth in
Section 12.2 or for indemnification pursuant to Section 14.7 with respect to any
Licensed Product sold or otherwise distributed by MiniMed without knowledge of
any defect, failure to meet specifications, damage or other similar problem. MRG
shall have no liability for incidental or consequential damages, but in no event
shall bodily injury, death or property damage caused by a Licensed Product be
deemed to be incidental or consequential damages.
12.2 LIMITED WARRANTY. MRG warrants to MiniMed that Licensed Products
sold by MRG to MiniMed under this Agreement shall be in conformance with
applicable specifications and shall be free from defects at the time of delivery
of said Licensed Products at the F.O.B. point except that no such warranty is
made with respect to any defect in design of MiniMed's current model of its
implantable pump systems.
12.3 DESIGN DEFECTS In the event that design defects exist in the
MiniMed implantable pump Model 2001, MiniMed and MRG will cooperate to resolve
any such defects. MRG will manage such efforts (if so requested by MiniMed) at
no cost, but MiniMed will pay any direct costs related to such efforts except
with respect to any further changes in design or improvements made by MRG after
the date of this Agreement and unrelated to defects in the current design, if
any.
13. DEFENSE OF TECHNOLOGY
13.1 NOTICE. In the event either Party hereto discovers or
becomes aware of any infringement or possible infringement of, or attack or
threatened attack on, any of the Licensed Pump Rights or rights to the MRG
Enhancement Technology, such Party immediately shall notify the other Party in
reasonable detail of such infringement, possible infringement, attack or
threatened attack. Promptly after such notification, the Parties will consult
with each other as to the course of action to be taken.
13.2 DEFENSE. MiniMed, in its sole discretion and at its sole
cost and expense and with counsel reasonably satisfactory to MRG, shall take any
and all appropriate legal action to defend the Licensed Pump Rights against any
suspected infringement or from any attack or threatened attack; provided,
however, that MRG at all times shall have the right to participate fully in any
such action at its own expense. In the event MiniMed fails within a reasonable
time to initiate appropriate action in connection with any such suspected
infringement, attack or threatened attack which in the reasonable judgment of
MRG adversely affects or might
Page 26 of 40
27
adversely affect MRG's rights in, to or under the Licensed Pump Rights, or fails
to pursue such action vigorously once commenced, MRG upon notice to MiniMed
shall have the right, but not the obligation, to initiate or pursue any such
appropriate action in MiniMed's name but at MRG's risk and expense, and MiniMed
shall cooperate fully in any such action. Any judgment, damages, settlement or
award which results from any such action shall be allocated (a) first, to
MiniMed and MRG in proportion and to the extent of the actual costs incurred by
each in connection therewith and (b) thereafter to MiniMed and MRG in proportion
to their actual damages.
13.3 LICENSES OF CONFLICTING TECHNOLOGY. In the event of the
occurrence of any claim that any of the rights granted pursuant to Section 3.1
by MiniMed to MRG conflict with any patent, copyright or other proprietary right
of any Third Party, the Parties hereto shall consult with each other regarding
such claim and the avoidance of the same. In the event the Parties mutually
determine that it is necessary or appropriate that MRG obtain a license from
such Third Party in order for MRG to exercise the rights granted to it
hereunder, the Parties shall use commercially reasonable efforts to obtain such
license on the most favorable terms practicable to MRG. In the event MRG is
required by the terms of such license to pay royalties to such Third Party, MRG
shall have the right to a refund of a portion of the royalties paid hereunder by
MRG in an amount equal to half the royalties paid to such Third Party not
exceeding half the royalties paid to MiniMed under Section 3.
13.4 MRG ENHANCED TECHNOLOGY. MiniMed and MRG shall have rights
with respect to each other that are reciprocal to those specified in Sections
13.2 and 13.3 in the event of any attack or threatened attack of the kind
referred to in those sections against any MRG Enhancement Technology
incorporated into a Licensed Product.
14. MISCELLANEOUS
14.1 QUALITY CONTROL. MiniMed shall follow reasonable quality
control standards with respect to the storage, preservation and use of Licensed
Products purchased under this Agreement.
