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EXHIBIT 10.2
UR-NAP APPLICATION DEVELOPMENT AGREEMENT
AND RIGHT OF FIRST REFUSAL OF NEW APPLICATIONS
This Agreement is made and entered into as of the 22nd day of
October, 1997, by and between the CHROMAVISION MEDICAL SYSTEMS, Inc., San
Juan Capistrano, California (hereinafter "CHROMAVISION"), a corporation existing
under the laws of Delaware and SIGMA DIAGNOSTICS, INC.(hereinafter "SIGMA"), a
corporation existing under the laws of the Missouri.
WHEREAS, CHROMAVISION has developed an automated intelligent microscope
system which uses imaging technology for diagnosis and research applications
(the "Instrument");
WHEREAS, SIGMA is developing a diagnostic kit using urea-resistant
neutrophil alkaline phosphotase ("UR-NAP") as a marker for the diagnosis of
Down's syndrome (the "Kit") to be used with the Instrument;
WHEREAS, the parties hereto have entered into a Distribution Agreement
contemporaneously with this Agreement to market the Instrument together with the
Kit and further contemplate developing additional diagnostic kits to be used
with the Instrument ("New Applications") for the diagnosis of other diseases or
medical conditions;
NOW THEREFORE, for and in consideration of the foregoing and the mutual
covenants and agreements contained herein, and certain other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Kit Development. Sigma shall use reasonable commercial efforts to
complete the development of the Kit for distribution with the Instrument
pursuant to the Distribution Agreement and by the dates contemplated by
this Agreement for clearance or approval of the use of the Kit with the
Instrument by the U.S. Food and Drug Administration (the "FDA").
2. Clinical Trials. CHROMAVISION has recruited sites and primary
investigators for clinical trials of the Kit used with the Instrument
and will manage the clinical trials. The clinical trials will involve
not less than three and not more than five medical centers and shall be
designed SO that there are five controls for each affected patient and
between 70 and 100 affected patients. CHROMAVISION will use reasonable
commercial efforts to cause the clinical trials to be completed by June
30, 1998. If CHROMAVISION is unable to arrange for, or bring about
completion of such clinical trials within the time period specified, the
parties will consult in good faith as to whether they should continue to
pursue the collaboration contemplated with respect to the Kit. If the
parties fail to reach a written agreement as to such continued
collaboration by September 30, 1998, either party will have the right to
terminate this Agreement as to collaboration on the Kit and to
concurrently terminate the Distribution Agreement by delivery of written
notice to
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the other, but such termination shall not affect the provisions of
paragraph 7 of this Agreement.
3. Cost of the Trials. The cost of the clinical trials shall be paid by
CHROMAVISION; provided however, SIGMA shall provide CHROMAVISION (at no
charge) the reagents to be used to perform the test using UR-NAP as a
marker for the diagnosis of Down's syndrome in order to permit the
clinical trials to be conducted. SIGMA shall deliver, at its expense,
such reagents in quantities reasonably requested by CHROMAVISION to the
sites of the clinical trials as requested by CHROMAVISION within 10 days
after delivery of any such request in writing.
4. Clinical Trial Results. If the trials do not demonstrate that the Kit
when used with the Instrument can be used as a statistical predictor of
Down's syndrome risk at least equal to the existing Triple Screen, the
parties will consult in good faith as to the possibility of pairing
UR-NAP with other markers in an effort to find a combination that is an
effective screen for Down's syndrome. For purposes of this paragraph 4,
"Triple Screen" refers to the markers Alpha Feto Protein ("AFP"), Human
Chorionic Gonadotrothin ("hCG") and unconjugated Estriol. If the parties
have not reached a written agreement as to the nature and substance of
such subsequent efforts with respect to the Kit within sixty (60) days
after the completion or termination of clinical trials, either party
will have the right to terminate this Agreement as to collaboration on
the Kit by delivering written notice to the other of its election to do
so, but no such termination shall affect the provision of paragraph 7 of
this Agreement. For purposes of this Agreement, clinical trials will be
deemed completed when there has been obtained and reported to the
parties data then thought by CHROMAVISION to be sufficient to obtain
clearance or approval of the use of the Instrument with the Kit from the
FDA, notwithstanding that the clinical trials may continue thereafter
for purposes of obtaining additional data for publication of the results
in medical or scientific journals. Such publications shall be subject to
paragraph 14 hereof. Any termination of the clinical trials by
CHROMAVISION prior to their completion shall require the written consent
of SIGMA, which consent shall not be unreasonably withheld.
