ASSIGNMENT
DATE: 30th June 1999
PARTIES:
(1) MARATHON MEDICAL TECHNOLOGIES, INC., an Oregon corporation, having an
office at 7620 S.W. Bridgeport Road, Portland, Oregon 97224, United States
of America ("Marathon")
(2) HYPOGUARD DEVELOPMENT CO. LIMITED an exempted company incorporated under
the laws of Bermuda, and having its registered office at Clarendon House, 2
Church St., Hamilton, Bermuda ("JV Co").
(3) ELAN CORPORATION, PLC, an Irish company, with a registered office at
Lincoln House, Lincoln Place, Dublin 2, Ireland ("Elan");
RECITALS:
A. Marathon and Elan entered into a license agreement dated 15th October 1997
("Marathon Licence") for the development of a glucose monitoring device.
B. Marathon has agreed with the JV Co to assign the benefit of the Marathon
License, the goodwill and custom associated with such Marathon Licence, and
all other intellectual property owned or licensed by Marathon, to JV Co in
accordance with the terms set forth in this Agreement.
1. ASSIGNMENT
Subject to the terms and conditions hereof, Marathon as beneficial owner hereby
assigns to the JV Co all the following property, rights, claims and liberties:
1.1 the full benefit of the Marathon Licence;
1.2 the goodwill and custom associated with the Marathon Licence; and
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1.3 all JV SUB KNOW-HOW, JV SUB PATENT RIGHTS and all its rights in and to the
JOINT IMPROVEMENTS (such words in capitals to have the meaning defined in
the Marathon Licence) and all other intellectual property owned or licensed
by Marathon including but not limited to:
a) in vitro data on sensor improvements/expirimentation,
b) in vivo data from human trials,
c) design analysis,
d) chemical analysis including toxicology data,
e) sensor membrane analysis and experimentation: membrane
thickness, solvents,
f) active layer composition data,
g) variability and drift studies,
h) electronic and software designs,
i) electronic pulsing variations and associated data,
j) electronic sampling variations and associated data, and
k) monitor housing and design.
TO HOLD the same unto JV Co absolutely.
2. CONSIDERATION
2.1 In consideration of the assignment set forth in Clause 1 above, JV Co shall
pay the following amounts to Marathon:
(i) $4,000,000 in cash upon the execution of this Assignment, and
(ii) the royalty payments described in Clause 2.2 below.
2.2 Subject to the following sentence, JV Co shall pay Marathon royalty
payments equal to 3% of (i) all In Market Net Sales of Products and (ii)
all Licence Fees following the date hereof in the Territory. After Marathon
has received $10 million in cumulative royalty payments on the Products
from JV Co, the royalty payable by JV Co to Marathon pursuant to the
preceding sentence shall be reduced from 3% to 1%.
"Affiliate" of any entity means any other entity controlling, controlled by
or under common control with such first entity, as the case may be, where
"control" means (a) in the context of a company limited by shares, the
direct or indirect ownership of at least 50% of the voting rights attaching
to the shares thereof, or (b) the ability to control or direct the affairs
of the other entity or (c) if not meeting the preceding criteria, the
maximum control or ownership right permitted in the country where such
entity exists, and "controlling" and "controlled" shall be construed
accordingly.
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"In Market" shall mean the sale of the Products by JV Co or JV Co's
sublicensee or any of their Affiliates to a third party (other than an
Affiliate of JV Co) such as (i) an end-user consumer of the Product or (ii)
a wholesaler, distributor, managed care organisation, hospital or pharmacy
or other third party payor for final commercial sale by such party to the
consumer, and shall exclude in any event the transfer pricing of the
Products by JV Co to an Affiliate or any permitted sub-licensee.
"Licence Fees" shall mean consideration paid by a third party (other than
an Affiliate of JV CO) to JV Co or its Affiliates for the granting of
rights, whether by license, sublicense or otherwise of any rights relating
to the development or commercialisation of one or more Products, including
licence fees, advance royalties on sales and other ongoing fees, but
excluding bona fide research or development fees or payments.
"Net Sales" shall mean the gross amount invoiced for sales of the Products
reduced by the following to the extent that they are properly allocable to
the quantity of Products so sold: all trade, quantity and cash discounts
allowed; credits or allowances actually granted on account of rejections;
returns, billing errors and retroactive price reductions (including,
without limitation, shelf stock adjustments); credits, rebates, chargeback
rebates, fees, reimbursements or similar payments granted or given to
wholesalers and other distributors, buying groups, health care insurance
carriers, governmental agencies and other institutions in respect of the
purchase price; freight, transportation, insurance or other delivery
charges; and all taxes (except income taxes), tariffs, duties and other
similar governmental charges paid by the seller on sale of the Products and
not reimbursed by the purchaser.
