EXHIBIT 10.21.1
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED BASED UPON A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934 AND HAVE
BEEN SEPARATELY FILED WITH THE COMMISSION
SECOND AMENDED AND RESTATED COLLABORATION,
LICENSE AND SUPPLY AGREEMENT
This Second Amended and Restated Collaboration, License and Supply
Agreement ("Agreement") dated as of August 17, 2000 ("Second Amendment Date"),
amends and restates the License and Supply Agreement (the "Original Agreement")
dated as of January 11, 1999 ("Effective Date") as amended June 30, 1999, and as
amended by the Amended and Restated License and Supply Agreement dated as of
November 1, 1999 (the "First Amended and Restated Agreement") between EPOCH
PHARMACEUTICALS, INC., (doing business as Epoch Biosciences, Inc.,) ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ("Epoch") and PE CORPORATION (formerly known as
THE ▇▇▇▇▇▇-▇▇▇▇▇ CORPORATION) having its Applied Biosystems Group at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ("ABG").
ARTICLE I. BACKGROUND OF THE AGREEMENT
1.01 Epoch represents that it has rights under certain patents pertaining
to oligonucleotides having a minor-groove binding moiety covalently attached
thereto ("MGB Oligonucleotide"), and methods for making and using such MGB
Oligonucleotides.
1.02 ABG wishes to acquire exclusive and non-exclusive licenses, depending
on fields of use, under such patents.
1.03 Epoch represents that it has certain know-how relating to the
synthesis of MGB Oligonucleotides, including MGB Oligonucleotides containing
modified bases, and the design of sequence-specific probes comprising such
oligonucleotides.
1.04 Epoch has research facilities and experienced scientists, research
associates and other personnel at its facilities in Redmond, Washington which
enable it to conduct research and development activities.
1.05 ABG desires to sponsor research by Epoch to develop improved nucleic
acid probes and methods for the manufacture of such probes for use in the
Exclusive Licensed Field and the Non-Exclusive Licensed Field.
1.06 ABG is engaged in the research, development, marketing, manufacturing
and distribution of products, including in the Exclusive Licensed Field and the
Non-Exclusive Licensed Field.
1.07 ABG has research and development facilities and experienced
scientists, research associates and other personnel at its facilities in Foster
City, California, which enable it to conduct research and development
activities.
1.08 ABG wishes to have Epoch supply (i) intermediate compounds useful for
making MGB Oligonucleotides, (ii) Bare Probes, and (iii) information with
respect to chemical synthesis and purification know-how relating to the
production of MGB Oligonucleotides using such intermediate compounds.
1.09 In this Agreement, in partial consideration for ABG's obligation to
pay minimum royalties and to incorporate Epoch's technology in certain of its
products comprising nucleic acid probes and the addition of a Supplemental
License Fee, Epoch has reduced the royalty rate owed by ABG for the sale of
Licensed Products as compared to that owed under the Original Agreement.
1.10 Concurrently with the First Amended and Restated Agreement, ABG and
Epoch entered into a Know-How Escrow Agreement, pursuant to which Epoch
deposited into escrow documentation of know-how necessary to enable a person
skilled in oligonucleotide chemistry to manufacture MGB Intermediates. The
Know-How Escrow Agreement was entered into between Epoch and ABG to provide that
ABG will have access to the know-how required to manufacture MGB Intermediates
if Epoch should be unable to meet its obligations to supply ABG MGB
Intermediates pursuant to this Agreement.
1.11 In connection with the Original Agreement, Epoch granted ABG a
security interest in a Licensed Patent, in order to induce ABG to provide a
pre-payment of [*] ($[*]) under the Original Agreement. Pursuant to a Stock
Purchase Agreement between Epoch and the Investors Listed on Schedule A thereto,
dated November 1, 1999 (the "Stock Purchase Agreement"), ABG used One Million
Dollars ($1,000,000) of this pre-payment, and an additional One Million Dollars
($1,000,000) in cash, to purchase Eight Hundred Thousand (800,000) shares of
Common Stock of Epoch, at a purchase price of Two Dollars And Fifty Cents
($2.50) per share. It is the Parties intent that the Security Agreement
previously executed by the Parties in conjunction with the Original Agreement,
and attached thereto as Exhibit A, will remain in effect to secure any unused
portion of the pre-payments made by ABG pursuant to Section 6.12 of this
Agreement.
