Document:

Exhibit 10.213

 

“CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.

 

FIRST

AMENDMENT TO

MUTUAL

TERMINATION OF

WAREHOUSE DISTRIBUTION CONTRACT

between

UPS SUPPLY CHAIN MANAGEMENT, INC.

and

CYGNUS, INC.

 

 

This First Amendment, having an Effective Date of

September 26, 2002 to the Mutual Termination of the Warehouse Distribution

Contract, having an effective date of September 10, 2002 (hereinafter “Mutual

Termination”), is between UPS Supply Chain Management, Inc. (hereinafter

“SCM”), f/d/b/a Livingston Healthcare Services Inc., having a principal place

of business at 220 Lake Drive, Newark, DE 19702, and Cygnus, Inc. (hereinafter

“Client”), having its principal place of business at 400 Penobscot Drive,

Redwood City, CA 94063.

 

RECITALS

 

WHEREAS, SCM now wishes to purchase from Client the equipment set forth

on Exhibit C.1 of the Warehouse Distribution Contract, and Client is willing to

sell said equipment to SCM;

 

NOW, THEREFORE, in consideration of the mutual promises contained

herein, the parties hereby agree to amend the Mutual Termination as follows:

 

1.               Client will sell

the equipment set forth on Exhibit C.1 of the Warehouse Distribution Contract

to SCM for a purchase price of [CONFIDENTIAL TREATMENT REQUESTED BY CYGNUS,

INC.].  Such sale shall be on an as-is

basis, with no warranties or representations whatsoever regarding the

equipment.

 

2.               SCM shall return

the following Client equipment to Client on or before October 15, 2002:

Equipment at Rancho Cucamonga, CA:

a.                                       [CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.]

b.                                      [CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.]

c.                                       [CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.]

d.                                      [CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.]

 

 

Equipment at Newark, DE:

a.                                       [CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.]

b.                                      [CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.]

c.                                       [CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.]

 

3.               The parties agree

that Client will short-pay SCM by an amount of [CONFIDENTIAL TREATMENT

REQUESTED BY CYGNUS, INC.] on the current invoice for the one-time payment of

[CONFIDENTIAL TREATMENT REQUESTED BY CYGNUS, INC.] , so as to settle the

[CONFIDENTIAL TREATMENT REQUESTED BY CYGNUS, INC.] owed by SCM to Client

pursuant to Paragraph 1 above.  Client

agrees to pay SCM the resulting amount of [CONFIDENTIAL TREATMENT REQUESTED BY

CYGNUS, INC.].

 

4.               Except for the

changes reflected in this Amendment, the Mutual Termination remains in full

force and effect.

 

IN WITNESS WHEREOF, the parties have executed this First Amendment to

the Termination.

 

UPS SUPPLY CHAIN

MANAGEMENT, INC.

 

	

  By:

  	

   

  	

   

  
	

  Name:

  	

   

  	

   

  
	

  Title:

  	

   

  	

   

  
	

  Dated:

  	

   

  	

   

  

 

CYGNUS, INC.

 

	

  By:

  	

  /s/ John C Hodgman

  	

   

  
	

  Name:

  	

  John C Hodgman

  	

   

  
	

  Title:

  	

  Chairman,

  President & CEO

  	

   

  
	

  Dated:

  	

  Sept 26, 2002

  	

   

  

 

2Exhibit

10.303

 

“CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.”

 

SECOND

AMENDMENT TO THE EXCLUSIVE LICENSE AGREEMENT

DATED JANUARY 31, 1995

between

THE REGENTS OF THE UNIVERSITY OF CALIFORNIA

and

CYGNUS, INC.

for

DEVICE FOR IONTOPHORETIC NON-INVASIVE SAMPLING

OR DELIVERY OF SUBSTANCES

 

UC Agreement Control

Number 1995-04-0565

UC Case No. 1987-162

 

This second amendment, (“Second Amendment”) is

effective this 19th day of September, 2002 (“Effective Date”), by

and between The Regents of the University of California, a California

corporation, having its administrative offices at 1111 Franklin Street, 12th

Floor, Oakland, California 94607-5200 (“The Regents”), and Cygnus, Inc., a

Delaware corporation having its principal place of business at 400 Penobscot Drive,

Redwood City, California 94063, formerly known as Cygnus Therapeutic Systems, a

California corporation (“Licensee”).