"Products" shall have the meaning assigned in the Amended Marathon Licence.
For the avoidance of doubt, this definition of "Products" is not in any
material respect different from the definition of "Products" in the
Marathon Licence.
"Territory" shall have the meaning assigned in the Amended Marathon
Licence.
2.3 Royalty payments due to Marathon pursuant to Clause 2.2 above shall be
payable semi-annually on the 45th day following the end of each six month
period ending 30th June or 31st December. JV Co reserves the right to
deduct before effecting payment to Marathon the amount of any taxation it
is required by law to withhold from Marathon in respect of the payment of
royalties due hereunder to Marathon. In the event of any such deduction, JV
Co shall secure and furnish promptly to Marathon official tax receipts
evidencing the
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payment of such taxation.
2.4 JV Co shall deliver to Marathon semi-annually, on the 45th day following
the end of each six month period referred to in Clause 2.3 above, a sales
summary showing all In Market sales of Products during the immediately
preceding six month period, a statement certifying its calculation of the
In Market Net Sales from gross revenues during such six month period, the
units of Products so sold, and a computation of the amounts due to
Marathon.
2.5 For the 90 day period following the close of each calendar year, JV Co
will, upon request, provide Marathon's independent certified accountants
(reasonably acceptable to JV Co) with access, during regular business hours
and subject to customary confidentiality provisions which are reasonably
acceptable to JV Co, to JV Co's books and records relating to the Products,
solely for the purpose of verifying the accuracy and reasonable composition
of the calculations hereunder (including the half yearly royalty
calculation) for the calendar year then ended.
2.6 In the event of a discovery of a discrepancy which exceeds 5% or $5,000,
whichever is the lesser, of the amount due to Marathon for any six month
period referred to in Clause 2.3, the cost of such accountant shall be
borne by JV Co; otherwise, such cost shall be borne by Marathon.
3. MARATHON REPRESENTATIONS
3.1 Marathon represents and warrants to JV Co that:
(i) all development work in the ELAN GLUCOSE MONITOR TECHNOLOGY (as
defined in the Marathon Licence) has been performed by Marathon, or by
a third party on behalf of Marathon so that Marathon is the owner of
all intellectual property rights arising or developed during such work
relating to the ELAN GLUCOSE MONITOR TECHNOLOGY; and
(ii) Marathon has the sole, unrestricted and unencumbered right to assign
the Marathon Licence, the goodwill and custom associated with the
Marathon License, and all other intellectual property owned or
licensed by Marathon as more fully described in Clause 1.3 above, to
JV Co.
3.2 As soon as is reasonably possible following the execution of this
Assignment, Marathon shall furnish a legal opinion with respect to Marathon
in a form which is reasonably accepted to JV Co.
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4. AMENDMENT TO MARATHON LICENCE
4.1 Immediately after the assignment of the Marathon Licence to JV Co, the
Marathon Licence shall be amended and restated as set forth in the Amended
Marathon Licence Agreement, of even date herewith, by and among Elan and JV
Co, in the form attached as Exhibit A hereto (the "Amended Marathon
Licence"). The Amended Marathon Licence shall replace and supersede the
Marathon Licence in its entirety.
4.2 The parties to this Assignment here intend to clarify their mutual
understanding of the Marathon Licence (as replaced herein by the Amended
Marathon Licence). It is the understanding of all of the parties that the
technology licensed from Elan to JV Co does not include any infusion device
as part of the combination infusor/monitor incorporating a ratchet
mechanism. Such infusion devices contemplated by the Marathon Licence (as
replaced herein by the Amended Marathon Licence) only include those having
a flexible diaphragm drug reservoir capable of deformation upon the
introduction of pressurized gas and only for use in combination with a
monitor device as disclosed and described in the Elan Glucose Monitor
Technology (as defined in the Amended Marathon Licence). Furthermore, it is
the understanding of the parties to this Assignment that the Field (as
defined in the Amended Marathon Licence) does not contemplate the use of
any cleaning fluid or compound in connection with the Elan Glucose Monitor
Technology.
5. FURTHER ASSURANCE
At the request and cost of JV Co, Marathon, at all times after the date of this
Assignment, shall do all acts and execute all documents as may be reasonably
necessary or desirable to secure the vesting in the JV Co of the Marathon
Licence, the goodwill and custom associated with the Marathon Licence, and all
other intellectual property owned or licensed by Marathon, free from all liens,
charges, options or encumbrances or adverse interests of any kind.