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
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ARTICLE II.
DEFINITIONS
2.01 "Affiliates" means any corporation, firm, partnership or other
entity, whether de jure or de facto, which directly or indirectly owns, is owned
by or is under common ownership with a Party to this Agreement, as the case may
be, to the extent of at least fifty percent of the equity (or such lesser
percentage which is the maximum allowed to be owned by a foreign corporation in
a particular jurisdiction) having the power to vote on or direct the affairs of
the entity.
2.02 "Net Sales" means (1) with respect to sales by a Party, or an
Affiliate of a Party, to non-affiliated third party purchasers, the actual
amount of gross sales of Licensed Product(s) to a third party, less: trade, cash
and quantity discounts granted at the time invoiced, if any, actually allowed,
amounts refunded for faulty or defective product, returns, rejections, freight,
insurance and other transportation costs (except income taxes), tariffs, duties
and similar governmental charges paid, to the extent included in gross sales
price, (2) with respect to sales by a Party made to any Affiliate or to any
person, firm or corporation enjoying a special course of dealing with a Party,
the Net Sales will be determined based on the first resale in a bona fide
arms-length transaction of Licensed Product(s) by such Affiliate, person, firm
or corporation to third parties, and (3) with respect to Licensed Product(s)
which are used by a Party, or an Affiliate of a Party, to supply services or
information to a third party for commercial purposes, or are otherwise disposed
of, the Net Sales will be determined as if such Licensed Product(s) had been
sold at the average Net Sales for such Licensed Product(s) during the past one
hundred and twenty days prior to the supply of such services or information.
With respect to Licensed Product comprising Licensed Know-How in the form
of software embodying algorithms for determining the melting temperature of MGB
Oligonucleotides, Net Sales for software sold separately shall be calculated as
set forth above, and Net Sales for software sold or otherwise transferred in
combination with equipment, other software or other products, or otherwise
provided by ABG to its customers, will be determined as if such software had
been sold at the average Net Sales price for such software during the past one
hundred and twenty (120) days prior to such sale, transfer or disposition.
2.03 "License Year" means the twelve month period beginning on the first
day of January, April, July or October next following the Second Amendment Date,
and each twelve month period thereafter, except that the first License Year will
include the period from the Second Amendment Date to the first day of the twelve
month period.
2.04 "Party" means Epoch or ABG and, when used in the plural, will mean
Epoch and ABG.
2.05 "Licensed Patents" means (1) U.S. Patent No. 5,801,155 titled
Covalently Linked Oligonucleotide Minor Groove Binder Conjugates, issued
September 1, 1998, (2) U.S. Patent No. 6,084,102 titled Covalently Linked
Oligonucleotide Minor Groove Binder Conjugates,
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issued July 4, 2000, (3) any patent covering Collaboration Intellectual
Property, and (4) any patent covering Modified Bases to the extent set forth in
Sections 4.01 and 4.02.
2.06 "Related Patent" means any patent or patent application owned, held,
or otherwise controlled, in whole or in part by Epoch that (1) discloses and/or
claims substantially the same subject matter as a Licensed Patents, (2)
discloses and/or claims improvements to inventions disclosed or claimed in a
Licensed Patent and requires rights under the Licensed Patent to exploit such
improvements, (3) claims priority to, a Licensed Patent, including but not
limited to continuation applications and patents, continuation-in-part
applications and patents, divisional applications and patents, reexamination
applications and patents, reissue applications and patents, and continuing
prosecution applications and patents, (4) is a parent of U.S. Patent No.
5,801,155, and/or (5) any foreign equivalents of a Licensed Patent or any patent
or patent application in (1), (2), (3) or (4) above.
2.07 "Licensed Product" means any product for use in the Exclusive
Licensed Field or the Non-Exclusive Licensed Field (1) which, but for the
license granted hereunder, manufacture, use or sale thereof would infringe at
least one Valid Claim of a Licensed Patent or a patent licensed to ABG for
Collaboration Epoch Intellectual Property or Epoch's interest in Collaboration
Joint Intellectual Property pursuant to Section 4.01 below, or (2) which
otherwise uses, incorporates or was developed or manufactured using Licensed
Know-How or Collaboration Epoch Intellectual Property or Epoch's interest in
Collaboration Joint Intellectual Property pursuant to Section 4.01 below.
