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EXHIBIT 10.3
GLUCOSE SENSOR OPTION AGREEMENT
THIS GLUCOSE SENSOR OPTION 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. MRG is developing and holds available for license or
sub-license 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 for Scientific Research (the "Xxxx
Foundation"). Some of this technology has been licensed to MRG by the Regents of
the University of California and the Xxxx Foundation.
B. MiniMed desires to obtain an option to purchase the
worldwide distribution rights with respect to the long-term glucose sensor
technology upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises,
and the representations, warranties and covenants contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS
1.1 AFFILIATE. A Person or entity, 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 CLOSED LOOP SYSTEM. A system that includes an implantable
insulin pump and Long-Term Glucose Sensor in which the Long-Term Glucose Sensor
fully and automatically controls insulin delivery except for possible patient
intervention to indicate a meal.
1.3 CONFIDENTIAL INFORMATION. All information of MRG or
MiniMed that (a) is not generally 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
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disclosed in such manner that the fact that it is not publicly available would
be obvious to a reasonable person under the circumstance.
1.4 EFFECTIVE DATE. The Effective Date shall be the date of
this Agreement.
1.5 FDA. The United States Food and Drug Administration or any
successor entity having substantially the same authority.
1.6 GLUCOSE CONTROLLER. An apparatus or system which utilizes
Glucose Sensing Technology to control an insulin infusion device in a human or
in an animal.
1.7 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.
1.8 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.
1.9 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.
1.10 THE IMPLANTABLE PUMP LICENSE AND DISTRIBUTION AGREEMENT.
The Implantable Pump License and Distribution Agreement dated the same date
hereof by and between MiniMed and MRG.
1.11 XXXXX XXXXXXX RIGHTS. All rights which MiniMed now has to
Technical Information as a result of or relating to any contract or agreement
involving 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, any Addendum or Amendment to said License
Agreement and the Novation Agreement made April 29, 1992, by and between the
Applied Physics Laboratories of The Xxxxx Xxxxxxx University, Pacesetter
Infusion, Ltd. and MiniMed Technologies, Ltd.
1.12 LICENSED PRODUCTS. A Target Product which utilizes MRG's
Glucose Sensing Technology, including all accessories therefor and the Long-Term
Glucose Sensor itself. Glucose Controllers and Glucose Monitors used with
Long-Term Glucose Sensors are Licensed Products. They are expected to be
incorporated into the implantable insulin pump, but for purposes of this
Agreement, the implantable pump itself (excluding the Glucose Controller and
Glucose Monitor) is not a Licensed Product.
1.13 LICENSED SENSOR RIGHTS. MRG's rights to any patent or
Technology included within MRG's Glucose Sensing Technology.
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1.14 LIST PRICE The price generally published from time to
time for a product offered for sale in a particular market in particular
quantities to Third Parties unrelated to either Party who are not sales agents,
sales representatives, dealer or distributors, but instead utilize the product
for themselves or in providing medical care to unrelated persons.
1.15 LONG-TERM GLUCOSE SENSOR. Any sensor using MRG's Glucose
Sensor Technology, 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 an
implantable microinfusion pump system for at least forty-five days before
replacement, including Improvements and all accessories and components of the
sensor. The lead connecting the Long-Term Glucose Sensor to an implantable pump
is not an accessory or component of the Long-Term Glucose Sensor but is a part
of the implantable pump system.
1.16 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.
1.17 MRG'S GLUCOSE SENSING TECHNOLOGY. All rights which MRG
has and hereafter develops or acquires to Glucose Sensing Technology and
Licensed Products, 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.
1.18 PARTY. Either entity that is a signatory to this
Agreement.
1.19 PMA. Approval from the FDA to commercially distribute a
medical device under the Pre Market Approval regulations.
1.20 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, including, without limitation,
either party to this Agreement and their respective Affiliates.
1.21 REGULATORY APPROVAL. Approval by appropriate authorities
to allow commercial sale of any Licensed Product in a certain country or
countries, for example the FDA PMA approval in the United States.
1.22 TARGET PRODUCT. A Glucose Controller or a Glucose Monitor
utilizing an implantable glucose sensor suitable for use in vivo in humans or
animals for a period of at least forty-five days before replacement.
1.23 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,
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feasibility study information, testing and reliability information,
specifications, documentation, drawings, computer programs, software,
prototypes, and the like.
1.24 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.
1.25 THIRD PARTY. Any Person other than the legal entities
that are Parties to this Agreement.
1.26 TRANSFER PRICE. The price charged for any product by MRG
to MiniMed.
1.27 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.
1.28 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.
2. DEVELOPMENT OF LONG TERM GLUCOSE SENSOR
2.1 Promptly after the execution and delivery of this
Agreement MRG will continue to use commercially reasonable efforts to diligently
pursue the development of the Long-Term Glucose Sensor, including without
limitations (a) all pre-clinical activity necessary to obtain approval from the
FDA to conduct a clinical trial with respect to a fully implanted version of
MRG's Long-Term Glucose Sensor in humans under the Investigational Device
Exemption regulations adopted by the FDA (with commercially reasonable support
from MiniMed's regulatory personnel), and (b) commencement of such a study in
humans by the earliest reasonable date (the "Long-Term Glucose Sensor
Development"). The period from the Effective Date until the commencement of the
clinical trial is referred to herein as the Performance Period.
2.2 MONITORING OF DEVELOPMENT. Promptly after the execution
and delivery of this Agreement MiniMed and MRG will each designate two
representatives who will meet at least monthly so that MiniMed can monitor the
development of the Long-Term Glucose Sensor. MRG will cooperate with the MiniMed
representatives in good faith and will provide all information regarding the
status of the development of the Long-Term Glucose Sensor as MiniMed may
reasonably request, whether at the meetings of the representatives referred to
above and at any other time.
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3. CONFIDENTIAL INFORMATION
3.1 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 and Technology for its own benefit or gain
except as is mutually agreed between the Parties or as otherwise provided for
and permitted under this Agreement or the Implantable Pump License and
Distribution Agreement. No Confidential Information or materials pertaining to
Licensed Products, MRG's Glucose Sensing Technology or MiniMed's Pump Technology
will be supplied to any other Person other than those approved in writing by
MiniMed with respect to MiniMed's Confidential Information and by MRG with
respect to MRG's Confidential Information, except disclosure to sublicensees,
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. Confidential Information may also be supplied by MRG to
proposed distributors if the Option expires without being exercised, if MiniMed
repudiates the Option before it expires or if the Option is exercised and
thereafter MRG reasonably believes, based on the quantity of Licensed Products
ordered or purchased by MiniMed, that MRG will have the right to convert
MiniMed's distribution rights to non-exclusive rights pursuant to Section 6.6.2
or terminate them pursuant to Section 6.6.3. Nothing in this Section 3 shall
apply, however, to any disclosure that may be required by applicable law,
including without limitation disclosures in documents filed with the Securities
and Exchange Commission and in 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.
3.2 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 to disclose and, to the extent reasonably practicable, to use
reasonable efforts to obtain confidential treatment for the Confidential
Information disclosed.
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3.3 LIMITED RELEASE. MiniMed and MRG shall be released from
the obligations of Section 3.1 to the extent that any of the disclosed
information: (a) was already publicly available 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).
3.4 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 3.1, 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.
