SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 15, 1997
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BIOJECT MEDICAL TECHNOLOGIES INC.
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(Exact Name of Registrant as Specified in Charter)
Oregon
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(State or Other Jurisdiction of Incorporation)
0-15360 93-1099680
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(Commission File Number) (IRS Employer Identification No.)
7620 SW Bridgeport Road
Portland, Oregon 97224
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (503) 639-7221
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
On September 30, 1997, the Company executed a binding letter
agreement with Elan Corporation, plc ("Elan plc") and Elan
International Services, Ltd. ("Elan"), a wholly-owned subsidiary
of Elan plc, covering various investments in the Company by Elan,
the formation of the Company's new subsidiary, Bioject JV
Subsidiary Inc. ("JV Sub"), and a license (the "License") by
Elan plc to JV Sub of certain patents and know-how (the
"Technology") related to systems for the continuous monitoring of
glucose levels in persons with diabetes. The parties anticipate
that an ambulatory monitoring system will be developed under the
License. The system is expected to include a patch-like sensor
coupled with a wrist watch-type monitoring device to measure
glucose levels. Human clinical trials of the system are
presently expected to begin in early 1998. The final
documentation for the License and related transactions described
below was executed on October 15, 1997. Elan plc is a worldwide
drug delivery and biopharmaceutical company with its principal
research and manufacturing facilities in Ireland, the United
States and Israel. Elan plc's shares trade on the New York,
London and Dublin Stock Exchanges.
JV Sub is owned 80.1 percent by the Company and 19.9 percent by
Elan. Elan has invested approximately $3 million in JV Sub's
Common Stock and the Company has invested $12.015 million in JV
Sub's Common Stock.
Elan loaned the Company the funds the Company has invested in JV
Sub. The loan is evidenced by a promissory note issued by the
Company (the "Note"). The Note bears interest from and after
October 15, 1997 at the rate of 9% until December 31, 1997 and
12% thereafter.
The Company will be calling a special meeting of its shareholders
to approve (i) the exchange of the Note for the Company's
convertible preferred stock, (ii) the issuance of convertible
preferred stock to fund future financing obligations of JV
Sub and (iii) the issuance of a warrant to the Company's
agent in connection with the transactions with Elan (the "Proposal").
If the Proposal is approved, the Note will be canceled and exchanged
for the Company's Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock. Of the total outstanding principal
and accrued interest on the Note at the date of exchange, $10
million plus accrued interest on the Note will be exchanged for
Series A Convertible Preferred Stock at $15.00 per share. The
Series A Convertible Preferred Stock will accrue dividends at the
rate of 9% per annum (compounded semi-annually). The remaining
$2.015 million outstanding under the Note will be exchanged for
Series B Convertible Preferred Stock at $15.00 per share, which
will not accrue dividends. Each share of the Series A and
Series B Convertible Preferred Stock is convertible into 10
shares of the Company's Common Stock, subject to adjustment.
At the end of seven years the orginal issuance price and
accrued and unpaid dividends of any Series A and Series B
Convertible Preferred Stock not previously converted or redeemed
will convert automatically to common stock at a conversion price
equal to the lesser of $1.50 per share or 80% of the then
market price.
Elan plc has agreed to conduct at its expense certain research
and development efforts related to the Technology
until the first to occur of (i) commencement of human trials,
(ii) April 1, 1998 or (iii) the devotion by Elan plc to such further
research and development efforts of aggregate Elan plc resources equal
to $2.5 million. Following the completion of such research efforts at
Elan plc, the responsibility for funding the project shifts to JV
Sub. Elan plc has agreed to make itself available to conduct
other development and commercialization efforts as may be
describe for it in one or more development plans to be agreed in
good faith by JV Sub and Elan plc. JV Sub will be required to
pay Elan plc for such further work, but if the Proposal is
approved by the Company's shareholders, JV Sub would be receive a
discounted price for such further work by Elan plc.
JV Sub intends to obtain up to $5 million of the funds required
for the further development and commercialization of the
Technology in the form of the further investment in JV Sub equity
of approximately $4 million by the Company and approximately $1
million by Elan. The Company and Elan have indicated their
intention to make these further investments in JV Sub, provided
that JV Sub's Board of Directors determines that such funds are
required for development of the Technology pursuant to a
development plan which has been approved by Elan. Each of the Company
and Elan have reserved the right to withhold its share of the
additional funding, but each has agreed not to do so
unreasonably. Elan will in any event not be obligated to fund
any amount in excess of 25% of the amount of such additional
investments by the Company, nor to make any further investments
following the expiration of 30 months after the earlier of (i)
February 1, 1998 and (ii) the date of the Company's shareholders
approve the Proposal.
Provided that the Company's shareholders approve the Proposal,
the Company intends to obtain approximately $4
million necessary for its further investment in JV Sub equity by the sale
to Elan of convertible preferred stock in that amount. The
agreement by EIS to purchase such Series C Preferred Stock will
expire 30 months after the date the Company's shareholders
approve the Proposal.
The Company and JV Sub anticipate that significant levels of
funding will be required to develop the Technology in addition to
the funding that is described above. The additional funding
will be raised through the future issuances of debt or equity by
either or both of the Company and JV Sub.
Subject to certain conditions, Elan has also agreed
to loan JV Sub further funds to support
the research, development and commercialization of the
Technology after JV Sub has expended a specified amount
on research and development and provided that JV Sub
is not readily able to obtain such funds from other
sources. Such funding would constitute senior indebtedness
of JV Sub.
Under the License, Elan plc has granted JV Sub an exclusive
license to the Technology in North America for use in glucose
monitoring. If the Company's shareholders approve the Proposal,
this will become an exclusive worldwide license for such use.
The continued exclusivity of JV Sub's License is contingent, on a
country-by-country basis, on JV Sub's refraining from commercializing
products which would compete with the products covered by the licensed
Elan plc Technology. Further, the License itself is contingent, on a
country-by-country basis, on JV Sub's diligently seeking and
obtaining regulatory marketing approval for licensed products and
on JV Sub's timely commercial launch of the licensed products in
countries where such approval has been obtained.
The Company believes that the License is likely to run for most
of the useful life of the products that may be
commercialized under it. In the event that a significant
percentage of JV Sub's equity is acquired by any one of a number
of specified companies identified as actual or potential competitors of
Elan plc, or any other entity to which Elan plc does not consent
(which consent shall not be unreasonably withheld), the license
agreement may be immediately terminated at the option of Elan
plc.
JV Sub has paid Elan plc an initial royalty under the License
equal to $15 million. In addition, JV Sub is required under the
License to pay Elan plc substantial further royalties in stated
amounts as certain milestones are achieved, including
commencement and completion of certain product trials, the filing
of applications for regulatory marketing approval, and the grant
of such approval. If the Company's shareholders approve the
Proposal described herein, thereby extending the territory of the
License to be worldwide, the royalty payment called for upon the
grant of US marketing approval will be split into two payments,
one to be paid upon the grant of such US marketing approval and the other
to be paid upon the grant of marketing approval in any other of certain
major nations listed. Additionally, JV Sub will be required under the
License to pay Elan plc a continuing royalty equal to a percentage of the
net revenues from sublicenses of the Technology or from the sale
by JV Sub or its sublicensees of products covered by the licensed
patents or that incorporate or apply the licensed know-how. The
percentage royalty will increase in stages as the aggregate net
revenues in a given fiscal year exceed stated levels. These
stated levels will be greater if the Company's shareholders
approve the Proposal, reflecting the larger
potential market for such products under the License once its
territory has been expanded to be worldwide.
Elan has invested $3 million in the Company in exchange for
2,727,273 shares of the Company's Common Stock and a five-year
warrant to purchase an additional 1,750,000 shares of Common
Stock at $2.50 per share. The Company has agreed that it will use
its best efforts to cause a nominee of Elan to be elected to its
Board of Directors for as long as Elan owns at least a 5 percent
equity position in the Company (this level will increase to 10%
in seven years). The Company's Board of Directors added Michael
Sember, Elan's Vice President of Planning, Investment and
Development, as a director effective October 16, 1997, the day
following the closing of the transactions contemplated by the
letter agreement.
Elan has agreed that for a period of three years it will not (i)
purchase shares or assets of the Company from third parties (ii)
participate in a tender or exchange offer, merger or other
business acquisition involving the Company, (iii) participate in
any recapitalization, restructuring, liquidation, dissolution or
other extraordinary transaction with respect to the Company, (iv)
solicit proxies or consents to vote any voting securities or the
Company, (v) attempt to influence management or control of the
Company or (vi) change the composition of the Company's Board of
Directors; provided that such agreement will not apply if a
tender offer or a proxy solicitation with respect to an
acquisition proposal is made by a party which has been invited in
writing by the Company or is unaffiliated with Elan.
Elan has also agreed to fund $500,000 of development expenses for
the development of pre-filled medication applications for the
Company's needle-free injection technology. The funding will
commence in the first quarter of fiscal 1998, upon written
request from the Company, in the form of grants to the Company
in four equal, quarterly (in arrears) payments of $125,000.
For its services in connection with the transactions described
above and the introduction of the Company to Elan, Raphael LLC, a
management consulting company, will receive a cash payment in the
amount of $150,000 and, subject to shareholder approval requested
in the Proposal, a five-year warrant to purchase 100,000 shares
of the Company's Common Stock at an exercise price of $0.85 per
share. If shareholder approval is not received, Raphael LLC will
receive an additional cash payment in an amount to be negotiated
in lieu of the warrant. For the period ended September 30, 1997, the
Company has taken a charge to expense for the amount of the $15 million
licensing fee, of which $12.015 million is reportable against the Company's
consolidated results of operations. The difference between the aggregate
amount of the licensing fee and the reportable net amount by the
Company represents the portion of the fee allocable to the minority
interest in JV Sub.
Item 7. Exhibits
10.40 License Agreement between Elan Corporation, plc and
Bioject JV Subsidiary Inc. dated October 15, 1997.
Confidential treatment has been requested with respect to
certain portions of this exhibit pursuant to an Application
for Confidential Treatment filed with the Commission under
Rule 24b-2(b) under the Securities Exchange Act of 1934, as
amended.
10.41* Securities Purchase Agreement between Elan
International Services, Ltd. and Bioject Medical Technologies
Inc. dated October 15, 1997.
10.42* Bioject Medical Technologies Inc. Registration Rights
Agreement between Elan International Services, Ltd. and
Bioject Medical Technologies Inc. dated October 15, 1997.
10.43* Series K Warrant to Purchase Shares of Common Stock
dated October 15, 1997.
10.44** Promissory Note dated October 15, 1997 in favor of
Elan International Services, Ltd.
10.45 Newco Subscription and Stockholders Agreement between
Elan International Services, Ltd., Bioject Medical
Technologies Inc. and Bioject JV Subsidiary Inc. dated October
15, 1997.
10.46** Bioject JV Subsidiary Inc. Registration Rights Agreement
between Elan International Services, Ltd. and Bioject JV
Subsidiary Inc. dated October 15, 1997.
* Previously filed with the Company's Form 8-K filed on October 31, 1997.
** Previously filed with the Company's Form 8-K filed on November 3, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
BIOJECT MEDICAL TECHNOLOGIES INC.
Date: January 22, 1998 By /s/ Peggy J. Miller
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Peggy J. Miller
Vice President, Chief Financial
Officer, Secretary/Treasurer
<PAGE>
EXHIBIT 10.40
This Agreement is made the 15th day of October 1997
BY AND BETWEEN
ELAN CORPORATION, plc
An Irish company, of Lincoln House, Lincoln Place, Dublin 2, Ireland.
AND
BIOJECT JV SUBSIDIARY INC.
A Corporation organised and existing under the laws of the State of
Oregon having an office at 7620 S.W. Bridgeport Road,
Portland, Oregon 97224, United States of America.
WHEREAS
- -ELAN owns and is beneficially entitled to the use of various patents,
including the ELAN PATENT RIGHTS, which have been granted or are pending under
the International Convention in relation to the development and production of
monitoring devices and drug delivery devices and processes, and
- -ELAN is knowledgeable in the development of devices and methods for directly
or indirectly monitoring the concentration of glucose in a subject and has
developed unique monitoring devices and methods, and
- -JV SUB is desirous of entering into a licensing agreement with ELAN to
further develop, manufacture and have manufactured in accordance with the
terms of this AGREEMENT and to market, sell and distribute the PRODUCTS in the
TERRITORY without infringing the ELAN GLUCOSE MONITOR TECHNOLOGY, and
- -ELAN is prepared to license the ELAN PATENT RIGHTS in the TERRITORY to JV SUB.
NOW IT IS HEREBY AGREED AS FOLLOWS:
ARTICLE I : DEFINITIONS
1.1.In the present AGREEMENT and any further agreements based thereon between
the Parties hereto, the following definitions shall prevail:
AFFILIATE shall mean any corporation or entity controlling, controlled by or
under the common control of ELAN or JV SUB as the case may be. For the
purpose of this paragraph, "control" shall mean the direct or indirect
ownership of at least fifty per cent (50%) of the outstanding shares or other
voting rights of the subject entity to elect directors, or if not meeting the
preceding criteria, any entity owned or controlled by or owning or controlling
at the maximum control or ownership right permitted in the country where such
entity exists.
2 AGREEMENT shall mean this agreement.
BIOJECT shall mean Bioject Medical Technologies Inc. and its AFFILIATES,
excluding JV SUB.
4. BUSINESS PLAN shall mean the business plan to be adopted by the Board of
Directors of JV SUB and approved by ELAN (which approval shall not be
unreasonably withheld or delayed) from time to time. The initial form of the
BUSINESS PLAN will be adopted and approved as soon as is practicable, the
Parties agreeing that both expect that such initial BUSINESS PLAN will be
approved in any event not later than forty five (45) days after the
EFFECTIVE DATE.
5. cGP shall mean, depending on the regulatory context, current Good Clinical
Practises and/or current Good Laboratory Practises and/or current Good
Manufacturing Practises.
6. COMPETING PRODUCT shall mean a product which is not a PRODUCT but which
would [CONFIDENTIAL PORTION OMITTED] with [CONFIDENTIAL PORTION OMITTED] such
that sales of the COMPETING PRODUCT by JV SUB or its AFFILIATES would
[CONFIDENTIAL PORTION OMITTED] of the PRODUCTS. COMPETING PRODUCTS will not
include products in the FIELD which are complementary or supplementary to
the PRODUCTS.
7. CONFIDENTIAL INFORMATION shall mean information, material or data relating
to the FIELD not generally known to the public. CONFIDENTIAL INFORMATION in
tangible form disclosed hereunder shall be marked as "Confidential" at the
time it is delivered to the receiving Party. CONFIDENTIAL INFORMATION
disclosed orally shall be identified as confidential or proprietary when
disclosed and such disclosure of CONFIDENTIAL INFORMATION shall be confirmed
in writing within thirty (30) days by the disclosing Party.
8.EARLY STAGE DEVELOPMENT PLAN shall have the meaning set forth in Article III
Paragraph 2.
9. EFFECTIVE DATE shall mean the 15th day of October 1997.
10. ELAN shall mean Elan Corporation, plc and any of its AFFILIATES (which for
the avoidance of doubt shall exclude JV SUB and BIOJECT).
11.ELAN GLUCOSE MONITOR TECHNOLOGY shall mean the ELAN PATENT RIGHTS
and/or the ELAN KNOW-HOW.
12. ELAN KNOW-HOW shall mean all scientific or technical knowledge, information
or expertise, including clinical data and test results, which is not generally
known to the public, developed, produced, created or acquired by or on behalf
of ELAN, whether prior to or during the term of this AGREEMENT, including
without limitation in the course of the development activities called for
under Article III (including ELAN IMPROVEMENTS but excluding JOINT
IMPROVEMENTS), relating to the FIELD, whether or not covered by any patent,
copyright, design patent, trademark, trade secret or other industrial or
intellectual property rights. Insofar as ELAN licenses or acquires third party
technology, ELAN shall use commercially reasonable efforts to exclude or where
applicable to minimise the extent of any limitations or restrictions on the
inclusion of such technology in the ELAN KNOW-HOW.
13. ELAN PATENT RIGHTS shall mean all issued patents and/or pending patent
applications relating to the FIELD owned or licensed by or on behalf of ELAN,
whether prior to or at any time during the TERM including without limitation
issued patents and /or pending applications to the extent directed to any of
the ELAN KNOW-HOW (including ELAN IMPROVEMENTS but excluding JOINT
IMPROVEMENTS). The current status of the ELAN PATENT RIGHTS is described by
ELAN in APPENDIX A. ELAN PATENT RIGHTS shall also include all continuations,
continuations-in-part, divisionals, re-issues and re-examinations of such
patents and patent applications and any patents issuing thereon and extensions
of any patents licensed hereunder and periods of market exclusivity. Insofar
as ELAN licenses or acquires third party technology, ELAN shall use
[CONFIDENTIAL PORTION OMITTED] to exclude or where applicable to minimise the
extent of any limitations or restrictions on the [CONFIDENTIAL PORTION OMITTED]
in the ELAN PATENT RIGHTS.
14.ELAN TRADEMARK shall have the meaning set forth in Article II Paragraph
11.4.
15.FDA shall mean the United States Food and Drug Administration or any other
successor agency, whose approval is necessary to market the PRODUCTS in the
United States of America.
16.FIELD shall mean the direct or indirect monitoring of the concentration of
glucose in a subject.