2.08 "MGB Oligonucleotide" means Licensed Product comprising an
oligonucleotide having a minor-groove binding moiety covalently attached
thereto, and, at ABG's option, further comprising a [*]. A Purified MGB
Oligonucleotide means an MGB Oligonucleotide that is at least [*]% pure based on
the HPLC assay specified in Exhibit A.
2.09 "MGB Intermediate" means an intermediate useful for the synthesis of
an MGB Oligonucleotide, including but not limited to [*]. The identity of a MGB
Intermediate will be confirmed based on an assay which shall be mutually agreed
upon by the Parties, and included in an amendment to Exhibit C within ninety
(90) days from the Second Amendment Date.
2.10 "Probe Unit" means that amount of MGB Intermediate required to make
[*] of a Purified MGB Oligonucleotide.
2.11 "Kits" means products containing MGB Oligonucleotides packaged with
other materials and reagents, such other reagents including but not limited to
enzymes, reaction buffers and nucleotide triphosphates. Also included within the
definition of Kits are microfluidic devices containing or packaged with MGB
Oligonucleotides.
2.12 "Bare Probe" means a MGB Oligonucleotide provided alone.
2.13 "Valid Claim" means a claim of a Licensed Patent (or pending
application
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
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included in the Related Patents) which has not been held permanently invalid or
otherwise unenforceable by a court of competent jurisdiction, unappealable or
unappealed within the time allowed for appeal, or has not otherwise finally been
held unpatentable by an appropriate administrative agency, unappealable or
unappealed within the time allowed for appeal.
2.14 "Exclusive Licensed Field" means the 5'-Nuclease Assay Field.
2.15 "Real-Time Nucleic Acid Amplification Monitoring Field" means the
monitoring of a polymerase chain reaction by detecting a change in a magnitude
of a detectable signal as a function of reaction cycle practiced outside of the
HIVD Field only.
2.16 "5'-Nuclease Assay Field" means the detection of a nucleic acid
sequence based on the cleavage of a nucleic acid probe that is hybridized to the
nucleic acid sequence by a 5' to 3' nuclease activity of a polymerase enzyme, as
generally described in U.S. Patent No. 5,487,972, practiced outside of the HIVD
Field only.
2.17 "Non-Exclusive Licensed Field" means (1) use of MGB Oligonucleotides
as ligation probes in an oligonucleotide ligation assay, generally as described
in U.S. Patent No. 4,883,750; (2) use of MGB Oligonucleotides in an assay
employing a [*]; (3) use of MGB Oligonucleotides as primers in a primer
extension reaction, including but limited to a PCR reaction or a DNA sequencing
reaction, and (4) use of MGB Oligonucleotides in the Real-Time Nucleic Acid
Monitoring Field, to the extent that (1), (2), (3) and (4) are practiced outside
of the Exclusive Licensed Field and practiced outside the HIVD Field.
2.18 "Human In Vitro Diagnostics Field ("HIVD Field") means products and
processes for the measurement of attributes practiced outside of the HIVD Field,
characteristics, diseases, traits or other conditions of a human being for the
medical management of that human being.
2.19 "Licensed Know-How" means trade secrets, technical information,
experimental data, software and other knowledge now existing and controlled by
Epoch relating to (1) the chemical synthesis and purification of MGB
Oligonucleotide using MGB Intermediate, (2) algorithms and related software for
determining the melting temperature of MGB Oligonucleotide, as described in 6.05
and Exhibit B, (3) Collaboration Intellectual Property, and (4) Modified Bases
to the extent set forth in Sections 4.01 and 4.02, to the extent that such
technical information, experimental data, software and other knowledge is not
publicly available.