4. [INTENTIONALLY OMITTED]
5. OPTION FOR EXCLUSIVE MARKETING AGREEMENT
5.1 GRANT OF OPTION. MRG hereby grants MiniMed the right and
option (the "Option") to purchase the exclusive worldwide distribution rights
with respect to the Long-Term Glucose Sensor and all other Licensed Products
pursuant to the terms and conditions set forth in Section 6 (the "Exclusive
Marketing Agreement"). The Option shall only be exercisable within 90 days after
any fully implantable version of the Long-Term Glucose Sensor is first
successfully implanted in human patients under an approved Investigational
Device Exemption granted by the FDA or under approval of the relevant regulatory
authority for the European Union. The Long-Term Glucose Sensor will be deemed to
have been successfully implanted if for a period of at least thirty days it
works continuously as designed, is not subject to being explanted and produces
data that correlates to plasma glucose levels determined using accepted
laboratory instruments or capillary glucose levels determined using conventional
monitors, in either case, to the extent of at least 85%. The 90-day period
within which the option must be exercised shall commence with the date of
implant and shall include the thirty days referred to above. Said 90-day period
to exercise the Option shall be extended by one day for each day after any such
implant until MRG notifies MiniMed of the implant and one day for each day after
the thirty days referred to above before MRG reports to MiniMed in writing on
the results relevant to determining that the implant was successful. The fact
that MiniMed's exclusive rights to distribute implantable pump systems may have
become non exclusive under the Implantable Pump License and Distribution
Agreement shall not affect MiniMed's right to exercise the Option and obtain the
exclusive distribution rights referred to above.
5.2 EXERCISE OF OPTION. The Option may be exercised by MiniMed
only by delivering written notice of its election to exercise within the 90 day
period referred to in Section 5.1 (as that period may be extended pursuant to
Section 5.1).
5.3 PURCHASE PRICE. The purchase price payable for the
exclusive worldwide distribution rights with respect to the Long-Term Glucose
Sensor and all the Licensed Products
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will be $30 million. The purchase price shall be payable within thirty (30) days
after delivery of the notice of exercise pursuant to Section 5.2.
5.4 AVAILABILITY OF INFORMATION. MRG shall make reasonable
efforts to keep MiniMed informed on a current basis of all facts and events
relating to the Long-Term Glucose Sensor specifications, schedules and trial
results which would be regarded as important to a reasonable and prudent person
holding the right to exercise the Option in deciding whether or not to exercise
(although not necessarily determinative in that decision).
5.5 PROHIBITION ON GRANTING LICENSES TO LICENSED SENSOR RIGHTS
DURING OPTION. MRG shall not license any of the Licensed Sensor Rights to any
Third Party prior to the expiration of the Option without it having been
exercised or after exercise of the Option, except that MRG may grant licenses to
utilize the Licensed Sensor Rights after MiniMed's distribution rights are
converted to non-exclusive rights pursuant to Section 6.6.2, such rights are
terminated pursuant to Section 6.6.3 or to the extent consented to in writing by
MiniMed prior to the date of this Agreement.
5.6 EFFECTIVE DATE OF EXCLUSIVE MARKETING AGREEMENT. Section 6
shall not become effective if the notice of exercise is not given by MiniMed
prior to the expiration of the Option or if MiniMed fails to pay the purchase
price as required by Section 5.3.
6. CONTINGENT EXCLUSIVE MARKETING AGREEMENT
The provisions of this Section 6 shall commence to apply if
and when the Option is exercised and MiniMed pays the purchase price to MRG.
6.1 CONTINGENT GRANT OF MARKETING RIGHTS. Subject to the
foregoing condition, MRG hereby grants to MiniMed the exclusive worldwide
marketing rights to promote, sell, market, distribute and use the Long-Term
Glucose Sensor and all other Licensed Products for the Exclusive Marketing
Agreement Term, subject to a limited reversion to non-exclusivity or termination
pursuant to Section 6.6 of this Agreement.
6.2 THE EXCLUSIVE MARKETING AGREEMENT TERM. The "Exclusive
Marketing Agreement Term" shall begin when and if MRG receives written
notification of MiniMed's exercise of the Option as provided in Section 5.2 and
payment of the purchase price as provided in Section 5.3, and shall continue
perpetually thereafter unless terminated.
6.3 EXCLUSIVITY. Except as provided in Sections 6.6.2 and
6.6.3 of this Agreement, MRG shall have no right to grant to any Third Party the
right to promote, sell, market, distribute or use the Long-Term Glucose Sensor
or any other Licensed Product anywhere in the world during the Exclusive
Marketing Agreement Term, and, except as provided in Sections 6.6.2 and 6.6.3,
MRG will not sell or distribute the Long-Term Glucose Sensor or any other
Licensed Product during the Exclusive Marketing Agreement Term except so as to
fulfill its obligations to MiniMed under this Agreement.
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6.4 PURCHASE OF LONG-TERM GLUCOSE SENSORS.
6.4.1 TRANSFER PRICES. Once the Long-Term Glucose
Sensor is ready for production and MRG can lawfully sell such a device to
MiniMed, MRG shall sell to MiniMed Long-Term Glucose Sensors at a Transfer Price
equal to
(a) for sales to customers located in the U.S., the greater of
the US Minimum Transfer Price established by MRG or
sixty-five percent (65%) of the List Price of such
Long-Term Glucose Sensors as determined by MiniMed and
(b) for sales to customers located in each respective market
outside of the U.S., the greater of the OUS Minimum
Transfer Price established by MRG or fifty-five percent
(55%) of the List Price of such Long-Term Glucose Sensors
as determined by MiniMed
and upon such other terms and conditions as are customary and mutually agreed
upon. Until 24 months after regulatory approval for sale in the US, the US
Minimum Transfer Price shall not exceed Twenty Six Hundred Dollars ($2,600.00).
Until 24 months after regulatory approval for sale in the EU or any other OUS
jurisdiction reasonably agreeable to MRG and MiniMed the OUS Minimum Transfer
Price shall not exceed Twenty Five Hundred Dollars ($2,500.00). Glucose
Controllers and Glucose Monitors are not included in the Transfer Price of the
Long-Term Glucose Sensors and are included in the Transfer Price of implantable
insulin pump systems pursuant to the Implantable Pump License and Distribution
Agreement. The lead connecting the Long-Term Glucose Sensor to an implantable
pump likewise is not included in the Transfer Price of the Long-Term Glucose
Sensor, is included in the price of the implantable pump system when sold with
that system and is priced separately when sold separately as provided in the
Implantable Pump License and Distribution Agreement.
6.4.2 MANUFACTURING. Within a reasonable time after
MiniMed obtains Regulatory Approval for a Licensed Product from the FDA or any
regulatory authorities of another jurisdiction approved by MiniMed, MRG will
establish the capability to manufacture the Long-Term Glucose Sensor and the
other Licensed Products meeting the then current specifications and the warranty
set forth in Section 6.19 in the quantities and within the delivery times
contemplated by this Agreement. If MRG fails to establish the capability to
manufacture the Long-Term Glucose Sensor or any of the other Licensed Products
in accordance with the requirements of the preceding sentence or thereafter
loses that capability or fails to manufacture the Long-Term Glucose Sensors or
the Licensed Products to be sold to MiniMed as contemplated by Section 6.4.2.1,
then MiniMed shall have the right, in accordance with Section 6.4.3, to itself
undertake the manufacture of the Long-Term Glucose Sensor and the other Licensed
Products 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 180 days in which to cure its failure to perform. Such cure shall be
deemed effective only if MRG manufactures and delivers to MiniMed in accordance
with the requirements of this Agreement that number of Long-Term Glucose Sensors
and other Licensed Products which
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MiniMed has ordered and MRG has failed to deliver and at least 80% of such
products that meet the specification and warranty requirements referred to
above.
6.4.2.1 ORDERS FOR LICENSED PRODUCTS.
MiniMed and MRG will cooperate to ensure that MiniMed receives the quantities of
Long-Term Glucose Sensors and other Licensed Products that it requires.