17.IN MARKET shall mean the sale of the PRODUCTS, by JV SUB (or where
applicable by JV SUB's SUBLICENSEE) to an [CONFIDENTIAL PORTION OMITTED] such as
a [CONFIDENTIAL PORTION OMITTED] and shall [CONFIDENTIAL PORTION OMITTED] of
the PRODUCT by JV SUB to an AFFILIATE or a SUBLICENSEE.
18. JOINT IMPROVEMENTS shall have the meaning set forth in Article VIII
Paragraph 1.
19.JV SUB shall mean BIOJECT JV SUBSIDIARY INC. and any of its AFFILIATES,
including BIOJECT.
20 JV SUB KNOW-HOW shall mean all scientific or technical knowledge, including
clinical data and test results, information or expertise developed, produced,
created or acquired by or on behalf of JV SUB which is not generally known to
the public, which is developed by or on behalf of JV SUB whether prior to or
during the TERM, to the extent it constitutes: (I) a modification of or an
improvement on the ELAN GLUCOSE MONITORING TECHNOLOGY having potential
application outside the FIELD and/or (II) technology that is necessary for the
research, development or commercialisation of the PRODUCTS, whether or not
covered by any patent, copyright, design patent, trademark, trade secret or
other industrial or intellectual property rights (but excluding ELAN KNOW-HOW
and JOINT IMPROVEMENTS).
21. JV SUB PATENT RIGHTS shall mean all issued patents and/or pending patent
applications to the extent directed to any of the JV SUB KNOW-HOW owned or
licensed by or on behalf of JV SUB (excluding ELAN PATENT RIGHTS and JOINT
IMPROVEMENTS), together with all continuations, continuations-in-part,
divisionals, re-issues and re-examinations of such patents and patent
applications and any patents issuing thereon and extensions of any patents
licensed hereunder.
22. LISTED COMPANIES shall mean the legal entities set out in APPENDIX B or
any subsidiary of any such entity, where the entity directly or indirectly
owns at least fifty per cent (50%) of the outstanding shares or other voting
rights of the subsidiary to elect directors, or if not meeting the preceding
criteria, where the entity owns or controls the maximum control or
ownership right permitted in the country where such subsidiary exists;
provided, however, that if ELAN or any of its AFFILIATES (for the avoidance of
doubt other than BIOJECT and JV SUB) at any time becomes owner to the extent of
more than fifteen per cent (15%) of the fully-diluted equity by any of the
LISTED COMPANIES, then that LISTED COMPANY shall thereupon be removed from
the LISTED COMPANIES. .
23. MAJOR MARKETS shall mean the United States of America, the United Kingdom
of Great Britain and Northern Ireland, Italy, France, Germany and Japan.
24. NET REVENUES shall mean:
24.1. the monetary amount or non cash consideration payable by an unaffiliated
third party to JV SUB (or where applicable payable to JV SUB's SUBLICENSEES)
for the granting of rights, whether by licence, sublicence or otherwise, by
JV SUB to any unaffiliated third party of any rights by JV SUB relating to
the development or commercialisation of one or more of the PRODUCTS
and/or to exploit the ELAN GLUCOSE MONITOR TECHNOLOGY or any exclusive right
under the JOINT IMPROVEMENTS within the FIELD, including licence fees, advance
royalties on sales and other ongoing fees, but excluding bona fide research or
development fees and payments; and
24.2. the monetary amount or non cash consideration payable by an unaffiliated
third party to JV SUB (or where applicable to JV SUB's SUBLICENSEE) determined
by deducting from the gross amount billed for the PRODUCTS sold by JV SUB (or
where applicable by JV SUB's SUBLICENSEE) IN MARKET to its customers in the
country of sale:
24.2.1. [CONFIDENTIAL PORTION OMITTED] or [CONFIDENTIAL PORTION OMITTED],
including [CONFIDENTIAL PORTION OMITTED], and [CONFIDENTIAL PORTION OMITTED],
if any;
24.2.2. [CONFIDENTIAL PORTION OMITTED] or [CONFIDENTIAL PORTION OMITTED] and
[CONFIDENTIAL PORTION OMITTED], if any, allowed or paid;
24.2.3. [CONFIDENTIAL PORTION OMITTED], if any, given or made on account of
[CONFIDENTIAL PORTION OMITTED], whether in existence now, or
enacted at any time during the term of this AGREEMENT;
24.2.4. any [CONFIDENTIAL PORTION OMITTED] (other than [CONFIDENTIAL PORTION
OMITTED]), [CONFIDENTIAL PORTION OMITTED] or [CONFIDENTIAL PORTION OMITTED]
upon or measured by the production, sale, transportation, delivery, or use of
the PRODUCTS; and
24.2.5 any sums already included in NET REVENUES and attributed to such PRODUCT
sale, such as [CONFIDENTIAL PORTION OMITTED], as the same are so attributed.
For the avoidance of doubt, it is understood and agreed that ELAN shall not
be entitled to receive any share of payments received by JV SUB from a third
party for the purchase of equity in JV SUB, debt financing, the license of
intellectual property other than in relation to the ELAN GLUCOSE MONITOR
TECHNOLOGY and/or any exclusive right under the JOINT IMPROVEMENTS within the
FIELD.
NET REVENUES shall include and ELAN shall be entitled to receive any share of
payments received from a third party for the purchase of equity in JV SUB where
such payments or a portion thereof are in excess of the fair market value of
such equities and are directly attributable to the granting of rights to the
ELAN GLUCOSE MONITOR TECHNOLOGY and/or any exclusive right under the JOINT
IMPROVEMENTS within the FIELD.
In the event that JV SUB (or where applicable JV SUB's SUBLICENSEE) shall sell
the PRODUCT to third parties which is not on an arm's length basis in a
particular country and the price attributable to the PRODUCT is less than the
average price of "arms length" sales of the PRODUCT alone in the particular
country for the reporting period in which sales occur, NET REVENUES for any
such sales shall be the average price of "arms length" sales by JV SUB (or
where applicable by JV SUB's SUBLICENSEE) of the PRODUCT alone and in the
country during the reporting period in which such sales occur. If the average
price of "arms length" sale of the PRODUCT cannot be determined in any given
country, the NET REVENUES will be determined by the value of the PRODUCT sold
to similar customers in countries with similar pricing and reimbursement
structures and for similar quantities.
25. Party shall mean JV SUB or ELAN, as the case may be. "Parties" shall
mean JV SUB and ELAN.
26. PMA shall mean one or more of (I) a Pre-Market Application, (II) New Drug
Applications or (III) 510(k) or other substantially similar applications which
JV SUB shall file, including any supplements or amendments thereto, which JV
SUB may file for a PRODUCT with the FDA and/or a REGULATORY AUTHORITY.
27. PRODUCT(S) shall mean all devices or any parts thereof used, developed,
manufactured, offered for sale or sold by or on behalf of JV SUB within the
FIELD which but for the granting of the licenses by ELAN pursuant to Article
II would infringe the ELAN PATENT RIGHTS or the patents incorporated in the
JOINT IMPROVEMENTS and/or which incorporate or apply the ELAN KNOW-HOW and/or
the JOINT IMPROVEMENTS. Where [CONFIDENTIAL PORTION OMITTED] believes that one
or more of its or its AFFILIATES' products [CONFIDENTIAL PORTION OMITTED]
or [CONFIDENTIAL PORTION OMITTED] the ELAN KNOW-HOW and/or the JOINT
IMPROVEMENTS, the onus shall be upon [CONFIDENTIAL PORTION OMITTED] to
establish the same to the reasonable satisfaction of [CONFIDENTIAL PORTION
OMITTED].
28. PROJECT shall mean all activity as undertaken by ELAN and JV SUB in order
to develop the PRODUCT in accordance with the BUSINESS PLAN.
29. PROJECT TEAM shall mean the group to be established pursuant to Article
VII.
30. REGULATORY APPROVAL shall mean (i) approval for sale and marketing of one
or more of the PRODUCTS by the FDA in the United States of America, and/or
(ii) approval for sale and marketing of one or more of the PRODUCTS in the
other countries of the TERRITORY by the applicable REGULATORY AUTHORITIES.
31. REGULATORY AUTHORITIES shall mean one or more regulatory authorities
whose approval is necessary to market the PRODUCTS in the TERRITORY outside
of the United States of America where JV SUB intends to obtain REGULATORY
APPROVAL.
32. RESEARCH AND DEVELOPMENT COST shall mean in the case of research and
development being conducted by or on behalf of ELAN for JV SUB pursuant to
Article III, the fully allocated costs thereof calculated in accordance
with generally accepted Irish accounting principles consistently applied.
33. SHAREHOLDER APPROVAL shall have the meaning as defined in the Securities
Purchase Agreement entered into on the EFFECTIVE DATE between BIOJECT and
Elan International Services Limited.
34. SUBLICENSEE shall mean a sublicensee appointed by JV SUB or ELAN as the
case may be, or where applicable a sublicensee appointed by such a
sublicensee, pursuant to the provisions of the AGREEMENT.
35. TERM shall have the meaning set forth in Article IX Paragraph 1.
36. TERRITORY shall mean the United States of America, Canada and Mexico;
however if SHAREHOLDER APPROVAL is granted, the TERRITORY shall be world-wide.
37. US$ shall mean United States Dollars.
1.2 In this AGREEMENT
1.2.1 the singular includes the plural and vice versa, the masculine includes
the feminine and vice versa and references to natural persons include corporate
bodies, partnerships and vice versa.
1.2.2 any reference to a Article or Appendix shall, unless otherwise
specifically provided, be to an Article or Appendix of this AGREEMENT.
1.2.3 the headings of this AGREEMENT are for ease of reference only and shall
not affect its construction or interpretation.
ARTICLE II : THE LICENCE
1.1. ELAN shall remain proprietor of the ELAN GLUCOSE MONITOR TECHNOLOGY
but hereby grants to JV SUB for the TERM a sole and exclusive (including as
to ELAN) licence in the TERRITORY, with the right to grant sublicences pursuant
to and in accordance with the provisions of Article II Paragraph 2, to
research, develop, manufacture, have manufactured for JV SUB (or its permitted
SUBLICENSEES), import and have imported, use, sell, offer for sale and
otherwise commercialise the ELAN GLUCOSE MONITOR TECHNOLOGY, ELAN's interest
in the JOINT IMPROVEMENTS in the FIELD and the PRODUCTS under the terms and
conditions set out herein.
1.2. Subject to earlier termination of the AGREEMENT pursuant to Article IX,
at the end of the TERM the rights granted by ELAN to JV SUB pursuant to Article
II Paragraph 1.1. above shall be [CONFIDENTIAL PORTION OMITTED]. In the event
that the AGREEMENT is terminated by JV SUB prior to the end of the TERM due to
an ELAN breach pursuant to Article IX Paragraph 2, [CONFIDENTIAL PORTION
OMITTED] shall be [CONFIDENTIAL PORTION OMITTED] to a [CONFIDENTIAL PORTION
OMITTED] commencing from the date on which the TERM would have ended had the
AGREEMENT continued in force.
1.3. Should JV SUB or its AFFILIATES commercialise or announce that they are
developing for commercialisation, any COMPETING PRODUCT during the TERM
specifically in any country or countries of the TERRITORY, ELAN shall notify
JV SUB in writing that ELAN is of the opinion that JV SUB or its AFFILIATES
are commercialising a COMPETING PRODUCT or have made such an announcement, as
to that country or countries. Unless JV SUB promptly desists from such
commercialisation or intended commercialisation, ELAN reserves the right to
terminate the exclusivity of the licences granted to JV SUB under the AGREEMENT
in such country or countries, which thenceforth for the remainder of the
TERM shall become non-exclusive in such country or countries. In such event,
ELAN shall have no further obligation to include in its licenses to JV SUB
with respect to that country or countries any ELAN IMPROVEMENTS that are
developed, produced, created or acquired by or on behalf of ELAN after the
effective date of such termination of JV SUB's exclusivity in such country or
countries, and neither shall the JV SUB KNOW-HOW and JV SUB PATENT RIGHTS to
be licensed to ELAN pursuant to Article II Paragraph 8.3. include, as to such
country or countries, any JV SUB KNOW-HOW that is developed, produced, created
or acquired by or on behalf of JV SUB after the effective date of such
termination of JV SUB's exclusivity in such country or countries. Further,
in such event, ELAN shall have a royalty free licence to the JV SUB PATENT
RIGHTS and the JV SUB KNOW-HOW previously developed, produced, created or
acquired by or on behalf of JV SUB within the FIELD and to exploit the
JOINT IMPROVEMENTS in the FIELD in such country or countries. If JV SUB
disputes ELAN's contention, JV SUB shall furnish all relevant materials and
documentation to ELAN to enable the Parties to review whether or not ELAN's
contention is correct. In the event that the Parties disagree whether or
not JV SUB, its AFFILIATES are commercialising a COMPETING PRODUCT, or have
announced that they are developing a COMPETING PRODUCT for commercialisation,
the matter may be submitted to arbitration by either Party. JV SUB's right to
an exclusive licence and to improvements shall remain in effect until and
unless the arbitrator makes a decision that the exclusivity of JV SUB's license
in such country should terminate as described above.
2.1. JV SUB may sublicense rights which incorporate the ELAN GLUCOSE MONITOR
TECHNOLOGY with the prior written consent of ELAN which shall not be
unreasonably withheld or delayed; provided, that such reasonableness standard
shall not apply in the case of a proposed sublicence to any of the entities
listed on the LISTED COMPANIES. The nature and extent of the proposed
sub-licence (such as the extent of the territory of the sublicence, the
material terms of the proposed sublicence, and whether the SUBLICENSEE has
the rights of further sublicensing) shall be a relevant factor in determining
whether or not ELAN has acted reasonably or otherwise in making such
determination. JV SUB shall use its reasonable endeavours to ensure that
ELAN shall have the same rights of audit and inspection vis a vis the
SUBLICENSEE as ELAN has pursuant to this AGREEMENT concerning JV SUB.
2.2. Insofar as the obligations owed by JV SUB to ELAN are concerned, JV SUB
shall remain responsible for all acts and omissions of any SUBLICENSEE as if
such acts and omissions were by JV SUB; provided that no such acts or
omissions of such SUBLICENSEE will constitute a material breach of the
AGREEMENT by JV SUB for the purposes of Article IX Paragraph 2. In the event
that ELAN terminates the AGREEMENT pursuant to the provisions of Article IX
Paragraph 2, due to the default of JV SUB, then ELAN shall, with JV SUB's
consent and assistance, notify each SUBLICENSEE appointed pursuant to Article
II Paragraph 2.1. of the said termination. If any SUBLICENSEE elects to notify
ELAN that it requires the continuation of the licenses granted to JV SUB
pursuant to this AGREEMENT, ELAN shall promptly enter into good faith
negotiations with such SUBLICENSEE to establish a direct contractual nexus
between ELAN and such SUBLICENSEE. Such contractual nexus shall, subject to
ELAN's reasonable discretion, be on commercially reasonable terms and shall
to the extent practicable be on terms no less favourable to the SUBLICENSEE
than the terms of such SUBLICENSEES' agreement with JV SUB, and shall provide
that the SUBLICENSEE shall take over the applicable obligations owed by JV SUB
to ELAN pursuant to this AGREEMENT. Sales of PRODUCTS and other consideration
payable to such a SUBLICENSEE in relation to the PRODUCTS shall
constitute NET REVENUES for the purpose of calculating the sums payable by
the SUBLICENSEE to ELAN. In the event that JV SUB does not continue or
procure the continuance of the supply of the relevant PRODUCT or the PRODUCTS
to the said SUBLICENSEE, JV SUB shall use its reasonable endeavours to ensure
that ELAN or the SUBLICENSEE can enter into the appropriate supply arrangements
with JV SUB or JV SUB's suppliers of the PRODUCTS and the components thereof
and grant ELAN a licence in the terms set out in Article II Paragraph 8.3.
3. It is contemplated that the physical transfer of the ELAN KNOW-HOW to be
licensed under this AGREEMENT and the furnishing of copies of relevant patent
documentation regarding the ELAN PATENT RIGHTS shall be completed within
[CONFIDENTIAL PORTION OMITTED] of the EFFECTIVE DATE (it being understood
that this is without prejudice to the later physical transfer of ELAN
IMPROVEMENTS thereafter developed, produced, created or acquired by or on
behalf of ELAN licensed pursuant to the AGREEMENT, including the furnishing
of copies of patent documentation regarding any applicable ELAN PATENT RIGHTS
with respect to ELAN IMPROVEMENTS). ELAN shall, at its expense, provide all
notices and reasonable assistance within such [CONFIDENTIAL PORTION OMITTED]
period to JV SUB to facilitate such transfer (and later, as to any subsequent
transfer of ELAN IMPROVEMENTS); provided, that in the event that JV SUB's
requirements relating to such transfer are in excess of the Parties' current
reasonable, good faith, expectations, the Parties shall negotiate in good
faith reimbursement of ELAN's out-of-pocket expenses.
4. JV SUB shall mark or have marked the patent number on all PRODUCTS, or
otherwise reasonably communicate to the trade concerning the existence of
any ELAN PATENT RIGHTS for the countries within the TERRITORY in such a
manner as to ensure compliance with, and enforceability under, applicable
laws.
Performance by JV SUB
5. JV SUB shall use [CONFIDENTIAL PORTION OMITTED] efforts consistent with
its financial resources and capital constraints, to
[CONFIDENTIAL PORTION OMITTED] the PRODUCTS and to [CONFIDENTIAL PORTION
OMITTED] the ELAN GLUCOSE MONITOR TECHNOLOGY in the [CONFIDENTIAL PORTION
OMITTED] in accordance with the [CONFIDENTIAL PORTION OMITTED].