 

BACKGROUND

 

A.                                   The Regents and Licensee entered into an

Exclusive License Agreement with an effective date of January 31, 1995, UC Control

No. 1995-04-0565 (“Agreement”) and this Agreement was amended to extend the

diligence deadline for filing an application for regulatory approval for the

Licensed Product in an Amendment with an effective date of April 23, 1998, UC

control No. 1995-04-0565B (“First Amendment”).

 

B.                                     The Licensed Product that Licensee is

selling presently comprises two separate components:  a GlucoWatchâ Biographer or its functional equivalent

(hereafter referred to as the “GlucoWatchâ

Biographer”) and a GlucoWatchâ AutoSensor or its functional equivalent

(hereafter referred to as the “GlucoWatchâ

AutoSensor”), wherein GlucoWatchâ is a registered trademark of

Licensee.  Each of these two components

shall be deemed to be a Licensed Product whether sold separately or in combination

with each other.

 

 

C.                                     Licensee has entered into an expanded

Sales, Marketing and Distribution Agreement with Sankyo Pharma, Inc., dated

July 8, 2002, wherein Sankyo Pharma has the exclusive right to sell, market,

and distribute the Licensed Product in the United States until April 1, 2014,

and Sankyo Pharma, Inc., is thus Licensee’s U.S. Marketing Partner as

“Marketing Partner” is defined in Paragraph 1.7 of the Agreement; provided,

however, that if Sankyo Pharma exercises its right to manufacture under the

Anticipatory Breach section of the Sales, Marketing and Distribution Agreement,

then Sankyo Pharma, Inc., will be considered a Sublicensee and not a Marketing

Partner.

 

D.                                    The

Regents and Licensee mutually desire to further amend the Agreement in

accordance with the terms set forth below;

 

NOW, THEREFORE, the parties agree to the following:

 

1.                   DEFINITIONS

 

A.            All definitions and paragraph

numbers referred to in this Second Amendment have the same meaning as in the

Agreement, unless modified herein.

 

B.            Paragraph 1.2 of the Agreement entitled Licensed Product

is deleted in its entirety and replaced with the following:

 

1.2           “Licensed Product(s)” [CONFIDENTIAL TREATMENT

REQUESTED BY CYGNUS, INC.]

 

C.            Paragraph 1.3 of the

Agreement entitled Licensed Method is deleted in its entirety and replaced with

the following:

 

1.3           “Licensed Method” [CONFIDENTIAL TREATMENT REQUESTED BY

CYGNUS, INC.]

 

D.            Paragraph 1.4 of the Agreement

entitled Net Sales is deleted in its entirety and replaced with the following:

 

1.4           “Net Sales” means the total of the

gross amount invoiced or otherwise charged (whether consisting of cash or any

other forms of consideration) for the Final Sale of Licensed Products or

Licensed Method by Licensee, any Affiliate or Sublicensee to Customers, less

the following deductions (to the extent included in and not already deducted

from the gross amount invoiced or otherwise charged) to the extent actual and

 

2

 

customary:  cash, trade or quantity discounts actually

granted to Customers; sales, use, tariff, import/export duties or other excise

taxes imposed on particular sales (excepting value added taxes or income

taxes); transportation charges, including insurance to the extent actually paid

by the Customer; and allowances or credits to customers because of rejections

or returns.  Where Licensee, any

Affiliate, or Sublicensee is the Customer, then Net Sales shall be based on the

gross amount normally invoiced or otherwise charged to other Customers in an

arms length transaction for such Licensed Product or Licensed Method.  For the avoidance of doubt, if Licensee, any

Affiliate, or Sublicensee supplies (directly or indirectly) a Product that

constitutes a Licensed Product to any Affiliate or Sublicensee, and such

Affiliate or Sublicensee includes such Product in another Product (including a

Combination Product), then Net Sales shall be based on the total gross amount

invoiced or otherwise charged for such other Product in its entirety.

 

For a Combination

Product, however, Net Sales shall be calculated as:

 

A/(A+B) x [Net Sales,

calculated without regard to this formula, of the Combination Product],

Where:

 

(i)            “A” is the total of the separately

listed sale price(s) of each Licensed Product contained within or used in the

Combination Product if sold separately; and

 

(ii)           “B”

is the total of the separately listed sale price(s) of each Combination Product

Component contained within or used in the Combination Product when sold

separately;

 

provided, however, that

in no event shall Net Sales for a Combination Product be less than

[CONFIDENTIAL TREATMENT REQUESTED BY CYGNUS, INC.] of Net Sales, calculated

without regard to this formula, of the Licensed Product that is the Combination

Product.  [CONFIDENTIAL TREATMENT

REQUESTED BY CYGNUS, INC.]