2.20 "Confidential Information" means information received by one Party
(Receiving Party) from the other Party (Disclosing Party) (1) that the Receiving
Party has a reasonable basis to believe is confidential to the Disclosing Party,
or is treated by the disclosing Party as confidential, (2) is identified at the
time of disclosure as "CONFIDENTIAL" and, (3) in the case of disclosures in
non-written form, is identified in writing within thirty (30) days as
confidential. Notwithstanding the above, Confidential Information will not
include any information which:
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
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(a) can be demonstrated to have been in the public domain as of the
Second Amendment Date or comes into the public domain during the term of this
Agreement through no act of the recipient; or
(b) can be demonstrated to have been independently known to the
recipient prior to the receipt thereof, or made available to the recipient as a
matter of lawful right by a third party; or
(c) can be demonstrated to have been rightfully received by the
recipient from a third party who did not require the recipient to hold it in
confidence or limit its use and who did not acquire it, directly or indirectly,
from the other Party to this Agreement under a continuing obligation of
confidentiality; or
(d) will be required for disclosure to any governmental regulatory
agencies pursuant to approval for use, provided the Disclosing Party is given
reasonable notice of such proposed disclosure and, if requested by the
Disclosing Party, the Receiving Party uses reasonable efforts to maintain the
confidentiality of such information in such governmental submission; or
(e) is independently conceived, invented or acquired by researchers
of the recipient who have not been personally exposed to the information
provided to the recipient hereunder; or
2.21 "Large Scale Order" means an order from a customer of ABG for at
least [*] Bare Probes represented to the customer as having been manufactured at
a synthesis scale intended to yield greater than or equal to [*]of MGB
Oligonucleotide.
2.22 "Research Committee" shall mean the joint committee of
representatives of ABG and Epoch as described in Section 3.08 hereof.
2.23 "FTE" means a full-time employee having the appropriate skill and
experience to conduct the Research Program who is dedicated to the conduct of
the Research Program or, in the case of less than full-time dedication, a
full-time equivalent person-year, based on a total of forty-six and 1/4 (46.25)
weeks or one thousand eight hundred fifty (1,850) hours per year, of work on or
directly related to the Research Program.
2.24 "Research Funding Payment" shall have the meaning set forth in
Section 5.03.
2.25 "Research Term" shall be for a period of two (2) years from the
Second Amendment Date unless otherwise extended pursuant to Section 3.03.
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
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2.26 "Research Plan" shall mean the plan, as amended from time to time by
the Research Committee, for the conduct of the Research Program, which plan,
including all amendments, shall be agreed to by the Parties within thirty (30)
days of the Second Amendment Date and attached to this Agreement as Schedule
2.26.
2.27 "Research Program" shall mean the collaborative research and
development program for identifying and evaluating improved nucleic acid probes,
and cost-effective methods for producing such probes, undertaken by the Parties
pursuant to this Agreement.
2.28 "Collaboration Joint Intellectual Property" means all writings,
inventions, discoveries, improvements and other technology, whether or not
patentable or copyrightable, and any patent applications, patents or copyrights
based thereon, arising from work performed under the Research Program, that are
jointly conceived by one or more employees or agents of Epoch, and by one or
more employees or agents of ABG.
2.29 "Collaboration Epoch Intellectual Property" means all writings,
inventions, discoveries, improvements and other technology, whether or not
patentable or copyrightable, and any patent applications, patents or copyrights
based thereon, arising from work performed under the Research Program, that are
conceived by one or more employees or agents of Epoch.
2.30 "Collaboration ABG Intellectual Property" means all writings,
inventions, discoveries, improvements and other technology, whether or not
patentable or copyrightable, and any patent applications, patents or copyrights
based thereon, arising from work performed under the Research Program, that are
conceived by one or more employees or agents of ABG.
2.31 "Collaboration Intellectual Property" means Collaboration Joint
Intellectual Property, Collaboration Epoch Intellectual Property and
Collaboration ABG Intellectual Property.
2.32 "Modified Base" means any modified nucleotide, including but not
limited to pyrazolopyrimidine (ppn) nucleobase analogs, e.g., ppA and ppG
analogs, including methods for making or using such modified nucleotides.
2.33 "Pre-Collaboration ABG Intellectual Property" means all writings,
inventions, discoveries, improvements and other technology, whether or not
patentable or copyrightable, and any patent applications, patents or copyrights
based thereon, that are owned by, either partially or wholly, or licensed to, or
otherwise controlled by, ABG or its Affiliates as of the Second Amendment Date.
2.34 "Pre-Collaboration Epoch Intellectual Property" means all writings,
inventions, discoveries, improvements and other technology, whether or not
patentable or copyrightable, and any patent applications, patents or copyrights
based thereon, that are owned by, either partially or wholly, or licensed to, or
otherwise controlled by, Epoch or its Affiliates as of the Second Amendment
Date.
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2.35 "Manufacturing Cost" means the fully-burdened manufacturing cost of
a product as determined using a Party's customary practices and procedures for
like products in accordance with United States generally accepted accounting
principles ("GAAP") including the following: direct material cost, material
overhead cost, direct labor cost, fixed manufacturing overhead cost, variable
manufacturing overhead cost, and manufacturing variance cost.