6. [CONFIDENTIAL PORTION OMITTED] JV SUB shall report on the ongoing sales
performance of the PRODUCTS, and the exploitation of the ELAN GLUCOSE MONITOR
TECHNOLOGY in the TERRITORY, furnish a non binding forecast of NET REVENUES
for the following [CONFIDENTIAL PORTION OMITTED] months, a summary of the
[CONFIDENTIAL PORTION OMITTED] and [CONFIDENTIAL PORTION OMITTED] for the
PRODUCTS, a list of the [CONFIDENTIAL PORTION OMITTED] concluded by JV SUB
as permitted by [CONFIDENTIAL PORTION OMITTED] together with a summary of the
[CONFIDENTIAL PORTION OMITTED] (such as the [CONFIDENTIAL PORTION OMITTED] of
the [CONFIDENTIAL PORTION OMITTED], the PRODUCT and [CONFIDENTIAL PORTION
OMITTED] for which the [CONFIDENTIAL PORTION OMITTED] has been
granted, the [CONFIDENTIAL PORTION OMITTED] and the [CONFIDENTIAL PORTION
OMITTED]). For the avoidance of doubt, the Parties agree that all information
furnished to ELAN pursuant to this Paragraph shall constitute CONFIDENTIAL
INFORMATION for the purposes of this AGREEMENT.
7. When packaged, and to the extent permitted by law, a product label shall
include an acknowledgement that the PRODUCT is made under licence from or
manufactured by ELAN. Such acknowledgement shall take into consideration
regulatory requirements and JV SUB's commercial requirements. JV SUB shall
wherever possible give due acknowledgement and recognition to ELAN in all
printed promotional and other material regarding the PRODUCT such as stating
that the PRODUCT is under license from ELAN and that the applicable ELAN
GLUCOSE MONITOR TECHNOLOGY has been applied to the PRODUCT. JV SUB shall
consult with and obtain the approval of ELAN as to the format and content of
the promotional and other material insofar as it relates to a description of,
or other reference to, the application of the ELAN GLUCOSE MONITOR TECHNOLOGY.
It shall be presumed that ELAN approved of such use unless ELAN provides
written notice of disapproval of such use to JV SUB within thirty (30) days
of delivery of such materials to ELAN, such approval not to be unreasonably
withheld or delayed. The further consent of ELAN shall not be
required where the format and content of such materials is substantively
materially similar as the materials previously furnished to and approved by
ELAN.
8.1. JV SUB shall effect a national commercial launch of the PRODUCT in each
MAJOR MARKET within one hundred and eighty (180) days of REGULATORY APPROVAL
thereof in such MAJOR MARKET. If JV SUB does not make a national commercial
launch in one or more of the MAJOR MARKETS within the one hundred and eighty
(180) day period, or such longer period permitted by the provisions of this
Paragraph 8.1, the licences granted to JV SUB hereunder shall with thirty
(30) days notice from ELAN terminate in the applicable country and ELAN shall
be entitled to a licence to commercialise the PRODUCT that was given such
REGULATORY APPROVAL under the JV SUB PATENT RIGHTS and the JV SUB KNOW-HOW
developed, produced, created or acquired by JV SUB, in the applicable country
on the terms set out in Article II Paragraph 8.3. and to the TRADEMARK on
the terms set out in Article II Paragraph 11.2 for such purpose. If in JV
SUB's reasonable commercial judgement, one or more of the one hundred
and eighty (180) day periods specified in this Paragraph 8.1. is insufficient,
the Parties shall negotiate in good faith the applicable extension to the
said one hundred and eighty (180) day period. Notwithstanding the above, in
the event that the Parties disagree whether or not JV SUB has satisfied its
obligations under this AGREEMENT in any country listed above, the
matter may be submitted to arbitration by either Party, and JV SUB's rights
and licenses shall remain in effect until and unless the arbitrator makes a
decision that JV SUB's right and license in such country should terminate.
8.2. JV SUB will use commercially reasonable efforts to file and obtain
REGULATORY APPROVAL in the MAJOR MARKETS as soon as practicable. In the
event of any failure by ELAN to diligently pursue any submission in any
application for regulatory approval in any country which results in JV SUB's
failure to obtain regulatory approval or any delay thereof, the Parties
through the PROJECT TEAM shall make reasonable and appropriate adjustments
to the period in which JV SUB shall have to obtain the applicable regulatory
approvals.
8.3. If (x) JV SUB fails to obtain REGULATORY APPROVAL to commercialise the
PRODUCT in the MAJOR MARKETS within a commercially reasonable time, as
determined by the PROJECT TEAM, or (y) JV SUB fails to effect a commercial
launch of the PRODUCT in the MAJOR MARKETS within the period specified in
Paragraph 8.1. above JV SUB shall, at the option of ELAN, make available and
transfer to ELAN all of JV SUB's data, information, applications, approvals
and filings to permit ELAN to commercialise the PRODUCT in the applicable
country or countries (including access to such data, information, applications,
approvals and filings which is of assistance in obtaining or maintaining
approvals and filings in the applicable country or countries), in consideration
for a royalty of [CONFIDENTIAL PORTION OMITTED] of NET REVENUES (for which
purpose the definition of NET REVENUES as set out in Article I shall apply to
mutatis mutandis) of the PRODUCT, after recovery of the expenses incurred by
ELAN related to the development and commercialisation of such PRODUCTS in the
applicable country or countries of the TERRITORY. Such royalty shall
be payable with respect to such NET REVENUES with respect to a term extending
until the expiration of fifteen (15) years starting from the EFFECTIVE DATE,
or on a country by country basis for the life of the last to expire patent
included in the JV SUB PATENT RIGHTS or the JOINT IMPROVEMENTS, whichever is
longer. In such event ELAN shall be entitled to an exclusive licence to the
JV SUB PATENT RIGHTS and the JV SUB KNOW-HOW developed, produced, created or
acquired by JV SUB whether prior to or after the granting of the licence to
ELAN), and a licence to the JOINT IMPROVEMENTS to the exclusion of JV SUB to
commercialise the PRODUCT on the terms set out in this Paragraph
and to the TRADEMARK on the terms set out in Article II, Paragraph 11.2. for
such purpose. ELAN may sublicense the rights granted to it pursuant to this
Paragraph to one or more SUBLICENSEES with the prior written consent of JV
SUB which shall not be unreasonably withheld or delayed. Insofar as JV SUB
has licensed or acquired third party technology, JV SUB shall all commercially
reasonable efforts to exclude or where applicable to minimise the extent of
any limitations or restrictions on its use for such purposes, and it is
understood that no such limitations or restrictions shall be permitted as
between BIOJECT and JV SUB. In the event that ELAN acquires a licence, the
Parties shall enter into a further written licence agreement which shall
include customary and reasonable terms relating to, inter alia, the timing of
royalty payments to JV SUB, reporting obligations regarding net sales, audit
rights of JV SUB with respect to books and records relating to net sales, and
indemnity provisions, which obligations shall, unless otherwise agreed by
the Parties, be substantially similar to those in this AGREEMENT with respect
to commercialisation of the PRODUCTS by JV SUB.
8.4.1 JV SUB will use its commercially reasonable efforts to obtain regulatory
approval to commercialise the PRODUCT in the other countries of the TERRITORY
that it selects, having regard to the effort and expenditure required to obtain
regulatory approval for the PRODUCT and the commercial opportunities for the
PRODUCT in such other countries of the TERRITORY.
8.4.2. In the event that the Parties disagree whether JV SUB has satisfied its
obligations under Paragraph 8.4.1. above with regard to one or more of such
other countries of the TERRITORY, the matter may be submitted to arbitration
pursuant to Article X Paragraph 14 by either Party, and JV SUB's rights and
licenses shall remain in effect until and unless the arbitrator makes a
decision that JV SUB's right and license in such country should terminate.
8.4.3. If JV SUB indicates to ELAN that it does not intend to obtain
registration approval and commercialise the PRODUCT in a particular country
or countries of the TERRITORY, or fails to commence commercialisation in any
country within one hundred and (180) days after receiving the required
regulatory approval therefore, ELAN shall be entitled to a licence to the
JV SUB PATENT RIGHTS and the JV SUB KNOW-HOW to commercialise the PRODUCT
in such countries on the terms set out in Article II Paragraph 8.3. and to the
TRADEMARK on the terms set out in Article II Paragraph 11.
Grant of rights to ELAN
9.1. ELAN may use the ELAN GLUCOSE MONITOR TECHNOLOGY and all technical and
clinical data or improvements generated by ELAN pursuant to this AGREEMENT in
connection with ELAN's commercial arrangements for the PRODUCTS in any country
which ceases to be a part of the TERRITORY, or in relation to the PRODUCTS in
the TERRITORY in the event of the termination of this AGREEMENT; provided that
ELAN will not, prior to February 1, 1998, make any such commercial
arrangements, nor any grants of any rights to any third party, anywhere in the
world that would be inconsistent with the extension of the TERRITORY to be
world-wide upon the SHAREHOLDER APPROVAL, with the same effect for all purposes
under this AGREEMENT as if the TERRITORY had been world-wide from the EFFECTIVE
DATE and at all times through the SHAREHOLDER APPROVAL.
9.2. For the avoidance of doubt, nothing in the AGEEMENT shall prevent ELAN
from exploiting the ELAN GLUCOSE MONITOR TECHNOLOGY and all technical and
clinical data or improvements generated by ELAN pursuant to this AGREEMENT
outside the FIELD.
10.1. Subject to the confidentiality and non-disclosure provisions set out in
Article X Paragraph 1, ELAN and JV SUB will share (for no additional
consideration) all relevant information developed in connection with the
PROJECT, relating to the development and commercialisation of the PRODUCT
including pre-clinical, methods, clinical protocols and other necessary or
appropriate data; it being understood that neither Party shall have any right
to any intellectual property or products of the other except as expressly set
forth in this AGREEMENT.
10.2. JV SUB shall be and remain the proprietor of all the JV SUB PATENT RIGHTS
and JV SUB KNOW-HOW, but will grant to ELAN a non-exclusive world-wide,
[CONFIDENTIAL PORTION OMITTED] license, to research, develop, package,
manufacture, have manufactured for ELAN (or its permitted SUBLICENSEES),
import and have imported, use, sell, offer for sale, and otherwise
commercialise under the JOINT IMPROVEMENTS and under the JV SUB KNOW-HOW
that is described in Clause (I) of the definition of "JV SUB KNOW-HOW" in
Article I, and the JV SUB PATENT RIGHTS directed to such JV SUB KNOW-HOW
outside the FIELD. The licence granted pursuant to this Paragraph shall
include patent rights and know-how licensed or acquired by JV SUB from one
or more third parties where JV SUB is free to license and disclose such
improvements. JV SUB shall not be obliged to use [CONFIDENTIAL PORTION
OMITTED] efforts to [CONFIDENTIAL PORTION OMITTED] or where applicable
[CONFIDENTIAL PORTION OMITTED] the extent of any such [CONFIDENTIAL PORTION
OMITTED] but shall act [CONFIDENTIAL PORTION OMITTED] as regards the
interests of ELAN. No such [CONFIDENTIAL PORTION OMITTED] shall be
permitted as between [CONFIDENTIAL PORTION OMITTED] and [CONFIDENTIAL
PORTION OMITTED]. ELAN may sublicense the rights granted to it pursuant to
this Paragraph to one or more SUBLICENSEES with the prior written consent of
JV SUB which shall not be unreasonably withheld or delayed.
Trademark
11.1. JV SUB shall market the PRODUCT in the TERRITORY under a TRADEMARK,
whether during the TERM or thereafter, which TRADEMARK will be owned by JV SUB.
JV SUB shall take reasonable steps to register such TRADEMARK within the
TERRITORY where JV SUB reasonably believes exploitation of one or more of the
PRODUCTS shall occur. In the event that JV SUB does not intend to
commercialise the PRODUCT and ELAN obtains a license pursuant to Article II
Paragraph 8.3, ELAN shall be entitled to request JV SUB to register the
TRADEMARK in such country, at ELAN's expense.
11.2. In the event that ELAN acquires a license to the JV SUB PATENT RIGHTS
and the JV SUB KNOW-HOW pursuant to Article II Paragraph 8.3, JV SUB shall
grant ELAN an exclusive royalty free licence to the TRADEMARK solely for use
in connection with the sale of the PRODUCT for the applicable country or
countries of the TERRITORY, in which event the following provisions shall
apply:
11.2.1 ELAN shall as soon as it becomes aware of any infringement give to JV
SUB in writing full particulars of any use or proposed use by any other
person, firm or company of a trade name or trademark or mode or promotion or
advertising which amounts to or might amount either to infringement of JV
SUB's rights in relation to the TRADEMARK or to passing off;
11.2.2. if ELAN becomes aware that any other person, firm or company alleges
that the TRADEMARK is invalid or that the use of the TRADEMARK infringes any
rights of another party or that the TRADEMARK is otherwise attacked or
attackable, ELAN shall immediately give to JV SUB full particulars in writing
thereof and shall make no comment or admission to any third party in respect
thereof; and
11.2.3. JV SUB shall have the right to conduct all proceedings relating to the
TRADEMARK and shall in its sole discretion decide what action, if any, to take
in respect of any infringement or alleged infringement of the TRADEMARK or
passing-off or any other claim or counter-claim brought or threatened in
respect of the use or registration of the TRADEMARK. Any such proceedings
shall be conducted at JV SUB's expense and for its own benefit. In the
event that JV SUB fails to take action in respect of any infringement or
alleged infringement of the TRADEMARK or passing-off or any other claim or
counter-claim brought or threatened in respect of the use or registration of
the TRADEMARK, ELAN may request JV SUB to take such action at the expense of
ELAN.
11.3. In the event that ELAN acquires a license to the JV SUB PATENT RIGHTS
and the JV SUB KNOW-HOW pursuant to Article II Paragraph 8.3, ELAN may at its
discretion advertise and promote the PRODUCT under the TRADEMARK. Except as set
forth in this Paragraph 11, nothing contained in this AGREEMENT shall grant to
ELAN any right, title, or interest in or to TRADEMARK, whether or not
specifically recognised or perfected under applicable laws. At no time during
or after the term of this AGREEMENT shall ELAN challenge or assist others to
challenge any TRADEMARK, or the registration thereof or attempt to register
any trademarks, marks, or trade names confusingly similar to any
TRADEMARK. All representations of any TRADEMARK that ELAN intends to use
shall first be submitted to JV SUB for approval (which shall not be
unreasonably withheld) of design, colour, and other details, or shall be exact
copies of those used by JV SUB. In addition, ELAN shall fully comply with all
reasonable guidelines, if any, communicated by JV SUB concerning the use of
any TRADEMARK.
11.4. ELAN grants to JV SUB an exclusive royalty free licence in the TERRITORY
solely for use in connection with the sale of the PRODUCT, for the TERM to use
any ELAN TRADEMARK, if any, which relates to the ELAN GLUCOSE MONITOR
TECHNOLOGY applicable to the PRODUCT (the "ELAN TRADEMARK"), such as an acronym
for the applicable technology applied to the PRODUCT, on the terms set forth in
Article II Paragraph 11.2.1. to 11.2.3.(including the obligation not to
challenge or assist others to challenge any trademark referred to
in this Paragraph, or the registration thereof or attempt to register any
trademarks, marks, or trade names confusingly similar to any such trademark)
as applied mutatis mutandis. JV SUB shall not be obliged to use the ELAN
TRADEMARK to identify the PRODUCT but at ELAN's request shall be obliged to
use the ELAN TRADEMARK to identify the applicable ELAN technology embodied in
the PRODUCT. For the avoidance of doubt, the Parties hereby confirm
that JV SUB shall not be entitled to a licence to use any trademark owned or
controlled by ELAN which identifies a product and furthermore that nothing in
this Paragraph shall prevent the licensing by ELAN of the ELAN TRADEMARK
outside the FIELD.
12. JV SUB hereby confirms that it intends to manufacture or procure the
manufacture of the PRODUCTS in a manner which fully complies with all
applicable statutes, ordinances and regulations of the United States of
America and other countries with respect to the manufacture of
the PRODUCTS including, but not limited to, the U.S. Federal Food, Drug and
Cosmetic Act and regulations thereunder and cGP.
ARTICLE III: DEVELOPMENT OF THE PRODUCTS
1. Subject to the provisions of Article III Paragraph 2 and Article III
Paragraph 3, JV SUB shall be responsible for the cost of the further
development, registration, manufacture and marketing of the PRODUCTS.
2. The PROJECT TEAM shall prepare and agree upon a development plan in
respect of the PRODUCT, including development work to be undertaken by ELAN
as soon as is practicable and in no event later than forty five (45) days
after the EFFECTIVE DATE (the "EARLY-STAGE DEVELOPMENT PLAN"). The Parties
agree that ELAN shall perform, and shall fund the cost of such development,
pursuant to and in accordance with the EARLY-STAGE DEVELOPMENT PLAN, such
development through and including the first to occur of (I) the first human
clinical trials in healthy human volunteers without regard to the result
thereof;(II) March 31, 1998; or (III) the devotion of ELAN to such further
development pursuant to the EARLY-STAGE DEVELOPMENT PLAN of an aggregate amount
of US$2.5 million (two million five hundred thousand United States dollars)
(using RESEARCH AND DEVELOPMENT COST plus [CONFIDENTIAL PORTION OMITTED] as
the basis for calculating the foregoing aggregate amount.