 

Notwithstanding the foregoing, Licensed Products used

solely in clinical trials and a reasonable quantity of Licensed Products used

as marketing samples to develop or

 

3

 

promote the Licensed

Products shall not be included as sold under this definition of Net Sales,

provided no consideration (whether in cash or other consideration) is provided

therefor.

 

E.             New Paragraph 1.9

is added:

 

1.9           “Combination

Product” [CONFIDENTIAL TREATMENT REQUESTED BY CYGNUS, INC.]

 

F.             New Paragraph 1.10

is added:

 

1.10         “Final Sale” means

any sale, transfer, lease, exchange or other disposition or provision of a

Licensed Product and/or a Licensed Method to a Customer.  A Final Sale shall be deemed to have

occurred upon the earliest to occur of the following (as applicable):  (a) the transfer of title to such Licensed

Product and/or Licensed Method to a Customer, (b) the shipment of such Licensed

Product to a Customer, (c) the provision of an invoice for such Licensed

Product or Licensed Method to a Customer, or (d) payment by the Customer for

Licensed Products or Licensed Method.

 

G.            New Paragraph 1.11

is added:

 

1.11         “Customer” means any

individual or entity that receives Licensed Products or Licensed Methods,

provided however, that Licensee, any Affiliate, or Sublicensee shall be deemed

a Customer only if it receives Licensed Products or Licensed Methods for its

own end-use and not for resale.

 

H.            New Paragraph 1.12

is added:

 

1.12         “Product” means any

kit, article of manufacture, composition of matter, material, compound,

component, or product.

 

I.              New Paragraph 1.13

is added:

 

1.13         “Valid Claim” means

any claim of (a) an issued, unexpired patent within the Regents’ Patent Rights,

but excluding any claim that has been (i) withdrawn, cancelled, disclaimed or

waived, or (ii) held invalid or unenforceable by a court of competent

jurisdiction in a decision that can no longer be appealed; or (b) a pending

patent application within the Regents’ Patent Rights, which claim has not been

abandoned or finally rejected by the United States Patent and Trademark Office

(USPTO), or any

 

4

 

analogous foreign administrative entity, in a decision that can no

longer be appealed or otherwise challenged.

 

2.                                       SUBLICENSEES

 

A.            New Paragraph 3.4 is added:

 

3.4(a)      If The Regents (as represented by the

actual knowledge of The Regents’ Office of Technology Transfer licensing

professional responsible for administration of this case) or a third party

discovers and notifies the licensing professional that Licensed Products or

Licensed Methods covered by Regents’ Patent Rights for which Licensee was

granted an exclusive license are useful for sampling analyte(s) other than glucose

or administering therapeutic agent(s) and such 

Licensed Products or Licensed Methods have not been developed or are not

currently under development by Licensee, then The Regents, as represented by

the Office of Technology Transfer, may give written notice to the Licensee of

the third party’s interest in developing Licensed Product and Licensed Method

for such purpose.

 

3.4(b)      Licensee shall have ninety (90) days to

give The Regents written notice stating whether Licensee elects to develop

Licensed Products or Licensed Methods for such other analyte(s) or agent(s).

 

3.4(c)      If Licensee elects to develop and

commercialize the proposed Licensed Products or Licensed Methods for such other

analyte(s) or agent(s), then Licensee shall negotiate with The Regents reasonable

milestones for the development of such other analyte(s) or agent(s) to be added

to Paragraph 6.4 of the Agreement, and submit a Progress Report every six (6)

months to The Regents outlining the Licensee’s development and

commercialization efforts for such other analyte(s) or agent(s).

 

3.4(d)      If Licensee elects not to develop and

commercialize the proposed Licensed Products or Licensed Methods for such

analyte(s) or agent(s), then Licensee shall notify The Regents in writing of

this election, and The Regents may seek a third party(ies) to develop and

commercialize the proposed Licensed Products or Licensed Methods for the other

analyte(s) or agent(s).  If The Regents

is successful in finding such third party, it shall refer such third party to

Licensee.  If the third party requests

in writing a sublicense under this Agreement, then the Licensee shall report in

writing the request to The

 

5

 

Regents within thirty

(30) days from the date of such written request.  If the request results in a sublicense, then Licensee shall

report it in writing to The Regents pursuant to Paragraph 3.2 of the Agreement.