ARTICLE III.
SCOPE, STRUCTURE AND ADMINISTRATION OF THE COLLABORATION
3.01 General. Epoch and ABG wish to establish the Research Program and
develop and conduct the Research Plan. The Parties shall use all commercially
reasonable endeavors to comply with the terms of the Research Plan.
3.02 Collaboration Data. Each Party shall use good scientific practices
and shall comply in all material respects with applicable regulations and
customary good laboratory and clinical practices in the performance of the
Research Program (including all data in the form required to be maintained under
any applicable governmental regulations). Such records shall comprise books,
results, reports, research notes, charts, graphs, comments, computations,
analyses, recordings, photographs, computer programs and documentation thereof,
computer information storage means, samples of materials and other graphic or
written data generated in connection with the Research Program. Each Party shall
provide the other Party the right to inspect its data, and shall provide
summaries of its data, to the extent reasonably required for the performance of
each Party's obligations under this Agreement and the Research Plan; provided,
however, that each Party shall maintain such records and the information of the
other Party contained therein in confidence in accordance with Article XI below
and shall not use such records or information of the other Party except to the
extent otherwise permitted by this Agreement.
3.03 Research Term. The Research Term shall commence on the Second
Amendment Date and be for an initial term of two (2) years from that date, and
may be extended an additional two (2) year term, provided ABG provides notice of
such extension at least ninety (90) days prior to the end of the initial term.
3.04 Research Plan. The Research Plan will be agreed upon Parties within
sixty (60) days of the Second Amendment Date and updated and approved by the
Research Committee as necessary. The Research Plan in effect at any time may not
be amended except as agreed in writing by the Research Committee. If at any time
during the Research Term either Party determines that a change to the Research
Plan would be beneficial to the collaboration of the Parties, such Party shall
prepare and submit to the Research Committee a written proposal detailing its
proposed changes to the Research Plan. The Research Committee shall promptly
convene a meeting to consider any such proposal.
3.05 Subcontracts. Either Party may subcontract portions of the Research
Program to be performed by it in the normal course of its business to third
parties with the prior consent of
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the Research Committee; provided, however, that such third parties enter into
appropriate confidentiality agreements unless such subcontracting would not
require the transfer of confidential information to the third party.
3.06 Availability of Employees. Each Party agrees to make its employees
and nonemployee consultants reasonably available at their respective places of
employment to consult with the other Party on issues arising during the Research
Program. If ABG requests Epoch personnel to consult other than at Epoch's
facility, ABG shall reimburse Epoch the reasonable travel and lodging expenses
of such personnel.
3.07 Visit of Facilities. Representatives of either Party may, upon
reasonable notice and at times reasonably acceptable to the other Party, visit
the other Party's facilities where the Research Program is being conducted, and
consult informally, during such visits and by telephone, with personnel
performing work on the Research Program. Each Party's representatives shall
abide by all reasonable operating procedures and rules of such facilities with
respect to safety and confidentiality.
3.08 Research Committee.
(a) Formation and Composition. A joint committee comprised of three
(3) named representatives of each of ABG and of Epoch, (the "Research
Committee") shall be appointed promptly after the date hereof and shall meet as
needed, but not less than once each quarter during the Research Term. Such
meetings shall be at such times agreed to by Epoch and ABG and shall be held
alternately at the facilities of Epoch and ABG, or at such locations as the
members of the Research Committee shall agree. The initial composition of the
Research Committee will be as follows:
From Epoch: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
From ABG: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(b) Functions and Powers. The principal functions of the Research
Committee will include the following: (i) discuss and approve the Research Plan,
material changes to the Research Plan, including budgets and schedules, and
allocation of responsibilities, (ii) monitor work conducted under the Research
Plan, and (iii) attempt to resolve any disputes arising under this Agreement as
set forth in Section 12.03. The Research Committee shall have the power to
appoint other committees as appropriate. The Research Committee shall endeavor
in good faith to make decisions unanimously, failing which the procedures set
out in Section 12.03 shall apply.