3. In addition to the research and development to be conducted pursuant to
Paragraph 2 above, the Parties shall each negotiate in good faith the extent
to which ELAN shall provide research and development services to JV SUB.
ELAN will agree to undertake certain research and development work related to
the development and commercialisation of the PRODUCTS as set forth in one or
more development plans agreed to in good faith between ELAN and JV SUB. The
cost of such development work shall be RESEARCH AND DEVELOPMENT COST together
with an additional royalty calculated on the basis of [CONFIDENTIAL PORTION
OMITTED] of the RESEARCH AND DEVELOPMENT COST;
provided, that if SHAREHOLDER APPROVAL is granted, the cost of such
development work shall be at the rate of RESEARCH AND DEVELOPMENT COST together
with an additional royalty calculated on the basis of [CONFIDENTIAL PORTION
OMITTED] of the RESEARCH AND DEVELOPMENT COST.
4. Subject to the provisions of this Article III, JV SUB shall use its
reasonable efforts, as would be deemed commensurate with the achievement of
its own business aims for a similar product of its own to conduct such part
of the PROJECT as the Parties mutually agree shall be conducted by JV SUB.
Subject to the provisions of this Article III, ELAN shall use its
reasonable efforts, as would be deemed commensurate with the achievement of
its own business aims for a similar product of its own, to conduct such part
of the PROJECT as the Parties mutually agree that shall be conducted by ELAN.
JV SUB shall carry out all clinical studies to prevailing cGP and most
specifically in accordance with FDA standards and guidelines.
5. ELAN shall have no liability to JV SUB as a result of any failure or delay
of the PRODUCTS to achieve one or more of the milestones set out in the
PROJECT and/or to obtain the REGULATORY APPROVAL or the approval of the
regulatory authorities in one or more of the other countries of the TERRITORY.
JV SUB shall have no liability to ELAN as a result of any failure or delay of
the PRODUCTS to obtain the REGULATORY APPROVAL or the approval of the
appropriate health regulatory authorities in one or more of the countries of
the TERRITORY.
6. The Parties hereby confirm that each shall undertake its respective part of
the PROJECT as a collaborative effort and that the provisions of this AGREEMENT
requires that each Party diligently carries out those tasks assigned to it
under the PROJECT and as otherwise agreed during the course of the PROJECT.
Each Party shall co-operate with the other in good faith
particularly with respect to unknown problems or contingencies and shall
perform its obligations in good faith and in a commercially reasonable,
diligent and workmanlike manner. Each Party will update the other Party on
the progress of the PROJECT at meetings of the PROJECT TEAM.
7. For the avoidance of doubt, the Parties hereby confirm that a primary
objective of the PROJECT is to generate the PMA and secure REGULATORY APPROVAL
for the PRODUCT from the FDA. As of the date of this AGREEMENT, it is the
Parties' expectation that the body of data so generated in the PROJECT will
also support such applications for regulatory approval that JV
SUB shall make in the other countries of the TERRITORY. In the event however
that such expectation proves unfounded or incorrect and further data is
required to obtain such other approvals as are pursued by JV SUB in the other
countries of the TERRITORY, JV SUB shall determine the viability of proceeding
further with the regulatory application and generation of the further data
requirements.
ARTICLE IV : FINANCIAL PROVISIONS
Initial Royalties
1.1. In consideration for the research and development of the PRODUCT by ELAN
under this AGREEMENT, JV SUB shall pay to ELAN the amounts set out in Article
III Paragraph 3. Subject to the provisions of Article III Paragraph 2, all
research and development work conducted by ELAN pursuant to this AGREEMENT,
including work conducted pursuant to Article III shall be the subject of
Article IV Paragraph 1.
1.2. ELAN will keep accurate records consistent with its normal business
practices, of the efforts expended by it under the PROJECT for which it is
charging JV SUB, which will include the time spent by each person working on
the PROJECT. Each quarter ELAN will send reports to JV SUB in order to
enable JV SUB to monitor ELAN's level of effort to assure JV SUB that the
committed level of effort is being applied.
1.3. If ELAN's development efforts require the use of an unaffiliated third
party, ELAN will, prior to appointing such unaffiliated third party, discuss
with JV SUB the activities to be undertaken by such unaffiliated third party
and the terms and conditions thereof. ELAN will not proceed with such third
party without the prior written approval of JV SUB, which approval shall not
be unreasonably withheld. ELAN shall charge JV SUB for the time spent by
its employees in administering the work conducted by such unaffiliated third
parties on the basis set out in Article III Paragraph 3. ELAN shall have the
right to charge JV SUB for all reasonable out of pocket expenses incurred in
the provision of its obligations thereunder.
Licence Royalties
2. In consideration of the rights and licence granted to JV SUB to the ELAN
PATENT RIGHTS by virtue of this AGREEMENT, JV SUB shall pay to ELAN amounts
as follows:
2.1. US$15 million (fifteen million United States Dollars) upon the date of
execution of this AGREEMENT;
2.2. US$1.0 million (one million United States Dollars) within ten (10) days
of commencement of pivotal clinical trials relating to the first PRODUCT (it
being a matter for the PROJECT TEAM to determine what constitutes a `pivotal'
clinical trial for the purposes of this Paragraph and Paragraph 2.3. below)
and the concurrent agreement between JV SUB and ELAN of the success criteria
for such pivotal clinical trials, which the Parties intend will include
completed ISS/ISE;
2.3. US$1.5 million (one million five hundred thousand United States Dollars)
within one hundred and twenty (120) days of the successful completion of the
pivotal clinical trials referred to in Paragraph 2.2. above; provided, that JV
SUB shall be liable for interest on such amount at the rate of ten per cent
(10%) per year from and after the date that is sixty (60)days after such
completion;
2.4. US$3.0 million (three million United States Dollars) within ten (10) days
of the initial filing of a PMA to obtain REGULATORY APPROVAL for marketing of
the first PRODUCT to reach such stage with the FDA; and
2.5. US$10.0 million (ten million United States Dollars) within one hundred
and twenty (120) days of the first REGULATORY APPROVAL for the first PRODUCT
to reach such stage by the FDA provided, that JV SUB shall be liable for
interest on such amount at the rate of ten per cent (10%) per year from and
after the date that is sixty (60) days after such approval; except that, in
the event that SHAREHOLDER APPROVAL is obtained, the following payments shall
be due and owing
2.5.1. US$5.0 million (five million United States Dollars) within one hundred
and twenty (120) days of the first REGULATORY APPROVAL by the FDA for the first
PRODUCT to reach such stage in the United States of America, provided, that JV
SUB shall be liable for interest on such amount at the rate of ten per cent
(10%) per year from and after the date that is sixty (60) days after such
approval; and
2.5.2. US$5.0 million (five million United States Dollars) within one hundred
and twenty (120) days of the approval by a REGULATORY AUTHORITY other than the
FDA for the first PRODUCT to reach such stage in one or more MAJOR MARKETS
other than the United States of America, provided, that JV SUB shall be liable
for interest on such amount at the rate of ten per cent (10%) per year from and
after the date that is sixty (60) days after such approval.
All such payments are due upon achievement of the milestone event and are
payable by JV SUB within the number of days specified above following the
occurrence of the milestone, of which event JV SUB will promptly notify ELAN
and ELAN will send an invoice to JV SUB for the corresponding milestone
payment. The foregoing licence royalties shall be non-recoverable by JV SUB.
Royalty on NET REVENUES
3.1. In consideration of the license of the ELAN PATENT RIGHTS to JV SUB, the
royalties payable by JV SUB to ELAN shall calculated by reference to the NET
REVENUES generated by JV SUB or its sublicensees on or after the EFFECTIVE
DATE.
3.2. The royalty payable shall vary from [CONFIDENTIAL PORTION OMITTED] to
[CONFIDENTIAL PORTION OMITTED] of NET REVENUES based upon the following (per
cent amounts refer to royalty rates, and dollar amounts refer to NET REVENUES
in a fiscal year):
3.2.1. [CONFIDENTIAL PORTION OMITTED] on the first [CONFIDENTIAL PORTION
OMITTED],
3.2.2. [CONFIDENTIAL PORTION OMITTED] on the amount between [CONFIDENTIAL
PORTION OMITTED] and [CONFIDENTIAL PORTION OMITTED], and
3.2.3. [CONFIDENTIAL PORTION OMITTED] on the amount in excess of
[CONFIDENTIAL PORTION OMITTED];
provided, that in the event of SHAREHOLDER APPROVAL, such royalties shall be
as follows:
3.2.4. [CONFIDENTIAL PORTION OMITTED] on the first [CONFIDENTIAL PORTION
OMITTED],
3.2.5. [CONFIDENTIAL PORTION OMITTED] on the amount between [CONFIDENTIAL
PORTION OMITTED] and [CONFIDENTIAL PORTION OMITTED], and
3.2.6. [CONFIDENTIAL PORTION OMITTED] on the amount in excess of
[CONFIDENTIAL PORTION OMITTED].
Royalty Payments, Reports and Records
4.1. Within [CONFIDENTIAL PORTION OMITTED] of the end of each quarter in
which NET REVENUES have been earned, JV SUB shall notify ELAN of the NET
REVENUES for that preceding quarter. Payments shown by each calendar quarter
report to have accrued shall be due on the date such report is due. All
payments due hereunder shall be made to the designated bank account of ELAN in
accordance with such timely written instructions as ELAN shall from time to
time provide.
4.2. JV SUB shall keep and shall cause its AFFILIATES and sublicensees to
keep true and accurate records of sales of PRODUCTS, other transactions giving
rise to NET REVENUES, and the royalties payable to ELAN under Article IV hereof
and shall deliver to ELAN a written statement thereof within [CONFIDENTIAL
PORTION OMITTED] following the end of each calendar quarter in which NET
REVENUES have been earned (or any part thereof in the last calendar quarter of
this AGREEMENT in which NET REVENUES are earned) for such calendar quarter.
Said written statements shall set forth (I) for each PRODUCT
[CONFIDENTIAL PORTION OMITTED], the calculation of NET REVENUES from gross
revenues during that calendar quarter, the applicable percentage royalty rates,
and a computation of such royalties due and (II) such details of the
transactions as are relevant to the calculation of NET REVENUES.
4.3. All payments due hereunder shall be made in United States Dollars.
Payments due on NET REVENUES received in a currency other than United States
Dollars shall first be calculated in the foreign currency and then converted
to United States Dollars on the basis of the average of the exchange rates in
effect for the purchase of United States Dollars with such foreign currency
quoted in the Wall Street Journal (or comparable publication if not quoted
in the Wall Street Journal) with respect to the currency of the country or
origin of such payment for the last business day of each month for which the
payment is being made.
4.4. ELAN shall have the right to have access, on reasonable notice, to JV
SUB's or JV SUB's SUBLICENSEES' financial documentation and records during
reasonable business hours for the purpose of verifying the royalties payable
as provided in this AGREEMENT for the two preceding years. This right may
not be exercised more than once in any calendar year, and once a calendar
year is audited it may not be reaudited. For the avoidance of doubt, the
Parties agree that all information furnished to ELAN pursuant to this
Paragraph shall constitute CONFIDENTIAL INFORMATION for the purposes of this
AGREEMENT.
4.5. Any adjustment required by such inspection shall be made within thirty
(30) days of the agreement of the Parties or, if not agreed, upon the
determination of an arbitrator to whom any dispute under this Paragraph shall
be submitted to arbitration pursuant to Article X Paragraph 14. If the
adjustment payable to ELAN is greater than [CONFIDENTIAL PORTION OMITTED] of
the amount paid for the relevant period, then the cost to ELAN for the
inspection, and if applicable the arbitration, shall be paid by JV SUB;
provided that the costs of the inspection shall not exceed the adjustment
payable to ELAN. In addition, JV SUB shall pay interest to ELAN at the rate
publicly announced by Morgan Guaranty Trust Company of New York at its
principal office at its prime or best rate plus one per cent (1%)(applicable
as of the date on which payment should have been made pursuant to Article IV
Paragraph 3), from the date on which payment should have been made pursuant to
Article IV Paragraph 3 until the date of payment.
4.6. Subject to the provisions of Article IV Paragraphs 2.3 and 2.5, JV SUB
shall pay interest to ELAN at the rate publicly announced by Morgan Guaranty
Trust Company of New York at its principal office at its prime or best rate
plus one per cent (applicable as of the date on which payment should have
been made pursuant to the applicable provisions of this AGREEMENT) from the
date on which payment should have been made pursuant to the applicable
provision until the date of payment.
ARTICLE V REGISTRATION OF THE PRODUCTS
1. During the TERM, JV SUB shall be responsible for filing and prosecuting
all PMAs and other applications for regulatory approvals. JV SUB or its
sublicensees shall file the PMAs with the FDA and will use its reasonable
efforts in prosecuting said PMA to approval. JV SUB shall maintain at its
own cost the PMAs with the FDA for the term of this AGREEMENT. JV SUB
hereby agrees to provide to ELAN at ELAN's own cost access to such PMAs as
ELAN reasonably requests. It is not the intention of the Parties that JV
SUB shall furnish to ELAN a copy of each PMA. The PMAs and any other
applications for regulatory approval filed hereunder in the United States of
America or in any other country of the TERRITORY for the PRODUCTS shall
remain the property of JV SUB. During the PMA registration procedure, JV
SUB shall keep ELAN promptly and fully advised of JV SUB's registration
activities, progress and procedures. For the avoidance of doubt, the
Parties agree that all information furnished to ELAN pursuant to
this Paragraph shall constitute CONFIDENTIAL INFORMATION for the purposes of
this AGREEMENT.
2. It is hereby acknowledged that there are inherent uncertainties involved
in the development and registration of pharmaceutical products with the FDA
or any other regulatory body in the TERRITORY insofar as obtaining approval
is concerned and such uncertainties form part of the business risk involved
in undertaking the form of commercial collaboration as set forth in this
AGREEMENT.
3. JV SUB shall indemnify and hold harmless ELAN, its agents and employees
from and against all claims, damages, losses, liabilities and expenses to
which ELAN, its agents, and employees may become subject related to or
arising out of JV SUB's bad faith, gross negligence or intentional
misconduct in connection with the filing or maintenance of the PMA and its
foreign counterparts.
ARTICLE VI: REPRESENTATIONS, WARRANTIES
1. ELAN represents to JV SUB the following:
1.1. ELAN is duly and validly existing in the jurisdiction of its
incorporation and each other jurisdiction in which the conduct of its
business requires such qualification, and is in compliance with all
applicable laws, rules, regulations or orders relating to its business and
assets;
1.2. ELAN has full corporate authority to execute and deliver this AGREEMENT
and to consummate the transactions contemplated hereby; this AGREEMENT has been
duly executed and delivered by ELAN and constitutes the legal and valid
obligations of ELAN and is enforceable against ELAN in accordance with its
terms and the execution, delivery and performance of this AGREEMENT and the
transactions contemplated hereby and will not violate or result in a default
under or creation of lien or encumbrance under ELAN's memorandum and articles
of association or other organic documents, any material agreement
or instrument binding upon or affecting ELAN or its properties or assets or
any applicable laws, rules, regulations or orders affecting ELAN or its
properties or assets;
1.3. ELAN is not in material default of its memorandum and articles of
association or similar organic documents, any applicable material laws or
regulations or any material contract or agreement binding upon or affecting
it or its properties or assets and the execution, delivery and performance
of this AGREEMENT and the transactions contemplated hereby will not result
in any such violation;
1.4. ELAN represents and warrants that ELAN is the sole and exclusive owner
or licensee of, or controls all right, title and interest to the ELAN GLUCOSE
MONITOR TECHNOLOGY;ELAN has the right to grant the licenses granted herein, and
the ELAN GLUCOSE MONITOR TECHNOLOGY is free and clear of any lien,
encumbrances, security interest or restriction on the licence granted herein;
ELAN will not grant during the term of this AGREEMENT, any right, license or
interest in and to the ELAN GLUCOSE MONITOR TECHNOLOGY or the PRODUCTS, or any
portion thereof, inconsistent with the license granted herein, nor, as provided
in Article II Paragraph 9.1, inconsistent with the expansion of the TERRITORY
upon the SHAREHOLDER APPROVAL; and to the best of ELAN's knowledge and belief
there are no pending or threatened adverse actions, suits, investigations,
claims or proceedings brought by one or more Third Parties related to the ELAN
GLUCOSE MONITOR TECHNOLOGY as of the EFFECTIVE DATE; and
1.5. ELAN represents and warrants that the execution of this AGREEMENT and the
full performance and enjoyment of the rights of JV SUB under this AGREEMENT
will not breach or in any way be inconsistent with the terms and conditions
of any licence, contract, understanding or agreement, whether express, implied,
written or oral between ELAN and any third party.