Immediately upon obtaining the first regulatory approval referred to in Section
6.4.2 (or before, at MiniMed's option) MiniMed will place a firm purchase order
with MRG for the quantity of Long-Term Glucose Sensors and other Licensed
Products it requires over the next six month period. MiniMed and MRG will meet
to review and agree to MiniMed's initial requirements. Thereafter, MiniMed will
provide supplemental purchase orders periodically, but at least every two
months, specifying the quantity of Long-Term Glucose Sensors and other Licensed
Products 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 if that order exceeds, for any given six month period, more that 115%
of the number of Long-Term Glucose Sensors or other Licensed Products purchased
in the previous six month period. If MiniMed's requirements for Long-Term
Glucose Sensors or other Licensed Products change 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 to reflect any actual increases in MRG's costs. In the event of any
disagreement as to whether the additional charges reflect actual increases in
MRG's costs, the matter shall be settled by arbitration pursuant to Section 18.
6.4.3. MANUFACTURE BY MINIMED. If MiniMed undertakes
to manufacture the Long-Term Glucose Sensor and other Licensed Products under
the provisions of Section 6.4.2, it will have the right to do so thereafter
throughout the Exclusive Marketing Agreement Term provided that it complies with
the following conditions: (1) MiniMed shall be required to pay a royalty to MRG
equal to 8% of MiniMed's Long-Term Glucose Sensor sales from the sale, lease or
other commercial exploitation of the Long-Term Glucose Sensors manufactured by
it; (2) MiniMed shall be required to comply with all requisite obligations of a
sublicensee arising after MiniMed undertakes to manufacture under the Exclusive
License Agreement for Glucose Sensors and Systems with the Regents of the
University of California effective February 28, 1990, U.C. Agreement Control No.
90-04-0104 and the License Agreement dated February 6, 1996 between MRG and the
Xxxx Foundation, including the payment of any royalties or other compensation
with respect to Long-Term Glucose Sensors manufactured by MiniMed under the
present terms of such licenses or any revised terms agreed upon after the date
hereof which are more favorable to MiniMed and (3) MiniMed shall not take any
action or omit to take any action which would constitute a default of a
sublicense under any such agreement. "Long-Term Glucose Sensor Sales" for this
purpose shall mean the U.S. dollar amount of gross sales of Long-Term Glucose
Sensors and other Licensed Products of MiniMed or any of its Affiliates,
excluding amounts collected for any transportation, shipping and mailing costs;
sales, use or excise taxes; customs, duties, tariffs or insurance and after
subtracting all amounts refunded, allowed, credited or discounted with respect
to Long-Term Glucose Sensors. If MiniMed elects to exercise the right to
manufacture the Long-Term Glucose Sensors and other Licensed Products pursuant
to this Agreement, MiniMed will have the right to use all Technology owned or
licensed by MRG relating to the Long-Term Glucose
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Sensor and the other Licensed Products for the purpose of manufacturing,
distributing and selling Long-Term Glucose Sensors and the other Licensed
Products provided that MiniMed complies with the requirements of (2) above and
any requisite obligations owed by MRG under any other license to a Third Party,
including the payment of any royalties. MRG will cooperate with MiniMed in
providing technical information and assistance as MiniMed may reasonably require
to manufacture Long-Term Glucose Sensors and other Licensed Products. If MiniMed
manufactures the Long-Term Glucose Sensor and other Licensed Products the
provisions of Sections 6.5 and 6.6 will continue to apply.
6.5 ABILITY TO SET LIST PRICE. MiniMed shall have the sole
authority to establish List Prices for the Long Term Glucose Sensor.
6.5.1 ADJUSTMENT IN PRICES. If at anytime after
December 31, 2000 either Party believes that the Transfer Price arrangement for
the Long-Term Glucose Sensor 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 18.
6.6 PERFORMANCE REQUIREMENTS. For MiniMed to maintain
exclusivity of its marketing rights granted under this Exclusive Marketing
Agreement for the two separate geographic segments of (a) sales to customers
located in the United States and (b) sales to customers located in any country
other than the United States ("OUS"), MiniMed must satisfy both of the following
requirements:
(i) MiniMed shall satisfy the minimum purchase
requirements set forth in Section 7.1 of the Implantable Pump
License and Distribution Agreement (but only to the extent
required to preserve its exclusive distribution rights
thereunder) for each full calendar year commencing after it
exercises the Option, whether or not its exclusive
distribution rights under that Agreement have become
non-exclusive, and
(ii) After the Long-Term Glucose Sensor and the other
related Licensed Products are commercially available as part
of a Closed Loop System, MiniMed must purchase that number of
Long-Term Glucose Sensors in each calendar year equal to the
combined total of the US and the OUS "Minimum Purchase
Requirements" determined as provided below.
The Minimum Purchase Requirement for each of the US and the OUS shall be
determined by multiplying the number of implantable pump systems sold by MiniMed
in the relevant jurisdiction (US or OUS) in each Annual Period by the applicable
percentage in the table below for that Annual Period. The Minimum Purchase
Requirements will be determined separately for the US and the OUS but the two
separate amounts shall be combined for purposes of (ii) above. Long-Term Glucose
Sensors that are sold as replacements for patients already having implanted
pumps with sensors will count towards the Minimum Purchase Requirements.
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Each Annual Period in the table below is measured for sales to
customers located in the U. S. from the first day of the month following the
latest of the date the Exclusive Marketing Agreement becomes effective, the end
of the Performance Period (as defined in Section 2.1) or the date of the first
Regulatory Approval of a Long-Term Glucose Sensor and the other related Licensed
Products for use with an approved implantable pump system in a Closed Loop
System for sales to customers located in the US. Each Annual Period in the
following table is measured for OUS sales from the first day of the month
following the latest of the date the Exclusive Marketing Agreement becomes
effective, the end of the Performance Period referred to above or the date of
first Regulatory Approval of a Long-Term Glucose Sensor and the other related
Licensed Products for use with an approved implantable pump system in a Closed
Loop System in the EU. Each such year referred to in the following table,
whether applicable to sales in the United States or OUS sales, is referred to in
this Agreement as an "Annual Period."
MINIMUM PERCENTAGE
ANNUAL PERIOD FOR U.S. AND OUS
------------- ------------------
First Year 40%
Second Year 50%
Third Year 60%
Fourth Year 70%
Fifth Year 80%
Each Year Thereafter 90%
6.6.1 DETERMINATION OF PURCHASE REQUIREMENTS. The
Minimum Purchase Requirements will be measured at the end of each relevant
calendar year as follows:
(a) Because the Annual Periods in the table in
Section 6.6 are intended to be 365-day periods from the date of
Regulatory Approval (366 days for leap years), which will not
necessarily be calendar years, an "Average Annual Percentage" for each
calendar year will be determined based on the average monthly
percentage for each Annual Period in the table. The average monthly
percentage for each Annual Period will be calculated by dividing the
applicable Minimum Percentage in the table by 12. Thus the average
monthly percentage for the first Annual Period (the First Year in the
table in Section 6.6) will be 3.33% and the average monthly percentage
for the second Annual Period (the Second Year in the table) will be
4.167%. If Regulatory Approval is obtained on any day other than the
first day of a calendar month, the first Annual Period will be deemed
to commence on the first day of the next full calendar month.