14.2 GOOD MANUFACTURING PROCEDURES. Licensed Products shall be
manufactured and tested by MRG in accordance with (a) all applicable U.S. laws
and FDA regulations, including but not limited to the FDA's Good Manufacturing
Practice and Quality System regulations in effect at the time of such
manufacture or testing and (b) MiniMed's quality standards and systems from time
to time in effect and applied by MiniMed to all of MiniMed's products which are
of a comparable nature. MiniMed shall have the right, at its expense, to conduct
quality audits of MRG and of the Licensed Products and MRG shall fully cooperate
in all such audits. Each Party shall notify the other Party of any FDA
inspection of its production facilities used to manufacture any Licensed
Products and shall furnish the other Party with copies of any FDA Form 483 or
similar report to the extent that they apply to any Licensed Products or
Long-Term Glucose Sensors.
Page 27 of 40
28
14.3 RECORDS AND TRACEABILITY. Each of the Parties hereby
covenants and agrees that during the Term of the Distribution Rights, including
any extensions thereof, and for a minimum period of seven (7) years thereafter,
it shall maintain complete and accurate traceability records for all Licensed
Products that are manufactured and sold under this Agreement, including
pertinent data, research reports, test results, and know-how data, as required
under all applicable FDA regulations and other U.S. or other applicable laws or
regulations then in effect. Each of the Parties hereby covenants, during the
term of this Agreement and for a minimum period of three (3) years thereafter or
such longer period as any regulatory authority may require, to maintain adequate
business and sales records regarding the distribution of all Licensed Products
that are manufactured and sold under this Agreement, including pertinent data,
research reports, test results, and know-how data to meet or exceed all
applicable FDA and other U.S. or other applicable laws or regulations then in
effect. MRG and MiniMed shall give each other access to these records in the
event of an FDA recall or other remedial actions with respect to any product
subject to this Agreement, or for other purposes of the Parties in complying
with applicable regulatory requirements.
14.4 COMPLIANCE WITH LAW. MiniMed and MRG shall each comply with
all federal, state and local laws (and the laws of any foreign jurisdictions in
which the Licensed Products are manufactured or sold) applicable to the
manufacture, sale and/or distribution of the Licensed Products.
14.5 PATENT IDENTIFICATION. MRG will, and will cause its
Affiliates, its sublicensees and their Affiliates to, apply to all Licensed
Products proper patent notice in accordance with U.S. and any foreign statutes
relating to the marking of patented articles.
14.6 MRG'S LIABILITY INSURANCE. Beginning on the earlier of the
date on which the first sale of a Licensed Product manufactured by MRG or an
Affiliate or distributor of MRG is made by MiniMed or an Affiliate or
distributor of MiniMed or the date that any clinical trial sponsored by MiniMed
and using a Licensed Product begins and continuing until the expiration of ten
(10) years from the date on which the last sale by MiniMed of a Licensed Product
occurs, MiniMed shall maintain product liability insurance for the benefit of
MiniMed and MRG as named insureds (containing a Products Contractual Liability
Endorsement covering MRG's obligations under Sections 14.7) on such Licensed
Product in amounts that are consistent with the amount of products liability
insurance that are maintained by MiniMed on similar products sold by MiniMed for
similar or related purposes, but in no event less than Fifteen Million Dollars
($15,000,000). In the event the cost of the products liability insurance
(including the Products Contractual Liability Endorsement) exceeds a reasonable
amount as a result of claims made for bodily injury, death, or property damage
actually or allegedly caused by a Licensed Product, MRG will pay the incremental
cost of the insurance in excess of said reasonable amount (notwithstanding the
first sentence of this Section 14.6). If MiniMed ceases to be the exclusive
distributor of Licensed Products for the Covered Applications for any reason,
the amount of insurance required to be maintained by MiniMed shall be
appropriately reduced to reflect the risk for Licensed Products sold and to be
sold by MiniMed. In the event MiniMed cannot obtain the insurance required by
this Section 14.6 because MiniMed is not the
Page 28 of 40
29
manufacturer of the Licensed Products or for any other reason, MRG shall obtain
and maintain such insurance for the benefit of MRG and MiniMed at the cost of
MRG.