5. Responsibility to Obtain Government Clearances. CHROMAVISION shall use
commercially reasonable efforts to obtain all government clearances or
approvals required for the commercial distribution of the Kit with the
Instrument and the Instrument with the Kit in the United States and the
other countries designated in Exhibit A hereto (the "Designated Foreign
Countries"), including approval by the FDA and comparable authorities in
the Designated Foreign Countries where required for commercial
distribution of the Kit, except that the obligation to obtain such
clearances or approvals shall not apply to any Designated Foreign
Country as to which CHROMAVISION reasonably determines that the cost of
obtaining the clearances or approvals is too high in relation to the
reasonably anticipated revenues from that country. SIGMA will use its
best efforts to develop quality control and proficiency testing
procedures for the Kit which are reasonably satisfactory to CHROMAVISION
in time to include them in the initial filing to be made by CHROMAVISION
with the FDA. SIGMA will provide such
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cooperation in obtaining all such FDA and other clearances and approvals
as CHROMAVISION may reasonably request, but nothing in this sentence
shall require SIGMA to pay any of the direct out-of-pocket expenses of
obtaining any such approvals. CHROMAVISION will provide to SIGMA
(without charge) one Instrument as soon as practicable after the date of
this Agreement for use in performing its obligations under this
Agreement and the Distribution Agreement. If this Agreement and the
Distribution Agreement are both terminated and there does not then exist
an agreement between the parties with respect to a New Application (as
defined in Paragraph 7), SIGMA shall return the Instrument to
CHROMAVISION, at SIGMA's expense, in good condition, reasonable wear and
tear excepted. If there does exist one or more agreements with respect
to New Application(s), then SIGMA shall return the Instrument in such
manner at such time as all such agreements in existence shall have
terminated.
6. Effect of Failure to Obtain Clearance. If clearance or approval of the
Kit for commercial use with the Instrument and/or clearance or approval
of the Instrument with the Kit is not received from the FDA within one
hundred eighty (180) days after the relevant application is filed, the
parties will consult with each other with respect to possible changes in
the relevant applications filed with the FDA, in the Kit or Instrument
or in the clinical trials in order to obtain such clearance or approval.
If the FDA denies clearance or approval of either the Kit for use with
the Instrument or the Instrument for use with the Kit by the later of
either December 31, 1998 or one hundred eighty (180) days after the
filing of the applicable application, either party shall have the right
to terminate this Agreement as to collaboration on the Kit by delivering
written notice of its election to terminate to the other party, but in
no event shall such termination affect the provision of paragraph 7 of
this Agreement. The timing of filing for and obtaining governmental
clearance or approval in the Designated Foreign Countries shall be
determined by CHROMAVISION after consultation with SIGMA, and no default
by CHROMAVISION in its obligations with respect to such clearances or
approvals in Designated Foreign Countries shall result in the
termination of this Agreement.
7. Right with Respect to New Applications. Sigma shall have a right of
first offer with respect to the use of the Instrument for any medical
diagnostic test not performed with the Kit (a "New Application") as
follows. If CHROMAVISION desires to pursue any New Application other
than the Kit which is the subject of this Agreement, or a third party
makes a proposal to CHROMAVISION with respect to any such New
Application which CHROMAVISION is interested in pursuing, CHROMAVISION
shall notify SIGMA in writing of such New Application. If CHROMAVISION
and SIGMA fail to reach agreement on acceptable terms with respect to
any such New Application within thirty (30) days after the delivery of
such written notice, CHROMAVISION shall be completely free to pursue
such New Application with any other person or entity on any terms. The
parties also contemplate that in situations where SIGMA clearly would
not be interested in proceeding with a particular New Application, it
will waive the thirty-day period. SIGMA's rights under this paragraph 7
shall not apply to any application as to which CHROMAVISION is
collaborating or has a contractual obligation with another
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party as of the date of this Agreement ("Exempt Third Party
Applications"). Such Exempt Third Party Applications are listed on
Exhibit B attached hereto.