(b) For each calendar year the Average Annual Percentage will
be equal to the sum of the monthly average percentages for each month
of the calendar year calculated as provided in (a) above. For example,
if the first Regulatory Approval referred to in Section 6.6 is
obtained in the US on March 20, 2005, the period from March 20, 2005
to March 31, 2005 will be disregarded and the average monthly
percentage for the months from April 2005 through March 2006 will be
3.33%. The
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average monthly percentage for the months from April 2006 to March 2007
will be 4.167%. Therefore the Average Annual Percentage for calendar
year 2006 will be the sum of the average monthly percentages for
January through March 2006 at 3.33% per month plus the average monthly
percentages for April through December 2006 at 4.167%, or a total of
47.5%.
(c) The total number of pump systems sold in the US
or the OUS, as the case may be, during each calendar year (both those
which include and do not include Long-Term Glucose Sensors) will then
be multiplied by the Average Annual Percentage for that calendar year,
and the resulting product will be the Minimum Purchase Requirement for
the US or the OUS, as the case may be, for that calendar year.
(d) There will be no Minimum Purchase Requirement for
any fractional calendar year after the first Regulatory Approval in the
US or for any fractional calendar year after the first Regulatory
Approval in the first jurisdiction in the OUS where Regulatory Approval
is obtained. For example, if the first Regulatory Approval in the US is
obtained on April 1, 2005, there will be no Minimum Purchase
Requirement for the US for the calendar year 2005 and the Minimum
Purchase Requirement for 2006 will be 47.5% calculated as provided in
(c) above.
(e) Although any fractional calendar year after the
first Regulatory Approval in the first jurisdiction in the OUS where
Regulatory Approval is obtained will be disregarded, fractional years
after the first Regulatory Approval in any other OUS jurisdictions will
not be disregarded. Moreover, pump systems sold in those subsequent OUS
jurisdictions will be included in the calculation of the Minimum
Purchase Requirement for the OUS commencing with the first day of the
first full calendar month after Regulatory Approval is obtained in each
such jurisdiction (or commencing on the day Regulatory Approval is
obtained if it is obtained on the first day of a calendar month).
(f) The Average Annual Percentage applicable to the
OUS will depend upon the date of the first Regulatory Approval in the
first OUS jurisdiction where such approval is obtained as provided in
(d) above notwithstanding the fact that Regulatory Approval for other
jurisdictions may be obtained in subsequent years. For example, if
Regulatory Approval in the EU is obtained on April 1, 2005 and
Regulatory Approval for Japan is obtained on July 1, 2007, pump systems
sold in Japan on and after July 1, 2007 will be included in the
calculation of the Minimum Purchase Requirement for the OUS for
calendar year 2007 and subsequent years and the Average Annual
Percentage applicable to all pump sales in the EU and Japan combined
for calendar year 2007 would be 57.5%, the same Average Annual
Percentage determined pursuant to (b) above that would apply to the OUS
if Regulatory Approval had not been obtained in Japan.
(g) In calculating the Minimum Percentage Requirement
for the OUS, sales of pump systems in all OUS jurisdictions for which
the first Regulatory Approval described in Section 6.6 has not been
obtained will be disregarded. Thus, in the
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calculation in (c) above sales of implantable pumps (both those which
include and do not include a Long-Term Glucose Sensor) in OUS
jurisdictions other than the EU and Japan would be disregarded
(assuming Regulatory Approval in any such other jurisdiction has not
been obtained).
(h) The EU shall be treated as a single jurisdiction
for purposes of calculating OUS Minimum Purchase Requirements unless at
some future date countries then having a majority of the population of
all countries presently constituting the EU do not accept the concept
of a single Regulatory Approval for all such countries.
(i) If Regulatory Approval is obtained and then
suspended or revoked in any jurisdiction, pump systems sold to
customers located in that jurisdiction, both those which include and do
not include a Long-Term Glucose Sensor, will be disregarded in the
calculation of Minimum Purchase Requirements until Regulatory Approval
is reinstated. If Regulatory Approval is suspended or revoked in the
US, (A) there shall be no Minimum Purchase Requirement for the US until
Regulatory Approval is reinstated, (B) the calculation of that Minimum
Purchase Requirement for the period after reinstatement shall be made
in the manner contemplated by (c) above and (C) the Minimum Percentages
in the table in Section 6.6 used to calculate the Average Annual
Percentage will be based upon the date of obtaining the first
Regulatory Approval without regard to any such suspension or revocation
unless the period of suspension or revocation exceeds six months. In
that event (X) the Minimum Percentage used for calculating the Average
Annual Percentage for the calendar year in which reinstatement occurs
will be the Minimum Percentage that was in effect for the Annual Period
during which the suspension or revocation occurred, (Y) such Minimum
Percentage shall remain in effect for 12 full calendar months after
Regulatory Approval is reinstated and (Z) all increases in the Minimum
Percentage shall occur at the beginning of the next succeeding 12
calendar month periods.
(j) Likewise, if Regulatory Approval in the EU is
suspended or revoked, the Minimum Purchase Requirements for the OUS
will be suspended and reinstated in the manner contemplated by (i)
above. If Regulatory Approval is suspended or revoked for any OUS
jurisdiction other than the EU, there shall be no effect on the Minimum
Purchase Requirement for the OUS except that sales of pump systems,
both those including and not including Long-Term Glucose Sensors, to
customers located in that jurisdiction will be disregarded in the
calculation until Regulatory Approval is reinstated.
An example of the application of Section 6.6 and this Section
6.6.1 is attached to this Agreement.
6.6.2 LOSS OF EXCLUSIVE RIGHTS. If during the
Exclusive Marketing Agreement Term purchases made in any calendar year by
MiniMed from MRG for the U.S. and OUS combined do not equal at least the
combined Minimum Purchase Requirements for the US and the OUS specified in
Section 6.6 and 6.6.1 for such calendar year and provided MRG can continue to
supply the quantities of Long-Term Glucose Sensors and the other related
Licensed Products set forth in Section 6.6.1 and is not otherwise in material
default of this Agreement, MRG shall have the absolute right to convert
MiniMed's marketing rights to a non-exclusive basis, unless within thirty (30)
days after the end of such Annual Period MiniMed pays to MRG such sum as is
representative of one-half of the Transfer Price of the quantity of Long-Term
Glucose Sensors which would need to be purchased by MiniMed to bring the total
minimum quantity for such calendar year up to at least such combined Minimum
Purchase Requirements for the US and the OUS. In no event shall MiniMed's
marketing rights be converted to a non-exclusive basis or terminated if the
failure of MiniMed to purchase the required number of Long-Term Glucose Sensors
is caused by the failure of MRG to provide, in accordance with the requirements
of this Agreement (determined without regard to the doctrine of substantial
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performance and without regard to the 115% limitation set forth in Section
6.4.2.1), Long-Term Glucose Sensors or other Licensed Products which have been
ordered by MiniMed.
If MRG fails to establish the capability to
manufacture Licensed Products and MiniMed exercises its right set forth in
Section 6.4.2 to itself undertake such manufacture or contract with others to do
so, the Minimum Purchase Requirements set forth in Section 6.6.1 shall be
adjusted so that they begin to apply for the first twelve calendar month period
commencing after such capability is established as if that had been the First
Year in the table set forth in Section 6.6 and shall progress as provided in the
table substituting each such successive twelve calendar month period for each
calendar year referred to in Section 6.6.1.
Likewise, if MRG loses said manufacturing capability
or if MRG fails to deliver or MiniMed is unable to manufacture or distribute
Long-Term Glucose Sensors as a result of the assertion by a Third Party of any
right to the Technology associated with the Long-Term Glucose Sensor, then the
obligation to meet the Minimum Purchase Requirements 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 Long-Term Glucose Sensors is eliminated (as a result
of legal proceedings or otherwise) and such delivery, manufacturing or
distribution, as the case may be, begins. The Minimum Purchase Requirements for
the first twelve calendar month period commencing thereafter shall be the same
as the Minimum Purchase Requirements for the calendar year in which any such
suspension occurred. The Minimum Purchase Requirements for each subsequent
twelve calendar month period shall be equal to the Minimum Purchase Requirement
for the calendar years subsequent to the year in which any such suspension
occurred.