2. JV SUB represents to ELAN the following:
2.1. JV SUB is duly and validly existing in good standing in the jurisdiction
of its incorporation and each other jurisdiction in which the conduct of its
business requires such qualification, and JV SUB is in compliance with all
applicable laws, rules, regulations or orders relating to its business and
assets;
2.2. JV SUB has full corporate authority to execute and deliver this AGREEMENT
and to consummate the transactions contemplated hereby; this AGREEMENT has been
duly executed and delivered and constitutes the legal and valid obligations of
JV SUB and is enforceable against JV SUB in accordance with its terms; and the
execution, delivery and performance of this AGREEMENT and the transactions
contemplated hereby will not violate or result in a default under or creation
of lien or encumbrance under JV SUB's certificate of incorporation, by-laws
or other organic documents, any material agreement or instrument
binding upon or affecting JV SUB or its properties or assets or any applicable
laws, rules, regulations or orders affecting JV SUB or its properties or
assets;
2.3. JV SUB is not in default of its charter or by-laws, any applicable laws or
regulations or any material contract or agreement binding upon or affecting it
or its properties or assets and the execution, delivery and performance of this
letter agreement and the transactions contemplated hereby will not result in
any such violation; and
2.4. JV SUB represents and warrants that it has not granted any option,
licence, right or interest to any third party which would conflict with the
terms of this AGREEMENT.
3. JV SUB represents and warrants that the PRODUCTS shall be manufactured,
packaged, distributed and sold in accordance with all regulations and
requirements of the FDA and foreign regulatory authorities including, without
limitation, the cGP regulations which apply to the manufacture, storage,
packaging and supply of the PRODUCT. JV SUB represents and warrants
that the PRODUCTS shall not be adulterated or mis-branded as defined by the
Federal Food, Drug and Cosmetic Act, (or applicable foreign law) and shall
not be a product which would violate any section of such Act if introduced
in interstate commerce except to the extent due to components
or materials manufactured or designed by ELAN (which components and material
have been properly used and applied in accordance with ELAN's specifications
or other written instructions or labels) or due to the negligence or wilful
misconduct of ELAN.
4. JV SUB is each fully cognisant of all applicable statutes, ordinances and
regulations of the United States of America with respect to the manufacture
of the PRODUCTS including, but not limited to, the U.S. Federal Food, Drug
and Cosmetic Act and regulations thereunder and cGP. JV SUB shall manufacture
or procure the manufacture the PRODUCTS in conformity with the
REGULATORY APPROVALS and where applicable the Drug Master File and in a
manner which fully complies with all United States of America and foreign
statutes, ordinances, regulations and practices.
5. ELAN shall indemnify, defend and hold harmless JV SUB and its officers,
directors, employees and agents from all actions, losses, claims, demands,
damages, costs and liabilities (including reasonable attorneys' fees) due to
third party claims to which JV SUB is or may become subject insofar as they
arise out of or are alleged or claimed to arise out of (i) any
breach by ELAN of any of its obligations under this AGREEMENT, and (ii) any
breach of a representation or warranty of ELAN made in this AGREEMENT and
(iii) any activities conducted by ELAN in connection with the PROJECT, except
to the extent due to the negligence or wilful misconduct of JV SUB.
6. JV SUB shall indemnify, defend and hold harmless ELAN and its officers,
directors, employees and agents from all actions, losses, claims, demands,
damages, costs and liabilities (including reasonable attorneys' fees) due to
third party claims to which ELAN is or may become subject insofar as they
arise out of or are alleged or claimed to arise out of (i) any
breach by JV SUB of any of its obligations under the AGREEMENT, (ii) any breach
of any representation or warranty of JV SUB made in this AGREEMENT, and (iii)
any activities conducted by JV SUB in connection with the PROJECT, except to
the extent due to the negligence or wilful misconduct of ELAN.
7. JV SUB shall indemnify, defend and hold harmless ELAN and its officers,
directors, employees and agents from all actions, losses, claims, demands,
damages, costs and liabilities (including reasonable attorneys' fees) due to
third party claims to which ELAN is or may become subject insofar as they arise
out of or are alleged or claimed to arise out of activities
conducted by JV SUB in the development, manufacture, transport, packaging,
storage, handling, distribution, promotion, marketing, offer for sale or sale
of the PRODUCT, that was caused by the negligence or wrongful acts or omissions
on the part of JV SUB.
8. ELAN represents and warrants that the manufacture, use, offer for sale, or
sale of the devices and methods exclusively disclosed in either the ELAN PATENT
RIGHTS or the application of the ELAN KNOW-HOW as documented in the transfer of
information to JV SUB as of the EFFECTIVE DATE does not infringe any patent
owned by a third party in the TERRITORY.
9. As a condition of obtaining an indemnity in the circumstances set out above
or elsewhere in the AGREEMENT, the Party seeking an indemnity shall:
9.1. fully and promptly notify the other Party of any claim or proceeding, or
threatened claim or proceeding;
9.2. permit the indemnifying Party to take full care and control of such claim
or proceeding;
9.3. reasonably assist in the investigation and defence of such claim or
proceeding;
9.4. not compromise or otherwise settle any such claim or proceeding without
the prior written consent of the other Party, which consent shall not be
unreasonably withheld; and
9.5. take all reasonable steps to mitigate any loss or liability in respect
of any such claim or proceeding.
10. Notwithstanding anything to the contrary in this AGREEMENT, ELAN and JV
SUB shall not be liable to the other for any consequential or incidental loss
or damage (whether for loss of profit or otherwise) by reason of any
representation or warranty, condition or other term or any duty of
common law, or under the express or implied terms of this AGREEMENT, and
whether occasioned by the negligence of the respective Parties, their employees
or agents or otherwise.
ARTICLE VII: PROJECT TEAM
1. The Parties have agreed to establish a PROJECT TEAM which shall consist
of a chief representative from each Party together with such additional
business and development personnel from each Party who are deemed necessary to
accomplish the work of the PROJECT. Unless both Parties agree otherwise,
commencing on the EFFECTIVE DATE, the PROJECT TEAM shall meet at least once
each calendar quarter, whether in person or by video conference; provided that
the PROJECT TEAM shall meet face to face at least once in every calendar year.
The PROJECT TEAM shall meet alternatively at the offices of ELAN and JV SUB
or as otherwise agreed by the Parties. Meetings shall be chaired by the chief
representative of JV SUB.
2. At and between meetings of the PROJECT TEAM each Party shall keep the other
fully and regularly informed as to its progress with its respective obligations.
In addition, ELAN and JV SUB will both furnish a quarterly project update in
relation to the research development, regulatory and clinical work being
conducted in relation to the PRODUCT to designated personnel of the Parties.
3. The PROJECT TEAM shall review the manufacturing costs and other costs as
well as the regulatory and commercialisation strategy for the PRODUCT on an
ongoing basis. The PROJECT TEAM may suggest alternative strategies and attempt
to resolve any conflicts or differences of opinion between the Parties as to
how to proceed.
4. The PROJECT TEAM shall not be empowered to alter the terms of this
AGREEMENT. The PROJECT TEAM shall continue to function and meet both prior to
and for a period of one year after the launch of the PRODUCT in the first
MAJOR MARKET,or for such additional period as may be agreed.
5. The PROJECT TEAM may suggest alternative strategies and shall attempt to
resolve any conflicts or differences of opinion between the Parties as to how
to proceed. Any matter as to which the PROJECT TEAM is unable to reach
agreement may be submitted by either Party to binding arbitration for final
resolution pursuant to Article X Paragraph 14, or as otherwise agreed, except
with respect to matters for which JV SUB has authority to make final decisions.
ARTICLE VIII PATENTS
Title
1. Title to ELAN GLUCOSE MONITOR TECHNOLOGY created or developed solely by
employees of ELAN shall be owned by ELAN. Title to all JV SUB PATENT RIGHTS
and JV SUB KNOW-HOW shall be owned by JV SUB. Title to all inventions and
other intellectual property created or developed jointly by at least one
employee of JV SUB (or otherwise on behalf of JV SUB) and at least one
employee of ELAN, whether pursuant to research and development conducted by
ELAN and JV SUB pursuant to Article III or otherwise ("JOINT IMPROVEMENTS"),
shall be jointly owned by ELAN and JV SUB. The Parties agree that such joint
intellectual property created or developed after the EFFECTIVE DATE shall
not result in any additional royalties in excess of those royalties already
payable by JV SUB pursuant to Article IV Paragraph 3 and by ELAN pursuant to
Article II Paragraph 8.3. being paid by JV SUB or ELAN.
Filing and prosecution of patents
2. The Parties agree that the following provisions of Article VIII Paragraph 2.
shall apply as regards the filing, prosecution and maintenance of the ELAN
PATENT RIGHTS:
2.1. Both Parties shall timely inform the other in writing of any improvement
or development made by such Party relating, respectively, to the ELAN GLUCOSE
MONITOR TECHNOLOGY, the JV SUB KNOW-HOW, and/or the JOINT IMPROVEMENTS so that
any patent protection that may be available for any such improvement or
development is not compromised.
2.2. ELAN shall prepare, prosecute and maintain all initially licensed patent
applications and issued patents as set forth in APPENDIX B, and all
improvements created or developed solely by employees of ELAN relating to the
FIELD ("ELAN IMPROVEMENTS") made pursuant to the AGREEMENT or otherwise.
With respect to the ELAN IMPROVEMENTS, ELAN shall have the right to apply for
patent protection in its own name and at its own expense. Should it however
be doubtful whether a patent may be obtained, then ELAN may at its sole
discretion decide not to apply for a patent in one or more countries of the
TERRITORY. If such a patent is obtained, such a patent shall constitute ELAN
PATENT RIGHTS and JV SUB shall have for the duration of this AGREEMENT a right
thereunder to have manufactured pursuant to the terms of this AGREEMENT, and
to prepare, use and sell the PRODUCT as specified in Article II Paragraph 1.
ELAN shall keep JV SUB fully informed as to the status of such patent matters
relating to the ELAN PATENT RIGHTS. With respect to the ELAN IMPROVEMENTS,
ELAN shall timely apprise JV SUB of the status of any such prosecution and,
in the event ELAN shall decide not to seek patent protection for any ELAN
IMPROVEMENTS and such ELAN IMPROVEMENTS are not otherwise encumbered by
licences to one or more third parties (it being agreed that ELAN shall use
commercially reasonable efforts to exclude or where applicable to minimise
the extent of any such encumbrances), JV SUB shall have the option to take
responsibility for such prosecution and/or maintenance.
2.3. JV SUB shall prepare, prosecute and maintain all patents applications and
issued patents relating to all (I) JV SUB KNOW-HOW and (II) JOINT IMPROVEMENTS
that relate to the FIELD. With respect to JV SUB KNOW-HOW, JV SUB shall timely
apprise ELAN of the status of any such prosecution and, in the event JV SUB
shall decide not to seek patent protection for any JV SUB KNOW-HOW, ELAN shall
have the option to take control of such prosecution. In the event that ELAN
shall determine, in good faith, that any JOINT IMPROVEMENT predominantly
relates to an area other than the FIELD, ELAN shall have the option to take
control of the preparation, prosecution and maintenance of patent
protection directed to such JOINT IMPROVEMENTS. In the event that ELAN shall
exercise such option, ELAN shall have due regard to JV SUB's wishes regarding
the patent prosecution strategy for such JOINT IMPROVEMENTS. In the event that
ELAN does not exercise such right, JV SUB shall have the right to take
responsibility for the preparation, prosecution and maintenance of patent
protection directed to such JOINT IMPROVEMENTS. In the event that any
JOINT IMPROVEMENT predominantly relates to the FIELD but also relates to an
area other than the FIELD, JV SUB shall have due regard to ELAN's wishes as
regards the patent prosecution strategy for such JOINT IMPROVEMENTS.
Third party infringement
3. JV SUB and ELAN shall promptly inform the other in writing of any alleged
infringement of which it shall become aware by a third party of any patents
within the ELAN PATENT RIGHTS and provide such other with any available
evidence of infringement.
4. During the TERM, JV SUB shall have the right to pursue at its own expense
any such infringements of the ELAN PATENT RIGHTS and/or the JV SUB PATENT
RIGHTS and/or the JOINT IMPROVEMENTS within the FIELD. ELAN shall agree to
be named as a necessary party in an action brought by and fully financed by
JV SUB and will reasonably co-operate with such action. Any expenses borne
by ELAN shall be reimbursed by JV SUB. Any recovery remaining after the
deduction by JV SUB of the reasonable expenses (including attorney's fees
and expenses) incurred in relation to such an infringement proceeding shall
constitute NET REVENUES for the purpose of this AGREEMENT. Should JV SUB
decide not to pursue such infringers of the ELAN PATENT RIGHTS and/or the JV
SUB PATENT RIGHTS and/or the JOINT IMPROVENTS within the FIELD, ELAN may do
so at its expense and for its own benefit, and JV SUB will reasonably
co-operate with such action. Any expenses borne by JV SUB in co-operating
with such action shall be reimbursed by ELAN.
Infringement of third party patents
5.1.1. In the event that a claim or proceedings are brought against JV SUB
by a third party alleging that the [CONFIDENTIAL PORTION OMITTED]
and [CONFIDENTIAL PORTION OMITTED] exclusively disclosed either in the ELAN
PATENT RIGHTS or the application of the ELAN KNOW-HOW as documented in the
transfer of information to JV SUB (other, in each case, than the ELAN
IMPROVEMENTS) infringes the patent rights owned by such a third party in the
TERRITORY, JV SUB shall promptly advise ELAN of such threat or suit.
5.1.2. ELAN shall indemnify JV SUB against such a claim to the extent set out
in Paragraph 5.1.1; provided that JV SUB shall not acknowledge to the third
party or to any other person the validity of any claims of such a third party,
and shall not compromise or settle any claim or proceedings relating thereto
without the prior written consent of ELAN, not to be unreasonably withheld or
delayed. At its option, ELAN may elect to take over the conduct of such
proceedings from JV SUB and ELAN shall indemnify JV SUB against the third
party claim subject to the provisions of this paragraph.
5.1.3. In the event that a claim or proceedings are brought against JV SUB by
a third party alleging that the [CONFIDENTIAL PORTION OMITTED]
and [CONFIDENTIAL PORTION OMITTED] exclusively disclosed either in the ELAN
PATENT RIGHTS or the application of the ELAN KNOW-HOW as documented in the
transfer of information to JV SUB emanating from the ELAN IMPROVEMENTS
infringes the patent rights owned by such a third party in the TERRITORY,
ELAN shall indemnify JV SUB against such a claim; provided that JV SUB shall
not acknowledge to the third party or to any other person the validity of any
claims of such a third party, and shall not compromise or settle any claim or
proceedings relating thereto without the prior written consent of ELAN, not
to be unreasonably withheld or delayed. At its option, ELAN may elect to take
over the conduct of such proceedings from JV SUB and ELAN shall indemnify JV
SUB against the third party claim subject to the provisions of this paragraph.
If in ELAN's reasonable and bona fide judgement the [CONFIDENTIAL PORTION
OMITTED] and [CONFIDENTIAL PORTION OMITTED] exclusively disclosed either in
such ELAN PATENT RIGHTS or such application of the ELAN KNOW-HOW in each case
emanating from the ELAN IMPROVEMENTS may infringe the patent rights of a third
party in the TERRITORY, ELAN shall so notify JV SUB. The Parties agree that
ELAN should notify JV SUB of the foregoing not later than
[CONFIDENTIAL PORTION OMITTED] concerned or
sooner in the event that ELAN has obtained external advice from reputable
patent attorneys. In such event, if JV SUB determines that notwithstanding
the foregoing it wishes to proceed with the development and commercialisation
of the applicable PRODUCTS notwithstanding the risk of infringing the patent
rights of a third party, ELAN shall not indemnify JV SUB whether pursuant
to this Paragraph or otherwise and JV SUB shall indemnify ELAN in accordance
with the provisions of Article VIII Paragraph 6 with respect to any matters
covered by such notification from ELAN.
5.1.4. ELAN's maximum liability pursuant to [CONFIDENTIAL PORTION OMITTED],
and [CONFIDENTIAL PORTION OMITTED] for damages and costs in relation to all
third party claims shall not exceed [CONFIDENTIAL PORTION OMITTED].
ELAN shall be entitled to apply [CONFIDENTIAL PORTION OMITTED] of the
reasonable costs and expenses incurred in defending such claims against the
said sum of [CONFIDENTIAL PORTION OMITTED]. In accordance with
its obligations pursuant to Article VI Paragraph 9.5, JV SUB shall favourably
consider taking such action as is reasonable, such as to cease selling the
PRODUCT, to re-engineer or modify the applicable PRODUCT so as to avoid
infringing the patent rights of a third party, or entering into a licence
agreement with such third party after due consultation with ELAN.
5.2. ELAN shall have [CONFIDENTIAL PORTION OMITTED] arising
for any [CONFIDENTIAL PORTION OMITTED] as a result of having to
[CONFIDENTIAL PORTION OMITTED] or having to [CONFIDENTIAL PORTION OMITTED],
whether as a result of a court order or otherwise.
6. In the event that a claim or proceeding is brought against ELAN by a third
party alleging that the manufacture, offer for sale, sale, distribution or use
of the PRODUCTS in the TERRITORY infringes any adversely held patent or
involves the unauthorised use of any other intellectual property, ELAN shall
promptly advise JV SUB of such threat or suit. Subject to ELAN's obligations
pursuant to the provisions of Article VI Paragraph 8 and Article VIII
Paragraphs 5.1.2. and 5.1.3, JV SUB shall indemnify ELAN against such a claim;
provided that ELAN shall not acknowledge to the third party or to any other
person the validity of the patent rights of such a third party and shall not
compromise or settle any claim or proceedings relating thereto without the
written consent of JV SUB, which shall not be unreasonably withheld
or delayed. At its option, JV SUB may elect to take over the conduct of
such proceedings from ELAN with counsel of JV SUB's choice. In such event
JV SUB shall keep ELAN advised of all material developments in the said
proceedings and shall not settle or compromise such proceedings without the
consent of ELAN which shall not be unreasonably withheld or delayed.