14.7 INDEMNITY. MRG shall indemnify, defend and hold harmless
MiniMed and its directors, officers, and employees from, and shall pay any and
all damages, costs, attorneys' fees or fines in excess of the amounts MiniMed
actually recovers under the insurance policy referred to in Section 14.6 or any
other policy maintained by MiniMed or MRG resulting from all claims or liability
for bodily injury, death and/or property damage arising out of any actually or
allegedly defective products sold to MiniMed pursuant to this Agreement or any
actual or alleged negligence or willful misconduct of MRG in carrying out the
terms of this Agreement and shall bear all costs and expenses of defending such
claims (including attorney's fees incurred by MiniMed or the allocable cost of
MiniMed's in-house counsel) in excess of such insurance proceeds. As used in
this Section 14.7 a "defective product" means a product that, at the time of
delivery to MiniMed at the F.O.B. point, does not conform to applicable
specifications or is damaged or has a defect in materials or workmanship or has
a defect in design that does not exist on the date of this Agreement. This
indemnity does not extend to any claim or loss which results from a Licensed
Product causing any other component, device or thing to fail (other than a
Glucose Controller or Glucose Monitor incorporated into an implantable pump and
other than the abdominal lead or the Long-Term Glucose Sensor) or a Licensed
Product failing as a result of use with any such other component, device, thing,
or technology; nor does this indemnity extend to failure of any such other
component, device, thing, or technology to work caused by a Licensed Product
which is properly manufactured.
14.8 INDEMNITY. MiniMed shall indemnify, defend and hold harmless
MRG, its manager and their respective directors, officers and employees from,
and shall pay any and all damages, costs and attorneys fees or fines in excess
of the amounts MRG actually receives under the liability insurance referred to
in Section 14.6 or any policy maintained by MiniMed or MRG resulting from any
claims or liability for bodily injury, death and/or property damage arising out
of the activities, services or other involvement of MiniMed with respect to any
sale or delivery of products sold or otherwise provided by MiniMed and resulting
from or caused by the actual or alleged negligent or willful misconduct of
MiniMed and shall bear all costs of defending such claims (including attorneys'
fees incurred by MRG) as contemplated by Section 14.9.
14.9 THIRD PARTY CLAIMS. The Party indemnified hereunder (the
"Indemnitee") shall promptly notify the indemnifying Party (the "Indemnitor") of
the existence of any claim, demand or other matter involving liabilities to a
Third Party to which the Indemnitor's indemnification obligations would apply
and shall give the Indemnitor a reasonable opportunity to defend the same at its
own expense and with counsel of its own selection (who shall be approved by the
Indemnitee, which approval shall not be unreasonably withheld); provided,
however, that the Indemnitee at all times shall have the right to fully
participate in the defense at its own expense. If the Indemnitor shall fail to
defend within a reasonable time after such notice, the Indemnitee shall have the
right, but not the obligation, to undertake the defense of, and to compromise or
settle (exercising reasonable business judgment), the claim or other matter on
behalf, for the account and at the risk and expense of the Indemnitor. Except as
provided in the preceding sentence, the Indemnitee shall not compromise or
settle the claim or other matter without the prior written consent of the
Indemnitor in each instance. If the claim is
Page 29 of 40
30
one that cannot by its nature be defended solely by the Indemnitor, the
Indemnitee shall make available all information and assistance that the
Indemnitor reasonably may request; provided, however, that any associated
expenses shall be paid by the Indemnitor.
15. FDA APPROVAL AND CLINICAL TRIALS
15.1 PMA/NDA FOR DIABETES. MiniMed will use commercially
reasonable efforts to cause a combined PMA and New Drug Approval application
("PMA/NDA") to be filed with the FDA with respect to the Licensed Products and
any related special insulin and to obtain approval of both the Licensed Products
and the related insulin for commercial distribution in the United States. In
that connection, MiniMed will also use commercially reasonable efforts to
conduct all clinical trials reasonably required by the FDA for such approval.
MiniMed will pay all reasonable costs and expenses of obtaining approval of the
PMA/NDA from the FDA, including the cost of the clinical trials, except that MRG
will provide at its expense the number of programmable insulin pump systems
reasonably required for such trials, up to a maximum of 100 as well as Licensed
Product support activities. If MiniMed obtains reimbursement for any such
implantable pump systems provided by MRG, the amount of such reimbursement shall
be allocated equally between MiniMed and MRG. If MiniMed believes that the scope
of any required clinical trials or any other requirements imposed by the FDA are
not commercially reasonable to pursue, MiniMed will have the right to notify MRG
of such determination, and thereafter the parties will consult in good faith as
to the extent to which MRG is willing to bear a portion of the costs. If such
consultation with MRG does not result in an amendment to this Agreement
satisfactory to MiniMed, either Party will have the right to have the matter
resolved by arbitration pursuant to Section 28. The arbitrator(s) shall
determine whether the requirements of the FDA are commercially unreasonable to
pursue and the portion of the cost that is unreasonable. Upon such
determination, MRG shall pay the portion of the cost determined to be
unreasonable as each item of cost is incurred and upon the presentation of
reasonable documentation from MiniMed.