If during any calendar year (a) MRG fails to deliver
to MiniMed within the times required by this Agreement, all of the Long-Term
Glucose Sensors (determined without regard to the 115% limitation set forth in
Section 6.4.2.1 and the doctrine of substantial performance) ordered by MiniMed
for delivery during that calendar 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 Sensors Ordered") or (b) any such
sensors delivered during the calendar year fail to meet all of the requirements
of this Agreement (including without limitation those set forth in Sections
6.12, 6.18 and 6.19), then the Minimum Purchase Requirement for that calendar
year will be reduced by the number of Long-Term Glucose Sensors which are not so
delivered plus those that do not meet such requirements (the "Shortfall"). In
addition, the Minimum Purchase Requirement for each subsequent calendar year
will be reduced by the percentage that the Shortfall represents of the Number of
Sensors Ordered. Such reduction shall be made whether or not the Number of
Sensors Ordered exceeds the 115% limitation set forth in Section 6.4.2.1.
In no event shall MiniMed's marketing rights be
converted to non-exclusive rights pursuant to this Section 6.6.2, nor shall such
rights be terminated pursuant to Section 6.6.3 if the failure of MiniMed to meet
the Minimum Purchase Requirement 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 115% limitation set forth in Section 6.4.2.1 and
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determined without regard to the doctrine of substantial performance), the
Number of Sensors Ordered or (b) the failure of MRG to establish or maintain the
capability to manufacture Long-Term Glucose Sensors or continuously maintain
that capability or (c) the assertion of Third Party rights in the Technology
associated with the Long-Term Glucose Sensor. The parties acknowledge that in
the case of (b) or (c) MiniMed will not be obligated to place orders for
Long-Term Glucose Sensors and therefore (b) and (c) will apply even if (a) does
not.
6.6.3 TERMINATION OF RIGHTS. If during the Exclusive
Marketing Agreement Term purchases made in any two consecutive calendar years by
MiniMed from MRG for each market segment have not met or exceeded the combined
Minimum Purchase Requirements for the US and the OUS, or if MiniMed shall sell
any Target Product that does not include a Long-Term Glucose Sensor purchased
from MRG, MRG shall have the absolute right to terminate the Exclusive Marketing
Agreement by payment to MiniMed of the amount of one-half of the purchase price
set forth in Section 5.3 less one-half of any amount previously paid to MiniMed
under Section 6.9.3.
6.6.4 SATISFACTION OF MINIMUM PURCHASE REQUIREMENTS.
If during the Exclusive Marketing Agreement Term purchases made in any calendar
year by MiniMed from MRG for the U.S. and OUS geographic segments equal or
exceed the combined Minimum Purchase Requirements for those segments specified
in the above table for such Annual Period, MiniMed shall be deemed to have
satisfied its obligations under Sections 6.6 and 6. 1 for such calendar year.
6.6.5 RIGHT TO SELL INVENTORY. In the event of
termination of the marketing rights under this Agreement pursuant to Section
6.6.3, MiniMed shall nonetheless have the right for one year from the effective
date of termination to sell the inventory of Long Term Sensors and other
Licensed Products in its possession at the time of termination, except, however,
that MRG shall have the right but not the obligation to repurchase the Long Term
Sensors and other Licensed Products in MiniMed's inventory at the price paid by
MiniMed to MRG for purchase of such products.
6.6.6 NOTICE OF TERMINATION. To be effective MRG may
exercise its right to terminate the Exclusive Marketing Agreement or its
exclusivity only if it elects to do so by delivering written notice to MiniMed
within one hundred eighty (180) days after the end of the calendar year for
which the required combined Minimum Purchase Requirements for the US and the OUS
have not been met and MiniMed has failed to pay the amounts necessary to avoid
any such termination.
6.6.7 OBLIGATIONS AFTER TERMINATION. In the event of
termination of the Exclusive Marketing Rights or the reduction of marketing
rights to non-exclusive rights under this Agreement, MiniMed shall make
commercially reasonable efforts to allow MRG to make and sell Licensed Products
and/or implantable insulin pumps for use with a Long-Term Glucose Sensor 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.
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6.7 PAYMENT. The purchase price payable by MiniMed to MRG
pursuant to Section 6.4 shall be F.O.B. MRG's place of manufacture. 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. All sales will be final, and no
returns will be allowed except as set forth below in Section 6.18 for products
not complying with MRG's warranty or the inspection specifications. In the event
any payment payable by MiniMed to MRG pursuant to Section 6.4 shall not be paid
promptly when due, the unpaid balance thereof shall bear interest at the lesser
of (a) prime lending rate of Citibank N.A. from time to time in effect plus 1%
or (b) maximum rate permitted by applicable law.
6.8 [INTENTIONALLY OMITTED]
6.9 DEFENSE OF TECHNOLOGY.
6.9.1 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 Sensor Rights, such Party immediately
shall notify the other Party of the details 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.
6.9.2 MRG, in its sole discretion and at its sole
cost and expense and with counsel, reasonably satisfactory to MiniMed, shall
take any and all appropriate legal action to defend the Licensed Sensor Rights
against any suspected infringement or from any attack or threatened attack;
provided, however, that MiniMed at all times shall have the right to participate
fully in any such action at its own expense. In the event MRG 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 MiniMed adversely affects or might adversely affect MiniMed's rights
in, to or under the Licensed Sensor Rights, or fails to pursue such action
vigorously once commenced, MiniMed upon notice to MRG shall have the right, but
not the obligation, to initiate or pursue any such appropriate action in MRG's
name but at MiniMed's risk and expense and MRG 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 MRG and MiniMed in proportion and to the
extent of the actual costs incurred by each in connection therewith, and (b)
thereafter, to MRG and MiniMed in proportion to their actual damages.
6.9.3 In the event of the occurrence of any claim
that any of the rights granted hereunder by MRG to MiniMed 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 MiniMed obtain a license from such Third Party in order for
MiniMed to exercise the rights granted to it hereunder, the Parties shall use
their best efforts to obtain such license on the most favorable terms
practicable to MiniMed. In the event MiniMed is required by the terms of such
license to pay royalties to such Third Party, MiniMed shall have the right
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to a refund of a portion of the Purchase Price paid hereunder by MiniMed in an
amount equal to one half of the royalties paid to such Third Party up to a
maximum of fifteen million dollars.
6.10 QUALITY CONTROL. MiniMed shall follow reasonable quality
control standards established by MRG with respect to the storage, preservation
and use of the Long-Term Glucose Sensors purchased under this Agreement.
6.11 FDA APPROVAL AND CLINICAL TRIALS.
6.11.1 MiniMed will use commercially reasonable
efforts to cause an appropriate application to be filed with the FDA for
approval of the Long-Term Glucose Sensor and other Licensed Products for
commercial distribution and to obtain such approval 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.
The cost of obtaining and maintaining such regulatory approvals shall be borne
equally by MiniMed and MRG. The results of these efforts shall be made available
to MRG to the extent reasonably practicable and at MRG's expense. MRG shall
reimburse MiniMed for its share of such cost from time to time within 30 days of
each request for reimbursement by MiniMed accompanied by reasonable
documentation of the costs to be reimbursed. Any amount not paid within the
thirty (30) day period will bear interest at the lesser of (a) prime rate of
Citibank N.A. from time to time in effect plus one percent or (b) the maximum
rate permitted by applicable law. The value (determined at the established
Transfer Prices) of implantable pumps, Long-Term Glucose Sensors and accessories
and other Licensed Products provided by MRG for the support of the regulatory
approvals will be credited towards MRG's share of the regulatory costs. MRG will
cooperate with MiniMed in connection with obtaining FDA approval of the
Long-Term Glucose Sensor and other Licensed Products, including cooperation with
clinical trials and will provide to MiniMed such information as it possesses and
MiniMed reasonably requests in connection with obtaining FDA approval on such
clinical trials or both.