6. NOTICES
Any notice required or permitted to be given under this Assignment shall be
sufficiently given if in writing and delivered by registered or certified mail
(return receipt requested), facsimile (with confirmation of transmittal),
overnight courier (with confirmation of delivery), or hand delivery to the
appropriate party at the address set forth below, or to such other address as
such party may from time to time specify for that purpose in a notice similarly
given:
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If to Marathon:
Marathon Medical Technologies, Inc.
7620 S.W. Bridgeport Road,
Portland
Oregon 97224
United States of America
Attn: President & Chief Executive Officer
Fax: 503 620 6431
If to JV Co:
Hypoguard Development Co. Limited
Clarendon House
2 Church Street
Hamilton
Bermuda HM11
Attn: David Doyle
Fax: 441 292 4720
If to Elan:
Elan Corporation, plc
Lincoln House
Lincoln Place
Dublin 2
Ireland
Attn: Vice President & General Counsel
Elan Pharmaceutical Technologies
A division of Elan Corporation, plc
Fax: 353 1 709 4124
Any such notice shall be effective (i) if sent by mail, as aforesaid, five
business days after mailing, (ii) if sent by facsimile, as aforesaid, when sent,
and (iii) if sent by courier or hand delivered, as aforesaid, when received.
Provided that if any such notice shall have been sent by mail and if on the date
of mailing thereof or during the period prior to the expiry of the third
business day following the date of mailing there shall be a general postal
disruption (whether as a result of rotating strikes or otherwise) then such
notice shall not become effective until the fifth business day following the
date of resumption of normal mail service.
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7. DISPUTE PROCEDURE
7.1 If a dispute arises between any of the parties to this Assignment and which
cannot be resolved in the normal course of events, any party to the dispute
may give notice in writing to the other party or parties as applicable,
specifying the subject matter of the dispute and its proposal for its
resolution. Each party must procure that the dispute is considered by their
respective authorised representatives and that such parties use all
reasonable endeavours, in good faith, to resolve the dispute within 14 days
of the date of the notice specifying the dispute. If the authorised
representatives reach agreement on the matter in dispute in the period
specified in this Clause 7.1, the parties shall procure that their
respective representatives sign a joint memorandum to that effect recording
the resolution and procure that such agreement is fully and promptly
carried into effect.
7.2 If the authorised representatives fail to reach agreement, any party to
this Assignment may refer the matter to, in the case of Marathon, the
President & Chief Operating Officer, in the case of Elan, the President of
Elan Pharmaceutical Technologies and, in the case of JV Co, the JV Co's
management committee (together the "Senior Officers"). The Parties shall
respectively procure that the Senior Officers attempt in good faith to
resolve the dispute. If the Senior Officers reach agreement on the matter
in dispute within 14 days of the dispute being referred to them (or such
other period as the parties may mutually agree in writing) the parties
shall procure that their respective Senior Officers shall sign a joint
memorandum to that effect recording the resolution and procure that such
agreement is promptly and fully carried in to effect.
7.3 The dispute resolution procedure shall have been exhausted if the matter in
dispute:
7.3.1 has not been resolved in accordance with Clause 7.1 within the
relevant period and is not referred to the Senior Officers within
the relevant period; or
7.3.2 where it is so referred, has not been resolved in accordance with
Clause 7.2 within the relevant period.
7.4 For the avoidance of doubt, the fact that the dispute resolution procedure
has been exhausted without resolution shall not prevent the parties from
agreeing that the dispute be referred to an independent alternative form of
dispute resolution and/or to arbitration.
7.5 The forgoing provisions shall not prevent any party from commencing legal
proceedings or applying to the court for injunctive or other interim relief
at any time.
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8. APPLICABLE LAW
This Assignment shall be governed by the laws of the State of New York, without
regard to principles of conflicts of law. Subject to the provisions of Clause 7,
each of the parties hereby irrevocably submits to the jurisdiction of any New
York State or United States Federal court sitting in the County, City and State
of New York over any disputes arising out of or related to this Assignment which
are not resolved after the dispute resolution procedure set out in Clause 7 has
been exhausted, and each party hereby waives the defence of any inconvenient
forum for the maintenance of such action.
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IN WITNESS whereof the parties have executed and delivered this document the day
and year first above written.
SIGNED BY: /s/ Illegible
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for and on behalf of
MARATHON MEDICAL TECHNOLOGIES, INC.
in the presence of: /s/ Illegible
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SIGNED BY:
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for and on behalf of
HYPOGUARD DEVELOPMENT CO LIMITED
in the presence of: ------------------------
SIGNED BY:
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for and on behalf of
ELAN CORPORATION, PLC
in the presence of: ------------------------