15.2 HIV/AIDS; RETAINED PHARMACEUTICAL COMPANIES. MiniMed will
have the right (but not the obligation) to prepare and file all applications for
approval by the FDA for the commercial distribution of the Licensed Products for
the treatment of HIV and/or for AIDS and for the delivery of any medications,
pharmaceuticals and other compounds developed, manufactured or distributed by
any of the Retained Pharmaceutical Companies, including any clinical trials
relating thereto. MiniMed will pay all reasonable costs and expenses of
obtaining such approvals except that MRG will provide at MRG's expense the
number of programmable insulin pump systems reasonably required for such trials,
up to a maximum of 100 in connection with seeking approval of such applications
in the aggregate. If MiniMed obtains reimbursement for any such implantable pump
systems provided by MRG, MiniMed will pay over to MRG one-half of the amounts
reimbursed promptly after receipt thereof.
15.3 OTHER APPLICATIONS. If MRG and MiniMed do not enter into an
agreement with respect to the distribution by MiniMed of Other Applications
(including neurological and otological applications), then MiniMed will
cooperate with MRG in connection with obtaining FDA approval and comparable
approval from the European Union
Page 30 of 40
31
for such Other Applications, including clinical trials, and will provide such
information as is available to MiniMed as MRG reasonably requests. MRG will
reimburse MiniMed for its direct out-of-pocket expenses incurred in providing
such cooperation and/or information. If MRG and MiniMed do enter into an
agreement with respect to Other Applications, their respective obligations with
respect to obtaining FDA and other regulatory approvals will be as set forth in
that agreement.
15.4 TERMINATION OF OBLIGATIONS. MiniMed's obligations under this
Section 15 shall terminate at such time as MiniMed's distribution rights with
respect to Licensed Products are converted to non-exclusive rights.
16. REPRESENTATIONS AND WARRANTIES
16.1 REPRESENTATIONS AND WARRANTIES OF MRG. MRG hereby represents
and warrants to MiniMed that the statements set forth in Sections 16.1 through
16.1.4 hereof are true and correct.
16.1.1 ORGANIZATION AND STANDING. MRG is duly organized,
validly existing and in good standing under the laws of the state of its
organization, with full power and authority to own its property and carry on its
business as now conducted.
16.1.2 AUTHORITY AND ENFORCEABILITY. MRG has the right,
power and authority required for the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby; all authorizations
and approvals have been secured by MRG which are necessary to authorize the
execution, delivery and performance of this Agreement; and this Agreement upon
being duly executed constitutes a legal, valid and binding agreement of MRG and
is enforceable against it in accordance with its terms, excepting only to the
extent that such enforceability may be limited by bankruptcy law or other laws
of general application relating to creditor's rights and subject to the
availability of equitable remedies. The list of record and beneficial owners of
the outstanding equity interests in MRG and the number of units owned by each is
as previously disclosed in writing to MiniMed.
16.1.3 COMPLIANCE WITH THE LAW AND OTHER INSTRUMENTS. The
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, will not result in the breach of any term or
provision of, or constitute a default under, the Articles of Organization or
Operating Agreement of MRG, as amended to the date hereof, or any statute,
order, judgment, writ, injunction, decree, license, permit, rule or regulation
of any governmental or regulatory body or court, or any indenture, mortgage,
deed of trust or other agreement or instrument to which MRG is a party or by
which it is bound. The execution, delivery and performance of this Agreement by
MRG will not subject MiniMed to any lien, charge or encumbrance nor any tax or
penalty (other than normal income, property and sales and use taxes) arising as
a result of MRG's financial condition, status, previously incurred obligations,
ownership or relationship with other parties.
Page 31 of 40
32
16.1.4 INTELLECTUAL PROPERTY RIGHTS. The Enhancement
Technology is not and will not be subject to any encumbrance, lien or claim of
ownership by any Third Party, except for rights that MRG has licensed or intends
to license from Third Parties, for which MRG has (or will have at the time of
sale of Licensed Products to MiniMed) rights to utilize such technology as
required hereunder. To the extent that MRG has licensed or intends to license
Intellectual Property from Third Parties MRG will be responsible for all costs
and obligations related to such licenses. To the best of MRG's knowledge but
without having conducted a patent infringement search, the manufacture, use or
sale of products incorporating the Enhancement Technology will not infringe any
intellectual property rights of any Third Party, except for certain patents and
copyrights that MRG has licensed or will license from third parties and which
MRG has or will have the right to use.