6.11.2 MiniMed will also have the right at its own
expense to apply for and obtain regulatory approval for commercial distribution
of the Long-Term Glucose Sensor and other Licensed Products in foreign
countries, and MRG will cooperate in such efforts.
6.11.3 MiniMed will provide MRG information on the
protocols and results obtained in MiniMed's trials of MiniMed's glucose sensors;
such information will constitute MiniMed's Confidential Information pursuant to
this Agreement.
6.11.4 MiniMed's obligations under this Section 6.11
shall terminate at such time as MiniMed's marketing rights with respect to the
Long-Term Glucose Sensor are converted to non-exclusive rights pursuant to
Section 6.6.2 or are terminated pursuant to Section 6.6.3 without first being
converted to non-exclusive rights.
6.12 GOOD MANUFACTURING PROCEDURES. Long-Term Glucose Sensors
and other Licensed Products shall be manufactured and tested by MRG in
accordance with 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 MiniMed's quality
standards from time to time in effect. MiniMed
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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 activities. MRG
shall notify MiniMed of any FDA inspection of its production facilities used to
manufacture any Long-Term Glucose Sensors or other Licensed Products and shall
furnish MiniMed with copies of any FDA Form 483 or similar report to the extent
that they apply to any or Long Term Glucose Sensors or other Licensed Products.
6.13 RECORDS AND TRACEABILITY. Each of the Parties hereby
covenants and agrees that during the Exclusive Marketing Agreement Term and any
renewals thereof, and for a minimum period of seven years thereafter, it shall
each maintain complete and accurate traceability records for all Long-Term
Glucose Sensors and other Licensed Products that are manufactured and sold under
this Exclusive Marketing 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 Exclusive
Marketing Agreement and any renewals thereof and for a minimum period of three
(3) years thereafter or such longer period as may be required by law, to
maintain adequate business and sales records regarding the distribution of all
Long-Term Glucose Sensors and other Licensed Products, 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 each shall give each other access to these records in
the event of an FDA recall of any product subject to this Exclusive Marketing
Agreement, or for other purposes of the Parties in complying with applicable
Regulatory requirements.
6.14 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
to the extent that each of them engages in any such activities. MiniMed shall
procure and maintain all necessary permits, consents, and qualifications
necessary for it to market and distribute the Licensed Products.
6.15 MiniMed warrants and covenants to MRG that:
6.15.1 MARKETING ACTIVITIES. MiniMed shall (a)
maintain adequate warehouses, inventory and other facilities and (b) shall train
and equip sufficient staff to promote, sell and distribute the Licensed Products
in a commercially reasonable manner.
6.15.2 MARKET INTRODUCTION AND TRADE PRESENTATIONS.
MiniMed shall be responsible for and shall bear the cost and expense of all
advertising, trade show exhibits, advertising and user training with respect to
the marketing of the Licensed Products.
6.15.3 PATENT IDENTIFICATION. MiniMed 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.
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6.15.4 MINIMED'S LIABILITY INSURANCE. Beginning on
the date on which the first sale of a Licensed Product is made by MiniMed or an
Affiliate or distributor of MiniMed and continuing until the expiration of ten
(10) years from the date on which the last sale of a Licensed Product occurs,
MiniMed shall maintain product liability insurance (containing a Products
Contractual Liability Endorsement covering MiniMed's obligations under Section
6.15.5) 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). MRG shall be named as an additional
insured in each policy of insurance required to be maintained by MiniMed
hereunder. 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 relating to any failure of the Long-Term Glucose Sensor to
perform in accordance with applicable specifications (whether as a result of a
defect or otherwise), MRG will pay the incremental cost of the insurance in
excess of said reasonable amount (notwithstanding the first sentence of this
Section 6.15.4). If MiniMed ceases to be the exclusive distributor of Licensed
Products for any reason, the amount and coverage of insurance required to be
maintained by MiniMed shall be appropriately reduced to cover and 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 6.15.4 because MiniMed is
not the manufacturer of the Licensed Products or for any other reason not
involving fault by MiniMed, MRG shall obtain and maintain such insurance for the
benefit of MRG and MiniMed at the cost of MRG.
6.15.5 INDEMNITY. MiniMed shall indemnify, defend and
hold harmless MRG and its manager, directors, officers, and employees from, and
shall pay any and all damages, costs, attorneys' fees or fines in excess of the
amounts MRG actually recovers under the insurance policy referred to in Section
6.15.4 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 the activities, services, or other involvement of MiniMed with respect to any
sale or delivery of products sold or otherwise provided by MRG resulting from or
caused by the actual or alleged negligence or willful misconduct of MiniMed and
shall bear all costs and expenses of defending such claims (including attorney's
fees incurred by MRG as contemplated by Section 6.17).
6.15.6 REGULATORY APPROVALS. MiniMed shall use
commercially reasonable efforts to (a) obtain all Regulatory Approvals necessary
to market the Licensed Products at the earliest reasonable date inside United
States, in the European Union and in such other jurisdictions as MiniMed may
reasonably determine, in exercise of its business discretion and, (b) as soon as
it is legally permitted to do so, to promote, market, sell and distribute the
Licensed Products during the Exclusive Marketing Agreement Term; provided,
however, that, notwithstanding anything contained in this Agreement to the
contrary, MRG's sole remedy for breach of MiniMed's obligations under (b) above
shall be conversion of MiniMed's marketing rights to a non-exclusive basis or
termination of said marketing rights as elsewhere provided. MiniMed's
obligations under this Section 6.15 shall terminate at such time as MiniMed's
marketing rights with respect to the Long-Term Glucose Sensor are converted to
non-exclusive rights pursuant to Section 6.6.2.
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6.16 INDEMNITY. MRG shall indemnify, defend and hold harmless
MiniMed and its directors, officers and employees from, and shall pay any and
all damages, costs and attorneys fees in excess of the amounts MiniMed actually
recovers under the liability insurance required by Section 6.15.4 or any other
policy maintained by MiniMed or MRG, resulting from all claims and 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 misconduct of MRG in carrying out the terms of
this Agreement and shall bear all costs and expenses of defending such claims
(including attorneys' fees incurred by MiniMed or the allocable cost of
MiniMed's in-house counsel). This indemnity does not extend to any claim or loss
which results from the Long Term Glucose Sensor causing any other component,
device or thing (other than an implantable pump system or other Licensed Product
sold by MRG) to fail or the Long Term Glucose Sensor failing as a result of use
with any such other component, device, thing, or technology; nor does this
indemnity extend to failure of any other such component, device, thing, or
technology to work caused by a Long Term Glucose Sensor which is not improperly
manufactured. As used in this Section 6.16 "defective product" means the product
does not conform to applicable specifications or has a defect in materials or
workmanship or design or is damaged at the time of delivery to MiniMed at the
F.O.B. point. 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 another Licensed Product or any component thereof and other than the
implantable pump system or any component thereof for which the Licensed Product
was designed) 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 or thing or technology to work
caused by a Licensed Product which is properly manufactured.
6.17 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 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.