 

3.4(e)      If the Licensee refuses to grant a

sublicense to such third party, then within thirty (30) days after such

refusal, which shall be in writing, the Licensee shall submit to The Regents a

written report specifying the license terms proposed by the third party and a

written justification for the Licensee’s refusal to grant the proposed

sublicense.  This justification may be

based on financial terms as well as the competitive position of the third party

in relationship to Licensee.  The

parties agree that the Licensee is under no obligation to grant a sublicense to

a third party that would result in the Licensee receiving an earned royalty of

less than [CONFIDENTIAL TREATMENT REQUESTED BY CYGNUS, INC.] of Net Sales from

such third party.  If however, The

Regents, at its sole reasonable discretion, determines that the terms proposed

by the third party are reasonable under the circumstances, then The Regents

shall have the right to grant to the third party a license to make, have made,

use, sell, offer for sale and import Licensed Products and practice Licensed

Method for other analyte(s) or agent(s) on terms no less favorable to The

Regents than the terms last proposed to Licensee by the third party providing

royalty rates are at least equal to those paid by Licensee.

 

3.4(f)       For avoidance of

doubt, The Regents’ right to grant a license under Paragraph 3.4(e) shall not

extend to any product, material, or method developed independently by Licensee

which is not covered by Regents’ Patent Rights.

 

3.4(g)      Notwithstanding

the letter dated [CONFIDENTIAL TREATMENT REQUESTED BY CYGNUS, INC.], by The

Regents, the Agreement has not been terminated for any analyte(s) or

agent(s).  Licensee will work with The

Regents to ascertain whether any third party, including Inventors, are

requesting sublicenses.

 

3.                                       ROYALTIES

 

A.            Paragraph 5.1 is deleted in its

entirety and replaced with the following:

 

5.1           The Licensee shall also pay to The

Regents an earned royalty as follows: 

[CONFIDENTIAL TREATMENT REQUESTED BY CYGNUS, INC.]

 

B.                                     Paragraph 5.2 of the Agreement is deleted

in its entirety and replaced with the following:

 

6

 

5.2           [CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.]

 

C.            Paragraph 5.5 of the Agreement is deleted in its entirety

and replaced with the following:

 

5.5           [CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.]

 

D.            Paragraph 5.7 of the Agreement, setting forth the minimum

annual royalty, is deleted in its entirety and replaced with  the following:

 

5.7           [CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.]

 

4.                                       DUE

DILIGENCE

 

A.            Paragraphs 6.4.6 and 6.4.7 of the

Agreement are deleted and replaced with the following:

 

6.4.6        [CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.] or

 

6.4.7        [CONFIDENTIAL TREATMENT REQUESTED BY

CYGNUS, INC.]; or

 

B.            New Paragraph 6.4.8 is added:

 

6.4.8        [CONFIDENTIAL

TREATMENT REQUESTED BY CYGNUS, INC.]

 

C.            Paragraph 6.5 of the

Agreement is deleted in its entirety, as are all references to Paragraph 6.5 in

the Agreement.

 

The Agreement

shall remain in full force and effect in accordance with its terms except as

amended herein.

 

The Regents and Licensee have

executed this Second Amendment in duplicate originals, by their respective and

duly authorized officers, as evidenced by the signatures below.

 

	

  CYGNUS,

  INC.

  	

  THE

  REGENTS OF THE

  UNIVERSITY OF CALIFORNIA

  
	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ John C Hodgman

  	

   

  	

  By:

  	

  /s/ Alan B. Bennett

  	

   

  
	

   

  	

  (Signature)

  	

   

  	

   

  	

  (Signature)

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Name:

  	

  John C Hodgman

  	

   

  	

  Name:

  	

  Alan B. Bennett

  
	

   

  	

  (Please print)

  	

   

  	

   

  	

   

  
	

  Title:

  	

  Chairman, President & CEO

  	

   

  	

  Title:

  	

  Executive Director

  
	

   

  	

   

  	

   

  	

  Research

  Administration and

  Technology Transfer

  
	

  Date:

  	

  Sept 18, 2002

  	

   

  	

  Date:

  	

  Sept. 19, 2002

  	

   

  
							

 

7

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