16.2 REPRESENTATIONS AND WARRANTIES OF MINIMED. MiniMed hereby
represents and warrants to MRG that the statements set forth in Section 16.2.1
through 16.2.4 hereof are true and correct.
16.2.1 ORGANIZATION AND STANDING. MiniMed is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation, with full corporate power and authority to own its
property and carry on its business as now conducted.
16.2.2 AUTHORITY AND ENFORCEABILITY. MiniMed has the
right, power and authority required for the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; all
authorizations and approvals have been secured by MiniMed which are necessary to
authorize the execution, delivery and performance of this Agreement; and upon
being duly executed this Agreement constitutes a legal, valid and binding
agreement of MiniMed and is enforceable against it in accordance with its terms,
excepting only to the extent that such enforceability may be limited by
bankruptcy law or other laws of general application relating to creditor's
rights and subject to the availability of equitable remedies.
16.2.3 COMPLIANCE WITH THE LAW AND OTHER INSTRUMENTS. The
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, will not result in the breach of any term or
provision of, or constitute a default under, the Certificate of Incorporation or
Bylaws of MiniMed, as amended to the date hereof, or any statute, order,
judgment, writ, injunction, decree, license, permit, rule or regulation of any
governmental or regulatory body or court, or any indenture, mortgage, deed of
trust or other agreement or instrument to which MiniMed is a party or by which
it is bound.
16.2.4 INTELLECTUAL PROPERTY RIGHTS. MiniMed's Pump
Technology is not and will not be subject to any encumbrance, lien or claim of
ownership of any Third Party except for the rights of the licensor of the Xxxxx
Xxxxxxx Rights and the Xxxxxx Xxxxxxxxxx Rights. To the best of MiniMed's
knowledge but without having conducted a patent infringement search, the
manufacture, use or sale of MiniMed's Pump Technology will not
Page 32 of 40
33
infringe any intellectual property rights of any Third Party. MiniMed has not
licensed MiniMed's Pump Technology to any Third Party.
16.2.5 XXXXX XXXXXXX AND XXXXXX XXXXXXXXXX CONTRACTS.
MiniMed's existing agreements with The Xxxxx Xxxxxxx University and the Applied
Physics Laboratories of The Xxxxx Xxxxxxx University with respect to the Xxxxx
Xxxxxxx Rights and its existing agreements with Xxxxxx Xxxxxxxxxx Ltd with
respect to the Xxxxxx Xxxxxxxxxx Rights are binding obligations of the parties
and continue to be in effect except as otherwise disclosed by MiniMed to MRG in
writing prior to the execution and delivery of this Agreement; MiniMed has no
actual knowledge of any default by either party to any such agreements in the
performance of its obligations thereunder; to MiniMed's actual knowledge, the
royalty rate payable with respect to the Xxxxx Xxxxxxx Rights is 3.5%. MRG
acknowledges that it has received copies of all such agreements and has had an
opportunity to make such review and perform such inquiry as it considers to be
necessary or desirable with respect to such agreements.
17. LIMITATIONS ON WARRANTIES AND REMEDIES
17.1 LIMITATIONS ON WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN
SECTIONS 12.2 AND 16.1.4, MRG MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, REGARDING THE LICENSED PRODUCTS OR MINIMED'S PUMP TECHNOLOGY, INCLUDING
BUT NOT LIMITED TO (a) THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE, OR (b) ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE
VALIDITY OR SCOPE OF ANY RIGHTS TO TECHNOLOGY, OR (c) ANY REPRESENTATION OR
WARRANTY WITH RESPECT TO THE OWNERSHIP OF ANY TECHNOLOGY, THE LICENSED PRODUCTS
OR MINIMED'S PUMP TECHNOLOGY OR THE INFRINGEMENT BY THE SAME OF ANY PATENT,
COPYRIGHT OR OTHER PROPRIETARY RIGHT OF ANY THIRD PARTY, OR (d) ANY
REPRESENTATION OR WARRANTY WITH RESPECT TO THE ABSENCE OF ANY DEFECT IN THE
LICENSED PRODUCTS.