8. Term. The term of this Agreement shall commence on the date hereof and
shall terminate on the later of September 30, 2000 or termination of the
Distribution Agreement.
9. Confidentiality. With respect to any Information, designated by the
parties as its confidential Information by a written notice to the
non-owning party within thirty (30) days after the first written
disclosure of that Information by either party to the other, the
non-owning party shall: (a) take all reasonable steps to prevent
disclosure of such Information to any third party and (b) not utilize
any of such Information for any purpose other than the purposes
contemplated by this Agreement and the Distribution Agreement; provided,
however, that the foregoing obligations of confidentiality and non-use
shall not preclude disclosure of such information in a patent
application or in the prosecution of a patent application or extend to
any of such Information which a non-owing party can show:
(i) by the non-owning party's prior written records was already in the
non-owning party's possession prior to date hereof;
(ii) such Information became generally available to the public through
issuance or publication of a patent application in which the information
is disclosed pursuant to this Paragraph 9;
(iii) such Information otherwise is or becomes generally available to
the public through no fault of the non-owning party;
(iv) such Information is received by the non-owning party in good faith
from a third party on a non-confidential basis without violating any
obligation of secrecy to the owner party relating to the Information
disclosed; or
(v) written consent to disclose such Information was given by the owning
party.
"Information" is defined to include all plans, specifications,
calculations, formulae, models, sketches, software, clinical, scientific
engineering or other test results, financial information, projections,
business plans, memoranda, notes and other documents, recordings, films,
photographs and all other information or every kind and nature, whether
recorded on paper, electronic media or otherwise, but only to the extent
that any such information is not generally lawfully available to the
public or the medical diagnostic industry generally. The provisions of
this Paragraph 9 shall not preclude the disclosure of Information which
is or, in the written opinion of counsel for either party may be,
required to be disclosed by law or the requirements of any stock
exchange or other market where the securities of either party or its
direct or indirect parent company are traded or (except as provided in
Paragraph 14) to any information required to be disclosed to the FDA or
any other governmental authority to obtain and keep in effect
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clearance or approval of the Instrument for use with the Kit or any New
Application or the Kit or any New Application for use with the
Instrument.
The provisions of this Paragraph 9 and Paragraph 10 shall survive any
termination or expiration of this Agreement, whether for default or
otherwise. The obligations of the parties under this Paragraph 9 shall
continue in effect for five (5) years after the latest of (i) the
expiration or earlier termination of the term of this Agreement, (ii)
the expiration or earlier expiration of the term of the Distribution
Agreement or (iii) the expiration or earlier termination of the term of
any agreement entered into by the parties pursuant to this Agreement
with respect to a New Application, except that the obligations shall not
expire as to any Information included in any patent application or
constituting a trade secret, in each case to the extent the Information
relates to the development, design, function, use, or method of use of,
or any process relating to, the Kit or the Instrument or otherwise
constiting technology relating to any of the foregoing. The obligations
of the parties shall not expire as to any item of such Information until
such item of Information becomes generally available to the public
through no fault of the non-owning party.
10. Disclosure of Confidential Information. All CHROMAVISION confidential
disclosures shall be sent to SIGMA to the attention of Vice President of
Administration. All SIGMA confidential disclosure shall be sent to
CHROMAVISION to the attention of Vice President of Business Development.
The failure of a party to send confidential disclosures as provided in
this Paragraph 10 and the failure to designate confidential Information
as provided in Paragraph 9 shall not excuse the obligations of the other
party with respect to such Information pursuant Paragraph 9 and this
Paragraph 10 if the person or persons receiving the Information or
disclosing it to a third party knew or should have known that the
Information was confidential. The parties agree that Information
designated confidential shall be disclosed to a restricted number of
employees and such employees shall be made aware of the confidential
nature of the Information. The parties shall use efforts fully
commensurate with those employed for the protection of its own
confidential information to protect the Information disclosed pursuant
to paragraph 9 hereof and this paragraph
11. Ownership of SIGMA Information. SIGMA Information is, or shall be, owned
solely by SIGMA.
12. Ownership of CHROMAVISION Information. CHROMAVISION Information is, or
shall be, owned by CHROMAVISION.