ARTICLE IX: TERM AND TERMINATION
This AGREEMENT is concluded for a period commencing as of the date of this
AGREEMENT and shall expire fifteen (15) years starting from the EFFECTIVE DATE,
or on a country by country basis for the life of the last to expire patent
included in the ELAN PATENT RIGHTS or the JOINT IMPROVEMENTS, whichever is
longer ("the TERM").
2. In addition to the rights of early or premature termination provided for
elsewhere in this AGREEMENT, in the event that any of the terms or provisions
hereof are incurably breached by either Party, the non-breaching Party may
immediately terminate this AGREEMENT by written notice. An incurable breach
shall be committed when either Party is dissolved, liquidated, discontinued,
becomes insolvent, or when any proceeding is filed or commenced by either
Party under bankruptcy, insolvency or debtor relief laws (and not dismissed
within ninety (90) days). Subject to the other provisions of this AGREEMENT,
in the event of any other material breach, the non-breaching Party may
terminate this AGREEMENT by the giving of written notice to the breaching
Party that this AGREEMENT will terminate on the ninetieth (90th) day from
notice unless cure is sooner effected. If the breaching Party has proposed a
course of action to rectify the breach and is acting in good faith to rectify
same but has not cured the breach by the ninetieth (90th) day, the said
period shall be extended by such period as is reasonably necessary to permit
the breach to be rectified. In the event that the breaching Party disputes
the validity of the right of the non-breaching Party to terminate the
AGREEMENT pursuant to this Paragraph, either Party may refer the dispute to
an arbitrator pursuant to the provisions of Article X Paragraph 14. Pending
the determination of the arbitrator, neither Party may regard the AGREEMENT
as having been terminated and in particular shall not allege or claim to any
third party that the AGREEMENT has been terminated pursuant to this Paragraph.
3. Upon termination of the AGREEMENT:
3.1. any sums that were due from JV SUB to ELAN prior to the exercise of the
right to terminate this AGREEMENT, shall be paid in full within sixty (60) days
of termination of this AGREEMENT;
3.2. all confidentiality provisions set out in this AGREEMENT shall remain in
full force and effect for a period of five (5) years;
3.3. all representations and warranties shall insofar are appropriate remain in
full force and effect;
3.4. the rights of inspection and audit shall continue in force for the period
referred to in the relevant provisions of this AGREEMENT;
3.5. termination of this AGREEMENT for any reason shall not release any Party
hereto from any liability which, at the time of such termination, has already
accrued to the other Party or which is attributable to a period prior to such
termination nor preclude either Party from pursuing all rights and remedies it
may have hereunder or at law or in equity with respect to any breach of this
AGREEMENT;
3.6. except as is necessary to enable ELAN to exercise the licenses granted by
JV SUB to ELAN pursuant to Article II Paragraph 8.3, Article II Paragraph 10.2.
and Article II Paragraph 11, JV SUB and ELAN shall promptly return to the other
Party all CONFIDENTIAL INFORMATION received from the other Party (except one
copy of which may be retained for archival purposes);
3.7. JV SUB and its SUBLICENSEES shall have an ongoing right to sell or
otherwise dispose of the stock of any PRODUCTS on hand as of the date of
termination of the AGREEMENT, which such sale shall be subject to Article IV
and the other applicable terms of this AGREEMENT. The foregoing provisions
of this Paragraph shall be subject to the provisions of such agreement or
agreements as ELAN and one or more SUBLICENSEES conclude pursuant to Article
II Paragraph 2.2;
3.8. in the event this AGREEMENT is terminated by ELAN pursuant to Article IX
Paragraph 2, the licences granted by ELAN to JV SUB shall terminate and ELAN
shall thenceforth be entitled to exploit the ELAN GLUCOSE MONITOR TECHNOLOGY,
the JV SUB PATENT RIGHTS, the JV SUB KNOW-HOW together with any JV SUB
IMPROVEMENTS, including the data, information, regulatory applications,
regulatory approvals, pricing and reimbursement approvals and the TRADEMARK
to enable ELAN to commercialise the PRODUCTS in which event the royalty
obligations set forth in Article II Paragraph 8.3. shall continue for the
term stated in that Paragraph; provided that the foregoing provisions shall
be subject to the provisions of Article II Paragraph 2.2. and any
agreements entered into pursuant to the said Paragraph; and in the event of
termination of this AGREEMENT, the licences granted by JV SUB to the JV SUB
PATENT RIGHTS and the JV SUB KNOW-HOW and the JOINT IMPROVEMENTS pursuant to
Article II Paragraph 8.3. and to the TRADEMARK pursuant to Article II
Paragraph 11 shall continue after the date of the termination of this
AGREEMENT until the last to expire patent in the JV SUB PATENT RIGHTS on a
country by country basis, or 15 years after the EFFECTIVE DATE
(whichever is later) and thereafter the licence shall be fully paid up and
irrevocable; and
3.9. Articles I, Article II Paragraphs 2.2, 8.3, 9, 10.2, 11, Article VI,
Article VIII Paragraphs 1, 5 and 6, Article IX and Article X shall survive
the termination or expiration of this AGREEMENT for any reason.
ARTICLE X: SUNDRY CLAUSES
Secrecy
1.1. Each of the Parties agrees, during the TERM, to hold in confidence and
not disclose CONFIDENTIAL INFORMATION to any third parties, except to the
extent required by applicable law or administrative or judicial process.
Each Party may make such disclosure to its directors, officers and agents and,
in the case of JV SUB, its potential and actual sublicensees and other parties
to whom such disclosure is appropriate to enable JV SUB to conduct its regular
business (each of whom shall be bound by JV SUB's customary confidential
disclosure agreements), who shall be informed of such confidentiality
obligation and for whose breach the disclosing Party shall be responsible.
1.2. Subject to the provisions of Paragraph 1.1, any information, whether
written or oral (oral information shall be reduced to writing within one month
by the Party giving the oral information and the written form shall be
furnished to the other Party) pertaining to the ELAN GLUCOSE MONITOR TECHNOLOGY
or the PRODUCTS that has been or will be communicated or delivered by ELAN to
JV SUB, and any information from time to time communicated or delivered by
JV SUB to ELAN, including, without limitation, trade secrets, business methods,
and cost, supplier, manufacturing and customer information, shall be treated
by JV SUB and ELAN, respectively, as CONFIDENTIAL INFORMATION, and shall
not be disclosed or revealed to any third party whatsoever or used in any
manner except as expressly provided for herein; provided, however, that such
CONFIDENTIAL INFORMATION shall not be subject to the restrictions and
prohibitions set forth in this section to the extent that such CONFIDENTIAL
INFORMATION:
1.2.1. is available to the public in public literature or otherwise, or after
disclosure by one Party to the other becomes public knowledge through no
default of the Party receiving such information; or
1.2.2. was known to the Party receiving such information prior to the receipt
of such information by such Party, whether received before or after the date
of this AGREEMENT; or
1.2.3. is obtained by the Party receiving such information from a third party
not subject to a requirement of confidentiality with respect to such
information; or
1.2.4. is required to be disclosed pursuant to: (A) any order of a court having
jurisdiction and power to order such information to be released or made public;
or (B) other requirement of law; provided that if the receiving Party becomes
legally required to disclose any CONFIDENTIAL INFORMATION, the receiving Party
shall give the disclosing Party prompt notice of such fact so that the
disclosing Party may obtain a protective order or other appropriate remedy
concerning any such disclosure.
The receiving Party shall fully cooperate with the disclosing Party in
connection with the disclosing Party's efforts to obtain any such order or
other remedy. If any such order or other remedy does not fully preclude
disclosure, the receiving Party shall make such disclosure only
to the extent that such disclosure is legally required; or
1.2.5. is independently developed by or for the Party by persons not having
access to the CONFIDENTIAL INFORMATION of the other Party.
1.3. Each Party shall take all such precautions as it normally takes with its
own CONFIDENTIAL INFORMATION to prevent any improper disclosure of such
CONFIDENTIAL INFORMATION to any third party; provided, however, that such
CONFIDENTIAL INFORMATION may be disclosed within the limits required to obtain
any authorisation from the FDA or any other REGULATORY AUTHORITY or, with the
prior written consent of the other Party, which shall not be unreasonably
withheld or delayed, or as may otherwise be required in connection with the
purposes of this AGREEMENT.
1.4. JV SUB agrees that it will not use, directly or indirectly, the ELAN
GLUCOSE MONITOR TECHNOLOGY, or other CONFIDENTIAL INFORMATION disclosed to JV
SUB or obtained from ELAN pursuant to this AGREEMENT, other than as expressly
provided herein. ELAN agrees that it will not use, directly or indirectly, any
JV SUB KNOW-HOW, JV SUB PATENT RIGHTS, or other CONFIDENTIAL INFORMATION
disclosed to ELAN or obtained from JV SUB pursuant to this AGREEMENT, other
than as expressly provided herein.
1.5. The Parties shall not (a) disclose to any person or entity, publicly or
privately, this AGREEMENT or the substance of the transactions contemplated
hereby without the prior written consent of the other Party; provided, that
the foregoing covenant shall not be applicable to the extent required by
applicable law or judicial or administrative process or periodic SEC reports
filed by ELAN or BIOJECT in connection herewith, so long as the text
thereof shall have been provided to the non disclosing Party and such non
disclosing Party shall have approved the text thereof, which consent shall
not be unreasonably withheld or delayed.
2. Assignments/ Subcontracting
JV SUB shall not be permitted to assign any of its rights under the AGREEMENT
without the prior written consent of ELAN, which consent will not be
unreasonably withheld or delayed; provided, that such reasonableness standard
shall not apply in the case of a proposed assignment or sublicense to any of
the entities listed on the LISTED COMPANIES. ELAN may not assign to an
unaffiliated third party (other than by operation of law in the event of an
acquisition of ELAN, or a merger or similar transaction) its rights under this
AGREEMENT without the prior written consent of JV SUB, which may be withheld
in JV SUB's sole discretion. ELAN may assign all or part of its right and
interest to an AFFILIATE without the prior written consent of JV SUB.
3. Certain changes of Control.
In the event that JV SUB (or an interest therein in excess of
fifteen percent (15%) of the fully-diluted equity) is acquired (by
merger, sale of assets or stock or otherwise) by (a) any of the LISTED
COMPANIES or (b) any other entity to which ELAN does not consent, which
consent shall not be unreasonably withheld or delayed, such reasonableness to
be determined by reference to JV SUB's and/or its controlling persons'
intention to continue diligent development and commercialisation of the
Products, at the option of ELAN, the AGREEMENT shall be immediately
terminated, without any further liability on
the part of ELAN to JV SUB; provided that in such event the provisions of
Article II Paragraph 8.3. and Article IX Paragraph 3.8. shall apply.
4. Parties bound
This AGREEMENT shall be binding upon and enure for the benefit of Parties
hereto, their successors and permitted assigns.
5. Severability
If any provision in this AGREEMENT is agreed by the Parties to be, or is deemed
to be, or becomes invalid, illegal, void or unenforceable under any law that is
applicable hereto, (i) such provision will be deemed amended to conform to
applicable laws so as to be valid and enforceable or, if it cannot be so
amended without materially altering the intention of the Parties, it will be
deleted, with effect from the date of such agreement or such earlier date as
the Parties may agree, and (ii) the validity, legality and enforceability of
the remaining provisions of this AGREEMENT shall not be impaired or affected
in any way.
6. Force Majeure
Neither Party to this AGREEMENT shall be liable for delay in the performance of
any of its obligations hereunder if such delay results from causes beyond its
reasonable control, including, without limitation, acts of God, fires, strikes,
acts of war, or intervention of a Government Authority, non availability of raw
materials, but any such delay or failure shall be remedied by such Party as
soon as practicable.
7. Relationship of the Parties
Nothing contained in this AGREEMENT is intended or is to be construed to
constitute ELAN and JV SUB as partners or joint venturers or either Party as an
employee of the other. Neither Party hereto shall have any express or implied
right or authority to assume or create any obligations on behalf of or in the
name of the other Party or to bind the other Party to any contract, agreement
or undertaking with any third party.
8. Amendments
No amendment, modification or addition hereto shall be effective or binding on
either Party unless set forth in writing and executed by a duly authorised
representative of both Parties.
9. Waiver
No waiver of any right under this AGREEMENT shall be deemed effective unless
contained in a written document signed by the Party charged with such waiver,
and no waiver of any breach or failure to perform shall be deemed to be a
waiver of any future breach or failure to perform or of any other right
arising under this AGREEMENT.
10. Headings
The section headings contained in this AGREEMENT are included for convenience
only and form no part of the agreement between the Parties. Save as otherwise
provided herein, references to articles, paragraphs, clauses and appendices
are to those contained in this AGREEMENT.
11. No effect on other agreements
No provision of this AGREEMENT shall be construed so as to negate, modify or
affect in any way the provisions of any other agreement between the Parties
unless specifically referred to, and solely to the extent provided, in any
such other agreement.
12. Applicable Law
This AGREEMENT (a) shall be governed by and construed in accordance with the
laws of the State of New York, without regard to principles of conflicts of
laws.
13. Notice
13.1. Any notice to be given under this AGREEMENT shall be sent in writing in
English by registered airmail or telefaxed to:
- - ELAN at
Elan Corporation, plc.
Lincoln Place,
Lincoln House,
Dublin 2
Ireland.
Attention: President, Elan Pharmaceutical Technologies, a division of ELAN
Corporation plc
Telephone: 353 1 709 4000
Telefax : 353 1 6624960
- - JV SUB at
Bioject JV Subsidiary Inc.
7620 S.W. Bridgeport Road,
Portland,
Oregon 97224,
United States of America.
Attention: President and Chief Executive Officer
Telephone: 1 503-639-7221
Telefax : 1 503-620-6431
or to such other address(es) and telefax numbers as may from time to time be
notified by either Party to the other hereunder.
13.2. Any notice sent by mail shall be deemed to have been delivered within
seven (7) working days after despatch and any notice sent by telefax shall be
deemed to have been delivered within twenty four (24) hours of the time of the
despatch. Notice of change of address shall be effective upon receipt;
provided that such date of receipt must be a business day for the Party to
whom the notice is delivered.
14. Arbitration
Should the Parties fail to reach agreement with respect to a dispute or
difference (other than as to a question relating to patent validity or as to
a matter left to the discretion of a Party hereunder) between the Parties
arising out of or in connection with this AGREEMENT, then the dispute or
difference will be determined by arbitration in New York in accordance with
the Non-Administered Arbitration Rules & Commentary (Amended 1993) of the CPR
Institute for Dispute Resolution by one independent and impartial arbitrator
who shall have had both training and experience as an arbitrator of general
corporate and commercial matters, or depending on the nature of the dispute
have experience of pharmaceutical device development and marketing (including
clinical development and regulatory affairs) or be an independent patent
attorney as the case may be. If the Parties to this AGREEMENT cannot agree on
the identity of the arbitrator, then the arbitrator will be selected by the
President of the CPR Institute for Dispute Resolution in accordance with the
criteria set forth in the preceding sentence. The arbitrator may decide any
issue as to whether, or as to the extent to which, any dispute is subject to
the arbitration and other dispute resolution provisions in this
AGREEMENT. The arbitrator must base the award on the provisions of this
AGREEMENT and must render the award in a writing which must include an
explanation of the reasons for such award. Any arbitration pursuant to this
section will be governed by the substantive laws of the State of New York
applicable to contracts made and to be performed in that state,
without regard to conflicts of law rules, and by the arbitration law of the
Federal Arbitration Act, and judgement upon the award rendered by the
arbitrator may be entered by any court having jurisdiction thereof. The
statute of limitations of the State of New York applicable to the
commencement of a lawsuit will apply to the commencement of an arbitration
under this section, except that no defences will be available based upon the
passage of time during any active negotiation between the Parties in an
attempt to resolve the dispute without arbitration. All fees, costs and
expenses of the arbitrator, and all other costs and expenses of the
arbitration, will be shared equally by the Parties to this AGREEMENT unless
such Parties agree otherwise or unless the arbitrator in the award assesses
such costs and expenses against one of such Parties or allocates such costs
and expenses other than equally between such Parties. Each Party to this
AGREEMENT acknowledges receipt of a copy of the Non-Administered Arbitration
Rules & Commentary (Amended 1993) of the CPR Institute for Dispute
Resolution. Notwithstanding the foregoing, either Party may, on good
cause shown, seek a temporary restraining order and/or a preliminary injunction
from a court of competent jurisdiction, to be effective pending the
institution of the arbitration process and the deliberation and award of the
arbitrator.
15. Withholding
Any income or other taxes which JV SUB is required by law to pay or withhold on
behalf of ELAN with respect to royalties and any other moneys payable to ELAN
under this AGREEMENT shall be deducted from the amount of such royalties and
moneys due. JV SUB shall furnish ELAN with proof of such payments. Any such
tax required to be paid or withheld shall be an expense of and borne solely by
ELAN. JV SUB shall promptly provide ELAN with a certificate or other
documentary evidence to enable ELAN to support a claim for a refund or a
foreign tax credit with respect to any such tax so withheld or deducted by JV
SUB. Both Parties will reasonably cooperate in completing and filing
documents required under the provisions of any applicable tax treaty or under
any other applicable law, in order to enable JV SUB to make such payments to
ELAN without any deduction or withholding.