17.2 LIMITATIONS ON REMEDIES. EXCEPT AS SET FORTH IN SECTION 14.7
AND 16.1.4 IN NO EVENT SHALL MRG BE LIABLE TO MINIMED FOR ANY DAMAGES FOR LOST
PROFITS, LOST SAVINGS OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION
WITH MRG'S MANUFACTURE OF THE LICENSED PRODUCTS EVEN IF MRG HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. DAMAGES FOR PHYSICAL INJURY, DEATH OR PERSONAL
INJURY SHALL NOT CONSTITUTE CONSEQUENTIAL DAMAGES. THE PROVISIONS OF THIS 17.2
SHALL NOT APPLY TO DAMAGES FOR THE INACCURACY OF ANY REPRESENTATION OR WARRANTY
SET FORTH IN SECTIONS 16.1.1` THROUGH 16.1.4.
17.3 REMEDY FOR BREACHES COVERED BY SECTION 17.2. Notwithstanding
Section 17.2, if (a) MRG breaches any obligation under this Agreement for
Page 33 of 40
34
which lost profits, lost savings or consequential damages would have been
available but for Section 17.2, (b) such breach is material, (c) MRG did not use
commercially reasonable efforts to
perform that obligation and (d) MRG failed to actually and fully perform the
obligation in default within 30 days after MiniMed delivers written notice of
the breach to MRG, then MiniMed will have the right to undertake to manufacture
the Licensed Products for the Covered Applications or contract with others to do
so after asserting such right in a written notice delivered to MRG. Either Party
shall have the right to commence an arbitration in accordance with Section 28 to
determine whether MiniMed has that right under this Section 17.3. The decision
of the arbitrator or arbitrators will be final and binding on the parties.
Pending the arbitration, MiniMed will not be entitled to undertake manufacturing
or contract with others to do so and MRG will continue to have all of its
obligations under this Agrement. If neither party commences an arbitration
within 30 days after MiniMed's written notice referred to above is delivered,
MiniMed will be deemed to have the right to undertake to manufacture the
Licensed Products or contract with others to do so. If MiniMed undertakes to
manufacture Licensed Products or contract with others to do so pursuant to this
Section 17.3, MiniMed shall have no further obligation to purchase Licensed
Products from MRG and the provisions of Section 8.1.2 shall apply.
18. INDEPENDENT CONTRACTORS
18.1 The relationship between MiniMed and MRG under this
Agreement is solely that of independent contractors.
18.2 Neither Party shall have the right to bind the other or to
incur obligations on the other's behalf without the other's prior written
consent in each instance.
19. CONDITION PRECEDENT
The obligation of each of MiniMed and MRG to consummate the
transactions contemplated by this Agreement is conditioned upon, on or prior to
the date of execution of this Agreement, the execution by MiniMed and MRG of the
License Agreement and the Agreement Re Implantable Pump Business referred to in
the Recitals to this Agreement.
20. FORCE MAJEURE
Any Party's delay or failure in performing its obligation under
this Agreement shall be excused to the extent caused by forces beyond that
Party's reasonable control, including, without limitation, the following: war,
floods, earthquakes, other acts of God, industrial disputes, civil disobedience,
strikes, fire, mobilization, changes in governmental regulation or
interpretation, requisition, embargo, restriction and shortage of transport
facilities, fuel, energy or supplies. The unavailability of funds to any Party
to perform any obligation under this Agreement shall not excuse performance
under this Agreement regardless of the reason therefor. Each Party claiming the
benefit of such an excuse agrees to notify the other promptly in writing of any
such delay or failure in performance, and to resume performance as soon as is
reasonably practicable.
Page 34 of 40
35
21. NOTICES
Any notice, request, demand or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been given
(a) if personally delivered, when so delivered, (b) if mailed, seventy-two (72)
hours after having been placed in the United States mail, registered or
certified, postage prepaid, addressed to the Party to whom it is directed at the
address set forth below or (c) if given by telex or telecopier, when such notice
or other communication Is transmitted to the telex or telecopier number
specified below and the appropriate answer back or telephonic, confirmation is
received:
If to MiniMed:
MiniMed Inc.
00000 Xxx Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Telecopier No: (000) 000-0000
With a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
If to Medical Research Group, LLC:
Medical Research Group, LLC
00000 Xxx Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: President
Telephone No.: (000) 000-0000
Telecopier No: (000) 000-0000
With a copy to:
Lyon & Lyon LLP
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No: (000) 000-0000
Page 35 of 40
36
22. ASSIGNMENT
Neither Party shall be entitled to assign its rights or to
delegate its duties under this Agreement, whether by law or otherwise, without
the express written consent of the other Party except that either Party may
assign this Agreement to (a) a wholly-owned subsidiary of such Party, or (b) a
Third Party who acquires either Party by merger or consolidation or acquisition
of 80% or more of the outstanding equity interests of said Party (although no
change in the ownership of equity interests of a Party shall be deemed to
constitute an assignment of this Agreement), or (c) a Third Party who acquires
all or substantially all of the assets of either Party relating to the Licensed
Products, so long as the assignee agrees to assume all of the obligations of
said Party under this Agreement. In the event of such an assignment, the party
making the assignment shall remain fully liable for the performance of its
obligations hereunder.