(c) Members; Approval; Chairs. A Party may change one or more of its
representatives to the Research Committee at any time. Members of the Research
Committee
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may be represented at any meeting by another member of the Research Committee,
or by a deputy. Either Party may permit additional employees and consultants to
attend and participate (on a non-voting basis) in the Research Committee
meetings, subject to the confidentiality provisions of Article XI. Any approval,
determination or other action agreed to by all of the members of the Research
Committee or their deputies present at the relevant meeting shall be the
approval, determination or other action of the Research Committee, provided that
at least two (2) representatives of each Party are present at such meeting. The
Research Committee shall be chaired by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
(d) Records and Reports. The Research Committee shall be responsible
for keeping accurate records of their deliberations and decisions and all
actions recommended or taken. Periodically, the Chair of the Research Committee
shall provide a brief written report of such activities to the Parties. All
records of the committees shall be available to both Parties.
3.09 Ownership of Inventions, Cooperation of Employees. Inventorship, with
respect to inventions made pursuant to the work carried out under the Research
Program shall be determined in accordance with United States rules of
inventorship. All Collaboration Epoch Intellectual Property shall be owned by
Epoch. All Collaboration ABG Intellectual Property shall be owned by ABG. All
Collaboration Joint Intellectual Property shall be owned jointly by ABG and
Epoch.
(a) Right to Practice. Subject to the licenses granted herein, each
Party will have the right to independently practice the Collaboration Joint
Intellectual Property, without accounting to the other Party, only to the extent
that the practice of the Collaboration Joint Intellectual Property by ABG does
not require rights under Pre-Collaboration Epoch Intellectual Property,
Collaboration Epoch Intellectual Property, or any other intellectual property
rights owned by, either partially or wholly, or licensed to Epoch, and that
practice of the Collaboration Joint Intellectual Property by Epoch does not
require rights under Pre-Collaboration ABG Intellectual Property, Collaboration
ABG Intellectual Property, or any other intellectual property rights owned by,
either partially or wholly, or licensed to ABG.
(b) Joint Invention Not Patentable Over Prior Invention of a Party.
In the event that a Party is the owner of a prior invention that would render a
patent under Collaboration Joint Intellectual Property unpatentable for being
obvious or anticipated under United States patent law, to assure the
patentability of the Collaboration Joint Intellectual Property, the other party
will assign sole ownership of the Collaboration Joint Intellectual Property to
the first Party. The first Party will then grant a royalty-free non-exclusive
license with a right to sublicense under the Collaboration Joint Intellectual
Property back to the other Party.
(c) Enforcement. Each Party will have the right but not the
obligation to bring, at its own expense, an infringement action against any
third party under its interest in Joint Collaboration Intellectual Property,
subject to the same limitations set forth in Section 3.09(a) with respect to the
practice of the Joint Collaboration Intellectual Property by Epoch or ABG. The
Parties will assist one another and cooperate in any such litigation at the
other's reasonable
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request, and, if a Party is necessary in order to institute or maintain an
infringement suit by the other Party as defined by law, that Party agrees to be
joined in the suit.
3.10 Filing, Prosecution and Maintenance of Technology, Patent Rights and
Joint Inventions. When Collaboration Intellectual Property may reasonably be
considered to be patentable the Parties shall discuss the protection thereof.
Unless otherwise agreed by the Parties, the provisions of this Section 3.10
shall govern the filing, prosecution and maintenance of patent applications. If
Collaboration Epoch Intellectual Property or Collaboration Joint Intellectual
Property useable in the Exclusive Licensed Field is involved, a priority patent
application shall be filed as soon as reasonably possible, prosecuted and
maintained at Epoch's expense by Epoch in the countries set forth is Section
4.05. If Collaboration Epoch Intellectual Property or Collaboration Joint
Intellectual Property not useable in the Exclusive Licensed Field is involved,
such filings shall be made at Epoch's discretion and such application shall be
filed by Epoch, in such countries as reasonably determined by Epoch after
consultation with ABG. Epoch shall bear the expense of such filing for
Collaboration Epoch Intellectual Property and the Parties will share the expense
for Collaboration Joint Intellectual Property. If Collaboration ABG Intellectual
Property is involved, such application may be filed by ABG, at its expense, in
such countries as reasonably determined by ABG, after consultation with Epoch.