6.18 INSPECTION OF LONG-TERM GLUCOSE SENSORS. MiniMed shall
conduct any incoming inspection tests not later than forty-five (45) days from
the date of receipt of the Licensed Products at the shipping address to which
MiniMed has requested delivery of such
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Licensed Products. Licensed Products not rejected by MiniMed by written notice
to MRG within such period shall be deemed accepted, with the exception of
Licensed Products with latent defects that are not readily observable by
MiniMed. In the event of any shortage, damage or discrepancy in or to a shipment
of Licensed Products or in the event any Licensed Products fail to comply with
the then current specifications for the Licensed Products, MiniMed shall report
promptly such shortage, damage or discrepancy or failure to MRG 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 Products at the F.O.B. point,
MiniMed may return the Licensed Products to MRG at MRG's expense, and MRG shall
at MRG's option either (a) promptly deliver substitute Licensed Products of the
same or another acceptable design to MiniMed in accordance with the delivery
procedures set forth herein, or (b) refund to MiniMed the cost of the Licensed
Products, including all costs of shipping, handling, insurance, import and
export taxes and other similar costs incurred by MiniMed.
6.19 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
at the F.O.B. point.
6.20 REMEDIES FOR BREACH OF WARRANTY. In the event that any
Licensed Product manufactured or sold by MRG to MiniMed under this Agreement
fails to comply with the limited warranty provided for in Section 6.19 and
MiniMed delivers notice of such noncompliance to MRG, within six (6) months of
the delivery of such Licensed Product to MiniMed or within six (6) months of
MiniMed's discovery of any latent defects in a Licensed Product that are not
readily observable by MiniMed, MRG will, unless the Licensed Product defect is
the result of any act of MiniMed, at MRG's option, either (a) correct such
failure by suitable repair or replacement at its own expense or (b) refund to
MiniMed the cost of the Licensed Product, including all costs of shipping,
handling, insurance, import and export taxes and other similar costs incurred by
MiniMed; however, MRG shall have no liability whatsoever 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.
6.21 REPRESENTATIONS REGARDING INTELLECTUAL PROPERTY RIGHTS.
MRG represents that MRG's Glucose Sensing 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 licensors of the Xxxx Foundation Rights and the UC Rights.
To the best of MRG's knowledge but without having conducted a patent
infringement search, the manufacture, use or sale of MRG's Glucose Sensing
Technology will not infringe any intellectual property rights of any Third
Party. MRG has not licensed MRG's Glucose Sensing Technology to any Third Party.
The agreements giving rise to the Xxxx Foundation Rights and the UC Rights are
in full force and effect except as previously described by MRG to MiniMed in
writing. MRG will indemnify, defend and hold harmless MiniMed and its directors,
officers and employees from, and shall pay one half of any and all damages,
costs and attorneys' fees (including allocable costs of in house counsel)
arising out of or relating to, any claim that any of the Licensed Products
infringes any patent, trade secret or other proprietary right of a Third Party
except that
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in no event shall MRG be obligated to pay more than $15,000,000 in the aggregate
for all such indemnification, including any payments by MRG under Section 6.9.3.
6.21.1 MINIMED'S INTELLECTUAL PROPERTY RIGHTS. If the
present design of any part of a Licensed Product infringes any current or future
MiniMed patent, trade secret or other proprietary rights, MiniMed hereby grants
to MRG a non-exclusive, fully paid, royalty free license to use those patent
rights in the manufacture, sale and use of Licensed Products except for such
rights as are licensed to MiniMed by a Third Party. If the present design of any
MiniMed product now being commercially distributed or in development, including
without limitation MiniMed's short-term glucose sensor, infringes any MRG
current or future patents, trade secret or other proprietary right, MRG hereby
grants to MiniMed a non-exclusive, fully paid, royalty-fee license to use those
rights in the manufacture, sale and use of such products except for such rights
as are licensed to MRG by a Third Party.
6.22 LIMITATIONS ON WARRANTIES AND REMEDIES
6.22.1 LIMITATIONS ON WARRANTIES. EXCEPT AS EXPRESSLY
SET FORTH IN SECTION 6.19 or 6.21, MRG MAKES NO REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, REGARDING THE LICENSED PRODUCTS, 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 PATENT RIGHTS, OR (c) ANY REPRESENTATION OR WARRANTY WITH RESPECT
TO THE OWNERSHIP OF ANY TECHNOLOGY OR THE LICENSED PRODUCTS OR THE INFRINGEMENT
BY THE SAME OF THE 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.
6.22.2 LIMITATIONS ON REMEDIES. EXCEPT AS SET FORTH IN SECTION
6.16 and 6.21, IN NO EVENT SHALL MRG BE LIABLE TO MINIMED FOR ANY DAMAGES FOR
LOST PROFITS, LOST SAVINGS OR OTHER 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 6.22.2 SHALL NOT APPLY TO DAMAGES FOR THE INACCURACY OF ANY REPRESENTATION
OR WARRANTY SET FORTH IN SECTIONS 13.1.1 THROUGH 13.1.3.
6.22.3 REMEDY FOR BREACHES COVERED BY SECTION 6.22.2.
Notwithstanding Section 6.22.2, if (a) MRG breaches any obligation under this
Agreement for which lost profits, lost savings or consequential damages would
have been available but for Section 6.22.2, (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 delivered written notice of the breach to
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MRG, then MiniMed will have the right to undertake to manufacture the Licensed
Products or contract with others to do so after asserting such right in a
written notice delivered to MRG. Either party will have the right to commence an
arbitration in accordance with Section 18 to determine whether MiniMed has that
right under this Section 6.22.3. 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 Agreement. 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 pursuant to this
Section 6.22.3, MiniMed shall have no further obligation to purchase Licensed
Products from MRG and the provisions of Section 6.4.3 shall apply.
6.23 TERMINATION. MiniMed may terminate the Exclusive
Marketing Agreement or Section 6.3 with respect to exclusivity at its sole
discretion by giving MRG written notice of its intention to terminate,
specifying the date of termination. The Exclusive Marketing Agreement shall be
subject to termination by MRG only as provided in Sections 6.6.2, 6.6.3 or 8.
6.24 TRADEMARKS. All trademarks and tradenames developed
during the terms 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. 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 and sale of the
Licensed Products 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. Upon
termination of the exclusivity of MiniMed Distribution Rights, the limited right
of MRG to use MiniMed's trademarks and tradenames shall be limited to use in
connection with Licensed Products sold to MiniMed.
6.25 IMPROVEMENTS TO INTELLECTUAL PROPERTY.
6.25.1 IMPROVEMENTS BY MRG. Any Improvements to the
Technology, Technical Information or Confidential Information developed by MRG
related to the Licensed Products during the term of this Agreement are, as
between MRG and MiniMed, owned by MRG.
6.25.2. IMPROVEMENTS BY MINIMED. Any Improvements to
the Technology, Technical Information or Confidential Information developed by
MiniMed
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relating to 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 the 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 18.
6.25.3 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.
6.25.4 TERM OF LICENSES; PATENTS. Any licenses
granted under Sections 6.25.1 through 6.25.3 shall survive until the last to
expire 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 no such patents or when the last of any 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 and proper) to carry out the provisions of these sections.
7. INDEPENDENT CONTRACTORS
7.1 The relationship between MiniMed and MRG under this
Agreement is solely that of independent contractors.
7.2 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.