23. SEVERABILITY
The provisions of this Agreement are severable, and if any one or
more provisions may be determined to be illegal or otherwise unenforceable, in
whole or in part, the remaining provisions, and any partially unenforceable
provisions to the extent enforceable, shall nevertheless be binding and
enforceable.
24. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS
All representations, warranties and agreements made by MiniMed or
MRG in this Agreement shall survive the date hereof and any investigations,
inspections, examinations or audits made by or on behalf of any Party hereto.
25. ENTIRETY
This Agreement constitutes the entire agreement between the Parties
hereto pertaining to the subject matter hereof, and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, relating to the subject matter of this Agreement, except the Mutual
Nondisclosure Agreement between the Parties with an effective date of January 2,
1996, the Glucose Sensor Option Agreement and the Agreement Re Implantable Pump
Business referred to in the Recitals to this Agreement.
26. AMENDMENT; WAIVER
This Agreement may be amended, modified, superseded or canceled,
and any of the terms and conditions hereof may be modified, only by a written
instrument executed by the Parties or, in the case of a waiver, by the Party
waiving compliance. No supplement, modification, waiver or termination of this
Agreement shall be valid unless it has been reduced to writing and executed by
the Party to be bound thereby. The failure of a Party at any time or from time
to time to require performance of any provision hereof shall in no manner affect
the right of such Party at a later time to enforce the same, and no waiver of
any nature, whether by
Page 36 of 40
37
conduct or otherwise, in any one or more instances, shall be deemed to be or
considered as a further or continuing waiver of any other provision of this
Agreement.
Subject to the restrictions on modification in this Section 26,
to the extent that any provision of this Agreement purports to grant rights or
create obligations that are inconsistent with either: (1) MRG's Xxxx Foundation
Rights or UC Rights, or (2) MiniMed's Xxxxx Xxxxxxx' Rights or Xxxxxx Xxxxxxxxxx
Rights (collectively, the "Rights"), the Parties shall meet and confer to bring
such provision in conformity with such Rights.
27. USE OF NAME
Except as provided in Section 9 with respect to trademarks and
tradenames, neither MiniMed nor MRG shall use the name of the other Party or of
any staff member or employee of the other Party or any adaptation thereof in any
advertising, promotion or sales literature in a manner which would constitute an
express or implied endorsement by the other Party or of any staff member or
employee thereof for any commercial product without the prior written consent of
the other Party in each instance.
28. SETTLEMENT OF DISPUTES
28.1 DISPUTES AND ARBITRATION. Unless the relief sought requires
the granting of equitable relief as contemplated by Section 28.1.1, below, any
dispute or controversy (whether or not based upon the law of contracts) arising
between the Parties in connection with this Agreement, including (a) disputes
relating to the formation of this Agreement or the performance, interpretation,
enforcement, application or validity of its provisions, and (b) issues that may
be based upon or arise out of disputes that MRG or MiniMed has with Third
Parties, shall upon the demand of either Party be resolved by arbitration held
at Los Angeles, California, in accordance with the arbitration procedures
established by the Rules of Commercial Arbitration of the American Arbitration
Association, except as otherwise provided herein.
28.1.1 If in connection with any such dispute or
controversy either Party seeks the issuance of a temporary restraining order or
the granting of preliminary injunctive relief, the court shall have the right
and power to grant the requested relief on a temporary basis pending the
resolution of factual issues by arbitration in accordance with Section 28.1.2,
and to thereafter enforce any award made in such arbitration proceedings.
28.1.2 The following principles and conditions will apply
in all arbitration proceedings conducted pursuant to this Agreement:
A. During the thirty (30) days following the date that the
written notice is given by either Party demanding the submission of the dispute
to arbitration, MRG and MiniMed will endeavor to select three independent
arbitrators having no substantial economic or other material relationship with
either MRG or MiniMed. If the issue in dispute involves matters of patents,
licensing or technology, the arbitration panel shall include at least two
persons who are knowledgeable in such matters. If the Parties cannot mutually
agree on
Page 37 of 40
38
the three arbitrators within such thirty (30) day period, then each Party will,
within seven (7) days after the expiration of such thirty (30) day period,
select one independent arbitrator and those two arbitrators shall select the
third independent arbitrator within seven (7) days after the selections of the
later of the two to be selected.