In the event that ABG does not file, prosecute and maintain any such patent
application or patent for Collaboration ABG Intellectual Property, or pay its
share of expenses for Collaboration Joint Intellectual Property, it shall give
Epoch forty-five (45) days' notice before any relevant deadline and transmit all
information reasonable and appropriate relating to such patent application or
patent, and Epoch shall have the right to pursue, at its own expense, filing,
prosecution and maintenance thereof, in which event ABG shall assign all of its
rights therein to Epoch. In the event that Epoch does not file, prosecute and
maintain any such patent application or patent for Collaboration Epoch
Intellectual Property, or pay its share of expenses for Collaboration Joint
Intellectual Property, it shall give ABG forty-five (45) days' notice before any
relevant deadline and transmit all information reasonable and appropriate
relating to such patent application or patent, and ABG shall have the right to
pursue, at its own expense, filing, prosecution and maintenance thereof, in
which event Epoch shall assign all of its rights therein to ABG.
3.11 No Other Technology Rights. Except as otherwise expressly provided in
this Agreement, under no circumstances shall a Party hereto, as a result of this
Agreement, obtain any ownership interest in or other right to any technology,
know-how, patents, pending patent applications, products, or biological
materials of the other Party, including items owned, controlled or developed by
the other Party, or transferred by the other Party to said Party at any time
pursuant to this Agreement, by implication, or by estoppel, or otherwise.
3.12 Cooperation of Employees. Each Party represents and agrees that
(except where such assignment is required by law) all employees or others acting
on its behalf in performing its obligations under this Agreement shall be
obligated under a binding written agreement to assign to such Party, or as such
Party shall direct, all intellectual property rights (including Collaboration
Joint Intellectual Property) made or conceived by such employee or other person.
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ARTICLE IV
LICENSE GRANT
4.01 Exclusive License. Epoch hereby grants to ABG a world-wide exclusive
license under Licensed Patents and Licensed Know-How, to make, use, offer to
sell, sell and import Licensed Products in the Exclusive Licensed Field,
provided however, that ABG shall have the rights under the Licensed Patents and
Licensed Know-How with respect to Modified Bases only if (i) ABG extends the
Research Term for an additional two (2) year period pursuant to Section 3.03 and
pays the two (2) additional [*] Dollar $[*]) technology access payments under
Section 5.02 or (ii) ABG does not extend the Research Term and pays one
additional [*] Dollar technology access payment as provided in Section 5.02.
4.02 Non-Exclusive License. Epoch hereby grants to ABG a world-wide
non-exclusive license under Licensed Patents and Licensed Know-How, to make,
use, offer to sell, sell and import Licensed Products in the Non-Exclusive
Licensed Field, provided however, that ABG shall have the rights under the
Licensed Patents and Licensed Know-How with respect to Modified Bases only if
(i) ABG extends the Research Term for an additional two (2) year period pursuant
to Section 3.03 and pays the two (2) additional [*] Dollar $[*]) technology
access payments under Section 5.02 or (ii) ABG does not extend the Research Term
and pays one additional [*] Dollar technology access payment as provided in
Section 5.02.
4.03 Sublicenses. ABG will have no right to sublicense its license rights
granted hereunder beyond those rights granted through the sale of Licensed
Product to ABG's customers.
4.04 Restrictions. ABG, without undertaking a special investigation, will
not knowingly sell, market, make or have made, Licensed Products for use outside
the Exclusive Licensed Field or the Non-Exclusive Licensed Field. In the event
that ABG does inadvertently sell, market, make or have made, Licensed Products
for use outside the Exclusive Licensed Field or the Non-Exclusive Licensed
Field, ABG will within thirty (30) days of learning of such activity cease such
activity. Epoch will not knowingly sell, market, make or have made MGB
Intermediate and/or MGB Oligonucleotide to third parties in the Exclusive
Licensed Field. In the event that Epoch does inadvertently sell, market, make or
have made MGB Intermediate and/or MGB Oligonucleotide to third parties in the
Exclusive Licensed Field, Epoch will within thirty (30) days of learning of such
activity cease such activity. Licensed Products comprising Licensed Know-How in
the form of software embodying algorithms for determining the melting
temperature of MGB Oligonucleotide, as described in Section 6.05 and Exhibit B,
will only be sold or marketed pursuant to a limited-use non-exclusive license
agreement consistent with ABG's normal practice for the sale and marketing of
like software products.
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
12
4.05 Patent Prosecution. To the extent commercially practicable, Epoch
will file and diligently prosecute patent applications with respect to the
Licensed Patents in at least the United States, Germany, France, Switzerland,
United Kingdom, Sweden, Italy, Japan, Australia and Canada.