13. Ownership of Intellectual Property. SIGMA shall have sole and exclusive
ownership of all SIGMA patents, patent applications, trade secrets and
other proprietary information developed by, licensed to or otherwise
provided by SIGMA relating to the Kit, any New Application or any
improvement of either. CHROMAVISION shall have sole and exclusive
ownership of all patents, patent applications, trade secrets and other
propriety information developed by or licensed to or otherwise acquired
by CHROMAVISION relating to the Instrument or any improvement thereof.
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If the parties jointly invent, create or develop any invention or other
technology which is patentable or constitutes a trade secret, except as
otherwise provided in this Agreement, (i) SIGMA shall be deemed to own
and have the right to make, use, license and sell such invention or
technology if it relates to the Kit or any other medical diagnostic kit,
(ii) CHROMAVISION shall be deemed to own and have the right to make,
use, license and sell such invention or technology if it relates to the
Instrument or any other medical device in the nature of a microscope or
accessory thereto (including without limitation softwear).
14. Publication. CHROMAVISION agrees not to disclose orally or in writing
any research results or other information relating to the development of
the Kit until SIGMA has had an opportunity to review such information
and determine whether the disclosure of such information would
negatively impact the patentability of any invention developed by SIGMA
under this Agreement. SIGMA shall notify CHROMAVISION within ten (10)
business days of the receipt of any such proposed disclosure of SIGMA's
assessment of such disclosure. If it is determined by SIGMA, that any
such proposed disclosure will negatively impact patent protection, then
CHROMAVISION shall refrain from making such disclosure until the earlier
of (i) the date patent application(s) are filed regarding the subject
matter of the proposed disclosure or (ii) the expiration of ninety (90)
days from the date CHROMAVISION advises SIGMA of the proposed
disclosure..
15. Notices. Any notices or report or other communication permitted or
required under this Agreement shall be in writing and sent by certified
mail, express mail, Federal Express, postage paid, return receipt
requested, addressed to the party to whom the notice, report or other
communication is to be given or by telephone facsimile to the telephone
facsimile number of the party to whom the notice, report or other
communication is to be given. All such notices, reports or other
communications sent by mail, postage prepaid, return receipt requested,
shall be deemed to have been given on the date postmarked. All other
such notices, reports or other communications shall be deemed to have
been given when actually received. Changes in address shall be
accomplished by a notice in compliance with this paragraph 15. The
current address and telephone facsimile number for each party is as
follows:
CHROMAVISION SIGMA DIAGNOSTICS, INC.
33171 Paseo Cerveza ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice-President and Chief Attn: Vice President,
Financial Officer Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
16. Assignability. Neither this Agreement nor any agreement incorporated
herein nor any rights or obligations hereunder or thereunder may be
assigned by either party without prior written consent of the other
party, and any attempted assignment without prior written consent shall
be void and of no effect. The decision of the party to withhold any
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such consent shall be final and not subject to challenge on the basis
that the reasons for the decision were not adequate or that there were
no reasons. Notwithstanding the foregoing, either party will have the
right to assign this Agreement without consent in connection with a
transfer of its business substantially as a whole (or that portion
thereof relating to the Instrument, in the case of CHROMAVISION, or
relating to medical diagnostic kits, in the case of SIGMA), whether by
merger, consolidation, sale of assets, sale of stock or otherwise.
17. Force Majeure. Neither party shall be liable in damages for, nor shall
this Agreement be terminable or cancelable by reason of any delay or
default in such party's performance hereunder if such default or delay
is caused by events beyond such party's reasonable control including,
but not limited to, acts of God, regulation or law or other action of
any government or agency thereof, war or insurrection, civil commotion,
destruction or production facilities or materials by earthquake, fire,
flood or storm, labor disturbances, epidemic, or failure of suppliers,
public utilities or common carriers. Each party shall endeavor to resume
its performance hereunder if such performance is delayed or interrupted
by reason of force majeure. Each party shall notify the other, in
writing, not less often than monthly, of the nature and progress of such
endeavors. Notwithstanding the foregoing, this Paragraph 17 shall not
apply to any obligation to pay money.