16. Entire Agreement
This AGREEMENT including its Appendices sets forth the entire agreement and
understanding of the Parties with respect to the subject matter hereof, and
supersedes all prior discussions, agreements and writings in relating thereto,
including the letter of agreement of 30th September 1997.
17. Counterparts
This AGREEMENT may be executed in two counterparts, each of which shall be
deemed an original and which together shall constitute one instrument.
IN WITNESS THEREOF the Parties hereto have executed this AGREEMENT in
duplicate.
Executed by JV SUB on 15th October, 1997
By : /s/ James C. O'Shea
Name: James C. O'Shea
Title: President
Executed by ELAN on 15th October, 1997
By: /s/ Thomas G. Lynch
Name: Thomas G. Lynch
Title: Director
APPENDIX A
Part I
ELAN PATENT RIGHTS
(where the TERRITORY is the United States of America, Canada and Mexico)
COUNTRY/
OUR DOCKET NO. APPLICATION NO. FILING DATE PATENT NUMBER ISSUE DATE
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
IMPROVED GLUCOSE MONITOR
COUNTRY/
OUR DOCKET NO. APPLICATION NO. FILING DATE PATENT NUMBER ISSUE DATE
[CONFIDENTIAL PORTION OMITTED]
APPENDIX A
Part II
ELAN PATENT RIGHTS
(where the TERRITORY is world-wide)
COUNTRY/
OUR DOCKET NO. APPLICATION NO. FILING DATE PATENT NUMBER ISSUE DATE
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
COUNTRY/
OUR DOCKET NO. APPLICATION NO. FILING DATE PATENT NUMBER ISSUE DATE
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
APPENDIX B
LISTED COMPANIES
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
[CONFIDENTIAL PORTION OMITTED]
<PAGE>
EXHIBIT 10.45
NEWCO
SUBSCRIPTION AND STOCKHOLDERS AGREEMENT
SUBSCRIPTION AND STOCKHOLDERS AGREEMENT, dated as of October 15, 1997, by and
among Bioject JV Subsidiary Inc., an Oregon corporation ("Newco" or the
"Company"), Bioject Medical Technologies Inc., an Oregon corporation
("Bioject"), and Elan International Services, Ltd., a Bermuda corporation
("EIS"; together with Bioject, the "Stockholders"; each sometimes referred to
herein as a "Stockholder").
R E C I T A L S:
A. The Company desires to issue and sell to EIS and Bioject (the
"Purchasers"), and the Purchasers desire to purchase from the Company, for
aggregate consideration of $15,000,000, shares of the Company's common stock
(the "Shares"), without par value (the "Common Stock"), as set forth herein.
The Shares issuable hereunder are entitled to the benefits of a Registration
Rights Agreement between the Company and the Purchasers dated as of the date
hereof and attached hereto as Exhibit A (the "Registration Rights Agreement").
B. After consummation of the transactions contemplated hereby, EIS initially
shall own Shares representing 19.9% of the Common Stock, and Bioject initially
shall own Shares representing 80.1% of the Common Stock.
C. The Stockholders and the Company desire to set forth herein certain
provisions relating to the governance of the Company and transfer of shares of
Common Stock and/or certain securities convertible, exchangeable or
exercisable for or into shares of Common Stock.
A G R E E M E N T:
The parties agree as follows:
ARTICLE I
DEFINITIONS; AUTHORIZATIONS; CLOSINGS
1.1 Defined Terms. As used herein, the terms below shall have the following
meanings:
"Affiliate" shall have the meaning set forth in Section 12b-2 of the
Securities Exchange Act of 1934, as amended.
"Company Securities" shall mean the Common Stock and any additional share of
Common Stock issued or issuable to any Stockholder upon the conversion,
exchange or exercise of any other security or right.
"Fully Diluted Common Stock" shall mean all of the Common Stock of the
Company, assuming conversion, exercise or exchange of all outstanding
convertible, exchangeable or exercisable securities, options, warrants and
similar instruments for or into Common Stock.
"License Agreement" shall mean that agreement dated as of the date hereof by
and between Elan Corporation, plc, an Irish public limited company ("Elan")
and the Company in connection with the licensing of Glucose Monitor Technology
(as defined therein) by Elan to the Company.
"Permitted Transferee" shall mean (i) any Affiliate of EIS or Bioject, as
applicable, or (ii) any other Person who acquires Company Securities from EIS
or Bioject in a transaction that is exempt from registration under the
Securities Act of 1933, as amended, other than under Rule 144 thereunder or a
similar rule or regulation providing for the sale of securities to the public.
"Person" shall mean an individual, partnership, joint venture, corporation,
trust or unincorporated organization, a government or any department, agency
or political subdivision thereof, or any other entity.
"Restricted Securities" shall mean Company Securities issued pursuant to this
Agreement, including Common Stock and any securities convertible, exercisable
or exchangeable for or into Common Stock or any other shares of Common Stock
hereafter acquired by EIS or Bioject.
"Stockholder" means any of EIS, Bioject, any Permitted Transferee or any other
Person who subsequently becomes bound by this Agreement as a holder of Company
Securities.
1.2 Authorizations; Etc. The Company has authorized the issuance (i) to EIS
of 199,000 shares of Common Stock, and (ii) to Bioject of 801,000 shares of
Common Stock issuable as provided in Section 1.3 hereof.
1.3 Closings. (a) The closing of the transactions contemplated hereby (the
"Closing") shall occur on the date hereof, at the offices of counsel to EIS in
New York, New York, or such other place as the parties may agree.
(b) As a condition of the Closing of the transactions contemplated hereby, the
Company shall produce its certificate of incorporation and by-laws for review
and approval (which approval shall not be unreasonably withheld) by EIS.
(c) At the Closing, (x) the Company shall issue and sell to EIS, and EIS
shall purchase from the Company, upon the terms and subject to the conditions
set forth herein, for an aggregate purchase price of $2,985,000, 199,000
shares of Common Stock and (y) the Company shall issue and sell to Bioject,
and Bioject shall purchase from the Company, upon the terms and conditions set
forth herein, for an aggregate purchase price of $12,015,000, 801,000 shares
of Common Stock.
(d) At the Closing, the parties hereto shall execute and deliver to each
other, as applicable:
(1) (i) certificates in respect of the Common Stock described above; (ii) the
Registration Rights Agreement (together with this Agreement, the "Newco
Transaction Documents"); and
(2) certificates as to the incumbency of the officers executing the Newco
Transaction Documents and such other matters as shall be customary for
transactions of this type and as may be reasonably requested by each of the
parties hereto of the other.
In addition, at the Closing, the Company shall cause to be delivered to the
Purchasers an opinion of counsel, in a form reasonably satisfactory to the
Purchasers, covering the due authority of the Company and the due
authorization of the Newco Transaction Documents, the due issuance of the
Securities, no violations of law or charter documents and other customary
matters, which opinion may contain customary exceptions.
(e) The Shares will be issued under an exemption or exemptions from
registration under the Securities Act; accordingly, the certificates
evidencing the Shares shall, upon issuance, contain the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT UNDER ANY CIRCUMSTANCES BE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
The Common Stock is afforded the rights and benefits as described in the
Registration Rights Agreement.
1.4 Additional Funding.
(a) Each of the Stockholders agrees to provide additional funding to the
Company (the "Additional Funding") following the earlier of the date Bioject's
shareholders approve the issuance of Preferred Stock to EIS and February 1,
1998; provided, that (i) the Company's board of directors shall determine, in
good faith, that such funds are required at such time for development of the
first product or products based upon Glucose Monitor Technology (as defined in
the License Agreement, the "Products") and the Glucose Monitor Technology, and
(ii) such development of the Products is consistent with the Company's then-
current business plan, which business plan shall have been approved by the
Company's board of directors and approved by Bioject and EIS (which approval
shall not be unreasonably withheld or delayed).
(b) The Stockholders shall be obligated to provide the additional funds in
combined increments of $1 million, which shall be provided 80.1% by Bioject,
to an aggregate maximum of $4,005,000, and 19.9% by EIS, to an aggregate
maximum of $995,000. In no event shall EIS be obligated to fund an amount in
excess of 25% of the amount of Additional Funding provided by Bioject to the
Company, and in any event, EIS's obligation to provide it's portion of the
Additional Funding shall terminate at the conclusion of the 30-month period
following the earlier of the date Bioject's shareholders approve the issuance
of Preferred Stock to EIS and February 1, 1998.
(c) It shall be a condition to the Stockholders' respective obligations to
make any Additional Funding, or payments in connection with Further
Development (as defined below), that (A) there shall be no material default or
breach by the Company of any material obligations under any of the Newco
Transaction Documents (as hereinafter defined) or any other agreement between
the Company or any of its affiliates, on the one hand, and the Stockholders or
any of their affiliates, on the other hand, (B) the Company shall have
executed and delivered to each Stockholder each document or instrument that
shall be customary and appropriate for such transaction as reasonably
determined by such Stockholder and the Company, and (C) each Stockholder shall
consent to make its own portion of such Additional Funding or Further
Development payments, which consent shall not be unreasonably withheld or
delayed.
(d) At the option of the Company's Board of Directors, the Additional Funding
shall be evidenced by Common Stock or Preferred Stock of the Company, with
such price and terms as the Board of Directors shall in good faith determine.
1.5. Further Development.
After such time, if any, as Newco has expended $15 million on research and
development in connection with the research, development and commercialization
of the Products resulting from Glucose Monitor Technology (including the
Additional Funding), in the event that the Company's board of directors shall
reasonably determine in good faith that the Company shall require further
funding in order to complete such research, development and commercialization
(the "Further Development"), EIS shall undertake to provide such funding in
accordance with the following limits and conditions:
(a) the maximum contribution which must be made by EIS under this Section
shall be $5 million;
(b) EIS shall have reasonably and in good faith determined that the Further
Development funding is likely to result in the commercialization of the
Products, as contemplated by the Company's then-current business plan;
(c) such funding shall be in minimum increments of $500,000;
(d) the Company shall have a market capitalization (if publicly held), or a
valuation as determined by a financial advisory or investment firm
satisfactory to each of Bioject and EIS (if privately held) of less than $50
million at the time of the Company's request for such funding;
(e) such Further Development funding shall constitute senior debt of the
Company, and be evidenced by a secured promissory note issued upon terms and
conditions satisfactory to each of EIS and the Company acting reasonably,
which shall be consistent with similar "arms-length" transactions then-being
consummated in the capital markets; such promissory note to bear interest at a
rate per annum equal to the prime rate (as publicly announced by Morgan
Guaranty Trust Company of New York at the time of the execution of the
promissory note) plus 1% for a term of three years.
1.6 Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Stockholders as follows, as of the date
hereof:
(a) Organization. The Company is a corporation duly organized, validly
existing and is in good standing under the laws of Oregon, and has all the
requisite corporate power and authority to own and lease its properties, to
carry on its business as presently conducted and as proposed to be conducted
and to carry out the transaction contemplated hereby. The Company is
qualified and in good standing to do business in each jurisdiction in which
the nature of the business conducted or the property owned by it requires such
qualification, except where the failure to so qualify would not reasonably be
expected to have a material adverse effect on the business of the Company.
(b) Capitalization. (i) The authorized and outstanding shares of capital stock
of the Company as of the date hereof, are set forth on Schedule 1.6(b)(i)
hereto.
(ii) All of the outstanding shares of capital stock of the Company have been
issued in accordance with applicable laws and regulations governing the sale
and purchase of securities and none of such shares carries preemptive or
similar rights.
(c) Authorization. The execution, delivery and performance by the Company of
this Agreement and each of the Transaction Documents, have been duly
authorized by all requisite corporate actions; and this Agreement and each
other of the Transaction Documents have been duly executed and delivered by
the Company and are the valid and binding obligation of the Company,
enforceable against it in accordance with their respective terms.
(d) No Conflicts. The execution, delivery and performance by the Company of
this Agreement and the other Newco Transaction Documents, the issuance, sale
and delivery of the Common Stock (and the issuance of any Common Stock
issuable upon the conversion of any convertible security, and compliance with
the provisions hereof by the Company, will not (a) violate any provision of
applicable law, statute, rule or regulation applicable to the Company or any
ruling, writ, injunction, order, judgment or decree of any court, arbitrator,
administrative agency or other governmental body applicable to the Company or
any of their respective properties or assets or (b) conflict with or result in
any breach of any of the terms, conditions or provisions of, or constitute
(with notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation
of, any Encumbrance (as defined below) upon any of the properties or assets of
the Company under, the charter or organizational documents of either or any
material contract to which the Company is a party, except where such
violation, conflict or breach would not, individually or in the aggregate,
have a material adverse effect on the Company. As used herein, "Encumbrance"
shall mean any liens, charges, encumbrances, equities, claims, options,
proxies, pledges, security interests, or other similar rights of any nature.
(e) Approvals. No permit, authorization, consent or approval of or by, or
any notification of or filing with, any person or entity (governmental or
private) is required in connection with the execution, delivery or performance
of this Agreement by the Company.
(f) Authorization of the Shares; Etc. The issuance, sale and delivery by the
Company of the Shares, as contemplated by the Newco Transactions Documents,
have been duly authorized by all requisite corporate action of the Company,
and such securities, when issued as contemplated hereby, will be validly
issued and outstanding, fully paid and nonassessable and not subject to
preemptive or any other similar rights of the stockholders of the Company or
others.
(g) Disclosure. To the best of its knowledge, this Agreement and the other
Newco Transaction Documents do not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
contained herein and therein not misleading.
1.7 Representations and Warranties of the Stockholders. Each of EIS and
Bioject hereby represent and warrant to the Company as follows:
(a) Organization. Each of the Stockholders is a corporation duly organized,
validly existing and, if applicable, in good standing under the laws of its
jurisdiction of organization and has all the requisite corporate power and
authority to own and lease its properties, to carry on its business as
presently conducted and as proposed to be conducted and to carry out the
transactions contemplated hereby.
(b) Authority. Each of the Stockholders has full legal right, power and
authority to enter into this Agreement and the Newco Transaction Documents and
to perform their respective obligations hereunder and thereunder, which have
been duly authorized and by all requisite corporate action. This Agreement is
the valid and binding obligation of the Stockholders, enforceable against them
in accordance with its terms.
(c) No Conflicts. The execution, delivery and performance by each of the
Stockholders of this Agreement and the other Newco Transaction Documents,
purchase of the Common Stock (and the purchase of any Common Stock issuable
upon the conversion or exercise of any convertible or exchangeable security),
and compliance with the provisions hereof by the Stockholders will not (a)
violate any provision of applicable law, statute, rule or regulation
applicable to the Stockholders or any ruling, writ, injunction, order,
judgment or decree of any court, arbitrator, administrative agency or other
governmental body applicable to the Stockholders or any of their respective
properties or assets or (b) conflict with or result in any breach of any of
the terms, conditions or provisions of, or constitute (with notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of, any
Encumbrance (as defined below) upon any of the properties or assets of the
Stockholders under, the charter or organizational documents of either or any
material contract to which the Stockholders are a party, except where such
violation, conflict or breach would not, individually or in the aggregate,
have a material adverse effect on the Stockholders. As used herein,
"Encumbrance" shall mean any liens, charges, encumbrances, equities, claims,
options, proxies, pledges, security interests, or other similar rights of any
nature
(d) Approvals. No permit, authorization, consent or approval of or by, or any
notification of or filing with, any person or entity (governmental or private)
(collectively, "Approval") is required in connection with the execution,
delivery or performance of this Agreement by the Stockholders; nor is any
Approval required by the Stockholders in order to fulfill their respective
obligations hereunder or under any of the Newco Transaction Documents.
(e) Investment Representations. Each of the Stockholders is capable of
evaluating the merits and risks of their respective investment in the Company.
None of the Stockholders have been formed solely for the purpose of making
this investment and are acquiring the Securities and, as applicable, the
underlying Common Stock for investment for their own account, not as a nominee
or agent, and not with the view to, or for resale in connection with, any
distribution of any part thereof. The Stockholders understand that the Shares
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or applicable state and other securities laws by reason of
a specific exemption from the registration provisions of the Securities Act
and applicable state and other securities laws, the availability of which
depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of such Stockholders' representations as expressed
herein. The Stockholders understand that no public market now exists for any
of the Shares and that there is no assurance that a public market will ever
exist for the Shares.
ARTICLE II
BOARD OF DIRECTORS
2.1 Board of Directors. From and after the date hereof, and until such time
as the Company's securities are registered under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or listed on a stock exchange or
quoted on an electronic quotation system, each of EIS and Bioject and their
respective Permitted Transferees shall use its best efforts (including voting
all of their shares of Common Stock) to cause the board of directors of the
Company to consist of five directors, designated as set forth below; provided
that the parties shall make such adjustments in the arrangements required by
this Section 2.1 as the board of directors shall deem necessary and proper in
connection with obtaining material investments from unaffiliated third
parties:
(a) Designation of Directors. EIS shall be entitled to designate one
director (the "EIS Director") and Bioject shall be entitled to designate four
directors (the "Bioject Directors"). The Company's by-laws shall not provide
for a board of directors that contains staggered terms. As of the date
hereof, the Company shall have a five-member board.
(b) Committees of the Board of Directors and Subsidiaries. The rights to
designate directors provided in Section 2.1(a) shall also apply,
proportionally, to any committees of the board of directors and to any board
of directors of any Subsidiary of the Company.