B. Discovery of evidence shall be conducted expeditiously
by the Parties and in accordance with the general principles embodied in the
California Civil Discovery Act. To the extent that it is necessary, either Party
may apply to a court of competent jurisdiction for assistance in obtaining
discovery of evidence for presentation to the arbitrators.
C. Except as provided in Section 28.1.3, the arbitrators
shall issue findings of fact and conclusions of law.
D. Except as provided in Section 28.1.3, the arbitration
will be conducted as a case would be represented to a trial court without a
jury. The arbitrators in their discretion may hear any type of evidence,
including hearsay evidence. The arbitrators shall decide the dispute in
accordance with applicable law and shall render a written decision, setting
forth their findings of fact and the conclusions of law upon which they relied
in making their award. The decision of the arbitrators shall be final and
binding on the Parties.
28.1.3 In the case of an arbitration to determine the
adjustment in prices referred to in Section 6.3, the arbitrators shall permit
each of the Parties to submit written and oral information and argument, shall
decide the matter in accordance with the standard set forth in Section 6.3 and
shall issue a written opinion explaining in reasonable detail the basis for
their decision on the adjustment in prices. The decision of the arbitrators will
be final and binding on the Parties.
28.2 COSTS OF ENFORCEMENT. Should any action or proceeding be
necessary to construe or enforce this Agreement, including an arbitration
pursuant to Section 28.1, or any arbitration award made pursuant to Section
28.1, above, then the Party prevailing in any such action or proceeding shall be
entitled to recover all court costs and reasonable attorneys' fees, to be fixed
by the court and taxed as part of any judgment entered therein, and the costs
and fees incurred in enforcing or collecting any such judgment.
29. GOVERNING LAW
The validity, construction and interpretation of this Agreement
shall be governed in all respects by the laws of the State of California
applicable to contracts made by residents of that state and to be performed
wholly within that state.
30. HEADINGS
Section and subsection headings are not to be considered part of
this Agreement and are included solely for convenience and reference and in no
way define, limit or describe the scope of this Agreement or the intent of any
provisions hereof.
Page 38 of 40
39
31. THIRD PARTIES
Nothing in this Agreement, expressed or implied, is intended to
confer upon any Person other than MiniMed or MRG any rights or remedies under or
by reason of this Agreement.
32. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each
one of which shall be deemed an original, but all of which shall constitute one
and the same instrument.
33. JURISDICTION
33.1 Each Party hereto irrevocably submits to the exclusive
jurisdiction of any court of the State of California or the United States of
America sitting in the City of Los Angeles over any suit, action or proceeding
arising out of or relating to this Agreement. Any arbitration proceedings
according to Section 28.1 shall be conducted in the County of Los Angeles. To
the fullest extent it may effectively do so under applicable law, each party
irrevocably waives and agrees not to assert, by way of motion, as a defense or
otherwise, any objection that it may now or hereafter have to the establishment
of the venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum.
33.2 Each Party hereto agrees, to the fullest extent it may
effectively do so under applicable law, that a judgment in any suit, action or
proceeding of the nature referred to hereinabove brought in any such court shall
be conclusive and binding upon such Person and its successors and assigns and
may be enforced in the courts of the United States of America or the State of
California (or any other courts to the jurisdiction of which such Person is or
may be subject) by a suit upon such judgment.
33.3 Nothing in this Section 33 shall be construed to limit the
force or effect of Section 28.
(Signature Page, located on page 40)
Page 39 of 40
40
IN WITNESS WHEREOF, the: Parties hereto have caused this Agreement to be
executed as of the date and year first set forth. above.
MINIMED INC., a Delaware MEDICAL RESEARCH GROUP, LLC, a
corporation California limited liability company
By AEM MiniMed Corp., its Managing
Member
By: /s/ XXXXXXXX X. XXXXX By: /s/ XXXXXX X. XXXX
----------------------------- -------------------------------
Xxxxxxxx X. Xxxxx Xxxxxx X. Xxxx
President and Chief Operating President
Officer
By: /s/ XXXX X. XXXXXX By: /s/ XXXXXX XXXXX
----------------------------- -------------------------------
Xxxx X. Xxxxxx Xxxxxx Xxxxx
Senior Vice President and President, MRG, LLC
General Counsel
Page 40 of 40