18. Severability. If any provision of this Agreement is or becomes or is
deemed invalid, illegal or unenforceable in any jurisdiction in which
the Agreement is sought to be enforced: (a) such provision shall be
deemed and amended to conform to applicable laws of such jurisdiction so
as to be valid and enforceable or, if it cannot be so amended without
materially altering the intention of the parties, it shall be stricken;
(b) the validity, legality and enforceability of such provision will not
in any way be affected or impaired thereby in any other jurisdiction;
and (c) the remainder of this Agreement shall remain in full force and
effect.
19. Waiver. Waiver by either party of a default or breach or a succession of
defaults or breaches, or any failure to enforce any right hereunder
shall not be deemed to constitute a waiver of any subsequent default or
breach with respect to the same or any other provision hereof, and shall
not deprive such party of any right to terminate this Agreement arising
by reason of any subsequent default or breach.
20. Arbitration. All disputes or controversies arising under or in
connection with this Agreement shall be settled exclusively by final and
binding arbitration in accordance with Commercial Arbitration Rules of
the American Arbitration Association then in effect, provided that the
arbitrator or arbitrators shall decide the dispute or controversy in
accordance with Missouri law as applied to this Agreement. Either party
can commence an arbitration by delivering written notice of its election
to do so to the other party setting forth with reasonable specificity
the issue or issues to be arbitrated. If the parties fail to agree on a
single arbitrator within thirty (30) days after delivery of such notice,
each of them shall appoint a single arbitrator and the two arbitrators
shall appoint a third arbitrator within ten days after the later of the
two appointments. If any party fails or the
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two arbitrators fail to appoint an arbitrator within the time periods
specified, such arbitrator shall be appointed by the American
Arbitration Association upon the request of either party. No arbitrator
shall have an existing or pre-existing business, family or social
relationship with either party or with any affiliate of either party or
with any officer, director or employee of either party or its
affiliates. An "affiliate" of a party is a party controlling, controlled
by, or under common control with, the party directly or indirectly by
any means whatsoever. The arbitration shall be conducted in the city
where the principal executive office of the party who did not commence
the arbitration is then located, except that in the case of CHROMAVISION
that may include the City of Los Angeles or any portion of Orange County
north of San ▇▇▇▇ Capistrano. If such principal executive office is not
in the United States, then the arbitration may be held in the city where
the principal executive office of the party commencing the arbitration
is located. All decisions of the arbitrators shall be by majority vote.
In the course of the arbitration the parties shall be entitled to such
discovery as would be permitted by the Federal Rules of Civil Procedure.
The arbitrators or any chairman of the arbitration panel selected by the
arbitrators, if there are to be three arbitrators, will have the
authority to determine all discovery disputes between the parties. The
arbitrators will also have the power to grant provisional remedies such
as temporary restraining orders and preliminary injunctions pending the
outcome of the arbitration. Any final decision by the arbitrators shall
be accompanied by written findings of fact and conclusions of law.
Judgment may be entered on the arbitration award in any court having
jurisdiction.
21. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State
of Missouri applicable to the agreements between residents of Missouri
to be performed entirely within Missouri.
22. Attorneys' Fees. In the event of any litigation or arbitration arising
out of or relating to this Agreement, the prevailing party shall be
entitled to recover its reasonable attorneys' fees incurred in
connection therewith.
23. Entire Agreement. This Agreement and the Distribution Agreement executed
contemporaneously herewith represent the entire understanding between
the parties as of the date hereof with respect to the subject matter
hereof, and supersede all prior agreements, negotiations,
understandings, representations, statements, and writings, between the
parties relating thereto. No modification, alteration, waiver or change
in any of the terms of this Agreement shall be valid or binding upon the
parties hereto unless made in writing and specifically referring to this
Agreement and duly executed by each of the parties hereto.
24. Headings. The headings of this Agreement are included only for ease of
reference and shall not affect the interpretation of this Agreement in
any manner.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives as of the day and
year first written above.
CHROMAVISION MEDICAL SYSTEMS, INC. SIGMA DIAGNOSTICS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
Printed Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ Printed Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: VP & CFO Title: CEO
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EXHIBIT A
DESIGNATED FOREIGN COUNTRIES
All foreign countries
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EXHIBIT B
EXEMPT THIRD PARTY APPLICATIONS
None
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