2.2 Removal. In the event that (a) EIS shall request, by written notice
thereof to Bioject, that an EIS Director be removed, or (b) Bioject shall
request, by written notice thereof to EIS, that a Bioject Director be removed,
then each Stockholder shall take all actions required by Section 2.4 to effect
such result. If the majority of the Company's board of directors shall object
to the appointment of any director on a commercially reasonable basis, such
director shall be removed (or not elected) and the party that designates such
director shall designate another director.
2.3 Vacancies. In the event that a vacancy is created on the board of
directors at any time by the death, disability, retirement, resignation or
removal of any director, or otherwise there shall exist or occur any vacancy
on the board, each of EIS and Bioject and each of their respective Permitted
Transferees hereby agrees to cause the director(s) designated by it and then
serving (subject to each such person's fiduciary duties as a director) to vote
for that individual designated to fill such vacancy and serve as a director by
whichever of the Stockholders that had designated (pursuant to Section 2.1
hereof) the director whose death, disability, retirement, resignation or
removal resulted in such vacancy on the board; provided, however, that such
other individual so designated may not previously have been a director of the
Company who was removed for cause from the board.
2.4 Covenant to Vote. (a) Each of EIS and Bioject and each of their
respective Permitted Transferees hereby agrees to take or assist such other
Persons to take all actions necessary to call, or cause the Company or the
appropriate officers or directors of the Company to call, a special or annual
meeting of stockholders of the Company and to vote all shares of Common Stock
owned or held of record by such Person at any such annual or special meeting
in favor of, or to consent by written consent in lieu of any such meeting to,
the election of a board of directors consistent with, and the taking of any
other action to effect the intent of, this Article II. In addition, each of
EIS and Bioject and each of their respective Permitted Transferees agrees to
vote, or consent with respect to, the shares of Common Stock owned or held of
record by such Person, or over which such Person has voting control, upon any
other matter arising under this Agreement submitted to a vote or consent of
the Company's stockholders in a manner so as to implement the terms of this
Agreement.
(b) Approval of a majority of the board shall be required for any and all
material determinations regarding the Company, including (i) acquisition of
material assets (including without limitation, intellectual property), (ii)
incurrence of debt or liens, (iii) payment of dividends or distributions in
respect of or redemption of equity, (iv) disposition of material assets and
changes in business lines or material Company budgets, or (v) any other
transaction not in the ordinary course of business.
2.5 Termination of Voting Agreements. The covenants and agreements
contained in this Article II shall terminate upon the earlier of (i) the tenth
anniversary of the date of this Agreement and (ii) the date that either (1)
EIS and its Permitted Transferees and (2) Bioject and its Permitted
Transferees each own in the aggregate Securities representing less than 5% of
the Fully Diluted Common Stock of the Company.
ARTICLE III
TRANSFERS OF RESTRICTED SECURITIES
3.1 General. From and after the date hereof, and until such time as the
Company's securities are registered under the Exchange Act, or listed on a
stock exchange or quoted on an electronic quotation system, no Stockholder
shall, directly or indirectly, sell, assign, pledge, encumber, hypothecate or
otherwise transfer (in each case, a "Transfer") any Company Securities except
in accordance with this Agreement. The Company shall not, and shall not
permit any transfer agent or registrar for the Company Securities to, transfer
upon the books of the Company any Company Securities from any Stockholder to
any Transferee (as hereinafter defined), in any manner, except in accordance
with this Agreement, and any purported transfer not in compliance with this
Agreement shall be void.
3.2 Legends; Securities Subject to this Agreement. In the event a
Stockholder shall Transfer any Restricted Securities (including any such
Restricted Securities acquired after the date hereof) to any Person (all
Persons acquiring Restricted Securities from a Stockholder, as described in
this Article III, regardless of the method of transfer, shall be referred to
collectively as "Transferees" and individually as a "Transferee") in
accordance with this Agreement, such securities shall nonetheless bear legends
as provided in this Agreement and in Section 6.1 hereof, as the case may be;
provided, however, that the provisions of this Section 3.2 shall not apply in
respect of a sale of Restricted Securities in a registered public offering
under the Securities Act or pursuant to Rule 144, or any successor rule under
the Securities Act.
3.3 No Violations or Breach. Notwithstanding any other provision of this
Agreement, no Stockholder shall, directly or indirectly, Transfer any
Restricted Securities at any time if such action would constitute a violation
of any federal or state securities or blue sky laws or a breach of the
conditions to any exemption from registration of Restricted Securities under
any such laws or a breach of any undertaking or agreement of such Stockholder
entered into pursuant to such laws or in connection with obtaining an
exemption thereunder.
3.4 Transferee Bound. No Stockholder shall effect a Transfer of Restricted
Securities unless such Transferee shall agree to be bound by this Agreement,
and shall further agree to permit EIS or Bioject, as applicable, to act on
their behalf in accordance with the provisions of this Agreement.
ARTICLE IV
RIGHT OF FIRST OFFER
4.1 Transfers by the Stockholders. (a) Notice of Intention. If at any
time a Stockholder shall desire to Transfer any Restricted Securities owned by
it (such Stockholder desiring to Transfer such securities being referred to
herein as a "Selling Stockholder"), in any transaction or series of related
transactions, then such Selling Stockholder shall deliver prior written notice
of its desire to Transfer (a "Notice of Intention") to (i) the Company and
(ii) the party who is not the Selling Stockholder (for purposes of this
Article IV, the party who is "not the Selling Stockholder" shall mean Bioject
if the Selling Stockholder is the EIS or an EIS Transferee, and EIS if the
Selling Stockholder is Bioject or a Bioject Transferee), and (iii) any
Permitted Transferees, as applicable, setting forth such Selling Stockholder's
desire to make such Transfer, the number and class of Company Securities
proposed to be transferred (the "Offered Shares") and the proposed form of
transaction (the "Transaction Proposal"), together with any documentation
relating thereto and the price at which such Selling Stockholder proposes to
Transfer the Offered Shares (the "Offer Price"). The "Right of First Offer"
provided for in this Article IV shall be subject to any "Tag-Along Right"
benefitting a Stockholder which may be provided for by Article V, subject to
the exceptions set forth therein. The parties shall make such adjustments in
the arrangements required by this Article IV as the board of directors shall
deem necessary and proper in connection with obtaining material investments
from unaffiliated third parties.
(b) Notice of Exercise. Upon receipt of the Notice of Intention, the party
who is not the Selling Stockholder shall have the right to purchase at the
Offer Price the Offered Shares, exercisable by the delivery of notice to the
Selling Stockholder (the "Notice of Exercise"), with a copy to the Company
within 10 business days from the date of receipt of the Notice of Intention.
If no such Notice of Exercise has been delivered by the party who is not the
Selling Stockholder within such 10 business-day period, or such Notice of
Exercise does not relate to all the Offered Shares covered by the Notice of
Intention, then the Selling Stockholder shall be entitled to Transfer the
Offered Shares to the intended Transferee.
(c) Obligation to Sell. In the event that the party who is not the Selling
Stockholder exercises its right to purchase Offered Shares in accordance with
Section 4.1(b), then the Selling Stockholder must sell the Offered Shares to
such party, in the amounts set forth in the Notice of Intention, after not
less than five business and not more than 15 business days from the date of
the delivery of the Notice of Exercise.
(d) Termination. The rights and obligations of each of the Stockholders
pursuant to the Right of First Offer provided herein shall terminate with
respect to each such party on the earlier of (i) the tenth anniversary of the
date hereof and (ii) with respect to such party's rights, the first date that
EIS on the one hand, and Bioject on the other, plus, in each case, their
respective Permitted Transferees, beneficially own, in the aggregate, Company
Securities representing less than 2 1/2% of the Fully Diluted Common Stock
and, with respect to each such group's obligations, the first date that the
other group (including Permitted Transferees) beneficially own, in the
aggregate, Company Securities representing less than 2 1/2% of the Fully
Diluted Common Stock and (iii) the date the Company's common stock is
registered under the Exchange Act or listed on a stock exchange or quoted on
an electronic quotation system.
4.2 Closing. At the closing of the purchase of Offered Shares (scheduled in
accordance with Section 4.1(c)), the Selling Stockholder shall deliver
certificates evidencing the Offered Shares being sold, duly endorsed, or
accompanied by written instruments of transfer in form reasonably satisfactory
to the party who is not the Selling Stockholder, duly executed by the Selling
Stockholder, free and clear of any adverse claims, against payment of the
purchase price therefor in cash, and such other customary documents as shall
be necessary in connection therewith.
ARTICLE V
TAG-ALONG RIGHTS
5.1 Tag-Along Procedures. For purposes of this Section "Common Stock" shall
include Common Stock underlying securities convertible thereto; provided that
the parties shall make such adjustments in the arrangements required by this
Section 5.1 as the board of directors shall deem necessary and proper in
connection with obtaining material investments from unaffiliated third
parties.
(a) Tag-Along Right. Subject to Section 5.3, any one Stockholder (the
"Transferring Stockholder") shall not Transfer (either directly or
indirectly), in any one transaction or series of related transactions, to any
Person or group of Persons, Company Securities representing, in the aggregate,
more than 5% of the Common Stock unless the terms and conditions of such
Transfer shall include an offer to the other Stockholders (the "Remaining
Stockholders"), at the same price and on the same terms and conditions as the
Transferring Stockholder has agreed to sell its Company Securities.
(b) Notice. In the event a Transferring Stockholder proposes to Transfer
any Common Stock in a transaction subject to this Section 5.1, it shall
notify, or cause to be notified, the Remaining Stockholders in writing of each
such proposed Transfer. Such notice shall set forth: (i) the name of the
transferee and the number of shares of Common Stock proposed to be
transferred, (ii) the proposed amount and form of consideration and terms and
conditions of payment offered by the transferee (the "Transferee Terms") and
(iii) that the transferee has been informed of the "Tag-Along Right" provided
for in this Section 5.1, if such right is applicable, and has agreed to
purchase shares of Common Stock from the Transferring Stockholder in
accordance with the terms hereof.
(c) Exercise. The Tag-Along Right may be exercised by the Remaining
Stockholders by delivery of a written notice to the Transferring Stockholder
(the "Tag-Along Notice") within five business days following receipt of the
notice specified in the preceding subsection. The Tag-Along Notice shall
state the number of shares of Common Stock owned by the Remaining Stockholder
which the Remaining Stockholder wishes to include in such Transfer; provided,
however, that without the written consent of the Transferring Stockholder, the
number of shares belonging to the Remaining Stockholder included in such
Transfer may not be greater than such Remaining Stockholder's percentage
beneficial ownership of Common Stock (on a fully diluted basis) multiplied by
the total number of shares of common stock to be sold by both the transferring
stockholder and all remaining stockholders. Upon receipt of a Tag-Along
Notice, the Transferring Stockholder shall be obligated to transfer at least
the entire number of shares of Common Stock set forth in the Tag-Along Notice
to the Transferee on the Transferee Terms; provided, however, that the
Transferring Stockholder shall not consummate the purchase and sale of any
shares hereunder if the Transferee does not purchase all shares. If no Tag-
Along Notice has been delivered to the Transferring Stockholder prior to the
expiration of the five-day period referred to above and if the provisions of
this Section have been complied with in all respects, the Transferring
Stockholder shall have the right for a 60 day calendar day period to Transfer
Common Stock to the Transferee on the Transferee Terms without further notice
to any other party, but after such 60-day period, no such Transfer may be made
without again giving notice to the Remaining Stockholders of the proposed
Transfer and complying with the requirements of this Article V.
5.2 Closing. At the closing of any Transfer of Common Stock subject to this
Article V, the Transferring Stockholder, and the Remaining Stockholder, in the
event such Tag-Along Right is exercised, shall deliver certificates evidencing
such shares of Common Stock as have been Transferred by each, duly endorsed,
or accompanied by written instruments of transfer in form reasonably
satisfactory to the Transferee, free and clear of any adverse claim, against
payment of the purchase price therefor.
5.3 Exceptions. Notwithstanding the foregoing, this Article V shall not
apply to any sale of Common Stock pursuant to an effective registration
statement under the Securities Act in a bona fide public offering, sales made
in compliance with Rule 144, or any successor rule under the Securities Act.
5.4 Termination. This Article V shall terminate on earlier of (i) the
seventh anniversary of the date hereof or (ii) the first date that either EIS
or Bioject beneficially own shares of Common Stock representing less than 2
1/2% of the Fully Diluted Common Stock or (iii) the date the Company's common
stock is registered under the Exchange Act or listed on a stock exchange or
quoted on an electronic quotation system.
ARTICLE VI
MISCELLANEOUS
6.1 Administrative Services Agreement. In consideration of EIS's agreement
to invest in the Company, as soon as practicable after the date hereof, the
Company and Bioject shall enter into an administrative services and support
agreement (which shall be reasonably satisfactory to EIS) which shall contain
provisions to the effect that Bioject shall provide commercially reasonable
and customary support and administrative services to the Company in connection
with the performance of the Company's obligations hereunder and under the
License Agreement.
6.2 Endorsement of Stock Certificates. Each of the Stockholders hereby
agrees that, in addition to any legends required by any other agreement, each
outstanding certificate representing shares of Company Securities subject to
this Agreement shall bear an endorsement reading substantially as follows
until the restrictions (including without limitation, the transfer
restrictions) with respect to such Company Securities are no longer effective:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER
RESTRICTIONS SET FORTH IN A STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER 15,
1997, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF WITHOUT COMPLYING WITH THE TERMS AND
CONDITIONS OF SUCH AGREEMENTS.
6.3 Term. Except as otherwise provided herein, this Agreement shall
terminate upon the sale of all Company Securities now owned by EIS and Bioject
(or their respective Permitted Transferees) in compliance with the provisions
hereof to parties not bound hereby, as provided herein.
6.4 Injunctive Relief. The parties hereto hereby agree and acknowledge that
it will be impossible to measure in money the damages that would be suffered
if any party should breach any obligation, covenant or representation herein
imposed or made, and that, in the event of such breach, a non-breaching party
will be irreparably damaged and will not have an adequate remedy at law. Any
such non-breaching party shall, therefore, be entitled to injunctive relief,
including specific performance, to enforce such obligations, and if any action
should be brought in equity to enforce any of the provisions of this
Agreement, none of the other parties hereto shall raise the defense that there
is an adequate remedy at law.
6.5 Notices. All notices, other communications or documents provided for or
permitted to be given hereunder, shall be made in writing and shall be given
either personally by hand-delivery, by telex or facsimile transmission, by
mailing the same in a sealed envelope, certified first-class mail, postage
prepaid, return receipt requested, or by air courier guaranteeing overnight
delivery:
(i) if to the Company or Bioject, to:
Bioject JV Subsidiary Inc.
or
Bioject Medical Technologies Inc.
7620 S.W. Bridgeport Road
Portland, Oregon 97224
Telecopier: 503-620-6431
Attention: President
with a copy to:
Bogle & Gates P.L.L.C.
Two Union Square
601 Union Street
Seattle, Washington 98101-2346
Telecopier:206-620-2660
Attention: Christopher Barry
(ii) if to EIS, to:
Elan International Services, Ltd.
Flatts Smiths SL04
Bermuda
Telecopier: (441) 292-2224
Attention: President
with a copy to:
Brock Fensterstock Silverstein McAuliffe & Wade LLC
153 East 53rd Street
New York, New York 10022
Telecopier: (212) 371-5500
Attention: David Robbins
Each Stockholder, by written notice given to the Company in accordance with
this Section 6.5 may change the address to which notices, other communication
or documents are to be sent to such Stockholder. All notices, other
communications or documents shall be deemed to have been duly given when
received. Whenever pursuant to this Agreement any notice is required to be
given by any Stockholder to any other Stockholder or Stockholders, such
Stockholder may request from the Company a list of addresses of all
Stockholders of the Company, which list shall be promptly furnished to such
Stockholder.
6.6 Assignment. Except as expressly permitted hereunder, neither this
Agreement nor any of the rights or obligations hereunder may be assigned by
any party hereto without the prior written consent of the other parties
hereto. Subject to the foregoing, this Agreement shall inure to the benefit
of and be binding upon the parties and successors and assigns of each of the
parties. If any Stockholder shall acquire any Restricted Securities in any
manner, whether by operation of law or otherwise, such Restricted Securities
shall be held subject to all of the terms of this Agreement.
6.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon without regard to the
principles of conflicts of laws.
6.8 Headings. The headings in this Agreement are inserted for convenience
of reference only and shall not constitute a part of this Agreement.
6.9 Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability
of any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
6.10 Amendments and Waiver. No provision of this Agreement may be amended,
nor performance of any covenant or agreement waived, except by a written
instrument executed by each of the Company, EIS and Bioject. Neither a
failure nor a delay in exercising any right, power or privilege of a party
hereunder shall operate as a waiver of, or a consent to the modification of,
the terms hereof unless given by that party in writing. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any preceding or succeeding breach.
6.11 Inspection. So long as this Agreement shall be in effect, this
Agreement shall be made available for inspection by any stockholder of the
Company at the principal offices of the Company.
6.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which when
taken together shall constitute one and the same Agreement.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.
Bioject JV Subsidiary Inc.
By:/s/ James C. O'Shea
Name: James C. O'Shea
Title: President
Bioject Medical Technologies Inc.
By:/s/ James C. O'Shea
Name: James C. O'Shea
Title: President
Elan International Services, Ltd.
By:/s/ Kevin Insley
Name: Kevin Insley
Title: President and Chief Financial Officer