8. TERMINATION
8.1 TERMINATION FOR CAUSE. Either Party will have the right to
terminate this Agreement upon the occurrence of any of the events specified in
Sections 8.1.1 through 8.1.3. 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 delivery of the notice. Said thirty (30) days shall be in addition to any
of the cure periods specified in Sections 8.2.1:
8.1.1 MATERIAL DEFAULT. The other Party (herein, a
"defaulting party") has failed to perform any material term, condition or
obligation to be performed by it under Section 5 or 6 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 a 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 cure period
for the failure to pay money shall be thirty (30) days and the applicable cure
period for any other default shall be sixty (60) days, but said 60-day 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 with sixty
(60) days. A default in the payment of money shall not be deemed material unless
the amount thereof
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exceeds $100,000. In the event of a default under any provision of this
Agreement other than Sections 5 and 6, the Agreement may not be terminated as a
remedy therefor, but the non-defaulting Party will have all other rights and
remedies under applicable law, including without limitation the recovery of
damages.
8.1.2 EARLY TERMINATION OF IMPLANTABLE PUMP LICENSE
AND DISTRIBUTION AGREEMENT. Prior to MiniMed's exercise of the Option pursuant
to Section 6.1 of this Agreement, MRG shall be entitled to terminate this
Agreement if the Implantable Pump License and Distribution Agreement is not or
is no longer effective or ceases to be legally binding or enforceable as to
MiniMed, except as a result of termination by MiniMed in accordance with the
Implantable Pump License and Distribution Agreement.
8.1.3 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.
8.2 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.
8.2.1 SURVIVAL OF CERTAIN OBLIGATIONS. The
termination of this Agreement for cause shall be without prejudice to (a) the
rights of either Party under Sections 3, 6.13, 6.15.5, 6.16, 6.17, 6.19, 6.20,
6.21, 6.21.1, 6.24, 6.25, 8.2, 11, 17, 18, and 23 or (b) any remedies which such
Party may then or thereafter acquire.
8.3 SEPARATE AGREEMENTS. The Implantable Pump License and
Distribution 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, except as provided in Section 8.1.2.
9. FORCE MAJEURE
9.1 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.
9.2 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.
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10. 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
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11. 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 said Party, or (b) a
Third Party who acquires either Party by merger or acquisition of 80% or more of
the outstanding capital stock of said Party (although no change in the ownership
of equity interests of said 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, 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.
12. 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.
13. REPRESENTATIONS AND WARRANTIES
13.1 REPRESENTATIONS AND WARRANTIES OF MRG. MRG hereby
represents and warrants to MiniMed that the statements set forth in Sections
13.1.1 through 13.1.3 hereof are true and correct.
13.1.1 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.
13.1.2 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.
13.1.3 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 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 any 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,
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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.
13.2 REPRESENTATIONS AND WARRANTIES OF MINIMED. MiniMed hereby
represents and warrants to MRG that the statements set forth in Sections 13.2.1
through 13.2.3 hereof are true and correct.
13.2.1 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
(corporate and other) to own its property and carry on its business as now
conducted.
13.2.2 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 (corporate and other) 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.
13.2.3 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 any indenture, mortgage, deed of trust or
other agreement or instrument to which MiniMed is a party or by which it is
bound.
14. 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.
15. 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 Implantable Pump License and Distribution Agreement and the Agreement
Re Implantable Pump Business between the Parties dated the same day as this
Agreement.
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16. 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 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
16, 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.
17. USE OF NAME
Except as provided in Section 6.24, 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.
18. SETTLEMENT OF DISPUTES
18.1 DISPUTES AND ARBITRATION. Unless the relief sought
requires the granting of equitable relief pursuant to Section 18.1.1, below, any
dispute or controversy (whether based upon the law of torts or of contracts)
arising 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.
18.1.1 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 18.1.2,
and to thereafter enforce any award made in such arbitration proceedings.
18.1.2 The following principles and conditions will
apply in all arbitration proceedings conducted pursuant to this Agreement:
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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 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.
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 6.5.1, the
arbitrators shall issue findings of fact and conclusions of law.
D. 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
render a written decision, setting forth their findings of fact and the
principles upon which they relied in making their award. The decision of the
arbitrators shall be final and binding on the Parties.
18.1.3 In the case of an arbitration to determine the
adjustment on prices referred to in Section 6.5.1, 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 6.5.1 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
shall be final and binding on the Parties.
18.2 COSTS OF ENFORCEMENT. Should any action or proceeding be
necessary to construe or enforce this Agreement or any arbitration award made
pursuant to Section 18.1, 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.
19. 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 and to be performed wholly within that
State.
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20. 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.
21. 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.
22. COUNTERPARTS
This Agreement may be executed simultaneously 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.
23. JURISDICTION
23.1 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 18.1 shall be conducted in the City 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.
23.2 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.
23.4 Nothing in this Section 23 shall be construed to limit
the force or effect of Section 18.
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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 California
corporation 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 President
Operating Officer
By: /s/ XXXX X. XXXXXX By: /s/ XXXXXX XXXXX
------------------------------- ----------------------------------
Xxxx X. Xxxxxx Xxxxxx Xxxxx
Senior Vice President and President, MRG, LLC
General Counsel
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EXAMPLE OF APPLICATION OF SECTIONS 6.6 AND 6.6.1
1. Assume the first Regulatory Approval referred to in Section
6.6 outside of the United States is obtained in the EU on November 20, 2003.
This means that the First Year in the table in Section 6.6 for the OUS begins
December 1, 2003 and ends November 30, 2004.
2. Assume that the first Regulatory Approval referred to in
Section 6.6 in the United States occurs on March 7, 2005. This means that the
First Year in the table in Section 6.6 for the US begins April 1, 2005 and ends
March 31, 2006.
3. Assume the first Regulatory Approval in Japan is obtained
on July 1, 2007. Assume that no Regulatory Approvals are obtained in any other
jurisdiction and no Regulatory Approvals are suspended or revoked.
4. Since the period from November 20, 2003 to December 31,
2003 is less than a full year, there shall be no Minimum Purchase Requirement
for the OUS for calendar year 2003. Likewise there will be no Minimum Purchase
Requirement for the US for calendar years 2003 through 2005.
5. The Average Annual Percentage for the OUS for calendar year
2004 will be equal to the sum of (i) 3.33% (the average monthly percentage for
the period from December 2003 through November 2004) multiplied by 11 plus (ii)
4.167% (the average monthly percentage for December 2004, or 40.83%. The Minimum
Purchase Requirement for the OUS for calendar year 2004 will equal 40.83% of the
total number of pump systems sold to customers located in the EU during that
calendar year. Only pump systems sold to customers in the EU (with and without
Long-Term Glucose Sensors) are included in the calculation.
6. The Average Annual Percentage for calendar year 2005 for
the OUS will be 50.83% calculated as provided in 5 above. The Minimum Purchase
Requirement for the OUS for calendar year 2005 will equal 50.83% of the total
number of pump systems sold in the EU during that calendar year.
7. The Average Annual Percentage for the OUS for the calendar
year 2006 will be 60.83% calculated as provided in 5 above. The Minimum Purchase
Requirement for the OUS for calendar year 2006 will equal 60.83% of the number
of total number of pump systems sold in the EU during that calendar year. The
Average Annual Percentage for the US for calendar year 2006 will be 47.50%
calculated as provided in 5 above. The Minimum Purchase Requirement for the US
for calendar 2006 will equal 47.5% of the total number of pump systems sold in
the US during that calendar year.
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8. The Average Annual Percentage for the OUS for calendar year
2007 will be 70.83%. The Minimum Purchase Requirement for the OUS for calendar
year 2007 will equal 70.83% of the total number of pump systems sold in the EU
during the full calendar year plus the number of pump systems sold in Japan for
the period from July 1, 2007 to December 31, 2007. The Average Annual Percentage
for the US for calendar year 2007 will be 57.5%, and the Minimum Purchase
Requirement for that calendar year will equal 57.5% of the total number of pump
systems sold in the US during that calendar year.
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