4.06 Obligation of ABG to use Technology. ABG shall use commercially
reasonable efforts to incorporate Epoch's Licensed Know-How and/or inventions
covered by the Licensed Patents in all locus-specific nucleic acid probes (and
kits including such probes) sold in the Exclusive Licensed Field by June 30,
2001.
4.07 License to Epoch. ABG hereby grants to Epoch a world-wide,
non-exclusive, perpetual, royalty-free license under Collaboration ABG
Intellectual Property, to make, use, offer to sell, sell and import products and
services for any purpose, except in the Exclusive Licensed Field during the term
of the license granted by Epoch to ABG under Section 4.01 above.
ARTICLE V.
LICENSE FEE; ROYALTIES; PAYMENT FOR KNOW-HOW
5.01 License Fees. ABG paid to Epoch after the Effective Date, [*] Dollars
($[*]),[*]% of which will be creditable against future royalties called for
under Section 4.02. ABG will use credits against future royalties at a rate not
to exceed [*] Dollars ($[*]) per License Year. In addition, upon the first
commercial sale of a Licensed Product for each of the four uses listed in the
definition of "Non-Exclusive Licensed Field," ABG will pay to Epoch, within ten
(10) business days of each such first commercial sale, an additional license fee
of [*] Dollars ($[*]).
5.02 Supplemental License Fee. ABG shall make a payment to Epoch of [*]
Dollars ($[*]) within five (5) business days of the Second Amendment Date, and
on the first anniversary of the Second Amendment Date an additional [*] Dollars
($[*]), by wire transfer to an account designated by Epoch. In the event ABG
extends the Research Term pursuant to Section 3.03 it shall make an additional
payment of [*] Dollars ($[*]) on the second anniversary of the Second Amendment
Date, and an additional payment of [*] Dollars ($[*]) on the third anniversary
of the Second Amendment Date. In the event ABG does not extend the Research Term
and desires to utilize the Licensed Patents and/or Licensed Know-How to make,
use or sell Modified Bases, it shall make one (1) additional payment of [*]
Dollars ($[*]) on the second anniversary of the Second Amendment Date. Payments
made to Epoch pursuant to this Section 5.02 shall not be credited against any
other payment otherwise due Epoch under this Article V.
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
13
5.03 Funding of Research Program by ABG. In consideration of Epoch's
performance of its obligations under the Research Program, ABG shall fund four
(4) FTE's for Epoch (onsite or offsite). During the first year, the cost of the
four (4) FTE's shall be [*] Dollars ($[*]) per year. Such amounts shall be
adjusted at the beginning of each subsequent year by an amount equal to the
increase in the U.S. Department of Labor Consumer Price Index in the prior year.
Such FTE's shall include a balanced group of scientists, as Epoch deems
necessary to conduct the Research Program. The amounts payable shall be paid by
wire transfer in United States dollars in four equal payments paid quarterly, in
advance, by the tenth (10th) business day of each calendar quarter, pro-rated as
necessary for the first and last quarter (each such payment referred to as a
"Research Funding Payment"). The first Research Funding Payment shall be paid
within five (5) days of the Second Amendment Date. Research Funding Payments
shall not be credited against any other payment otherwise due Epoch under this
Article V. Except as otherwise agreed by the Parties, or set forth in this
Agreement, each Party shall bear all of its costs incurred in connection with
the Research Program.
5.04 Royalties.
(a) Percentage Royalties. ABG will pay to Epoch percentage royalties
on the Net Sales of Licensed Products sold or otherwise disposed of under the
license granted under Sections 4.01 and 4.02 of this Agreement as follows:
Bare Probes covered by a Valid Claim [*]%
Kits covered by a Valid Claim [*]%
Bare Probes not covered by a Valid Claim [*]%
Kits not covered by a Valid Claim [*]%
Software [*]%
No percentage royalties will be owed under this Section 5.04 (a) for
the sale by ABG of any Bare Probes or Kits not covered by a Valid
Claim in the event that (i) the Licensed Know-How becomes publicly
available, (ii) ABG is placed at a commercial disadvantage as a
result of such know-how becoming publicly available, and (iii) such
know-how was not made publicly available by ABG. In addition, no
percentage royalties will be owed under this Section 5.04(a) for the
sale by ABG of any Bare Probes purchased by ABG from Epoch pursuant
to Section 6.02.
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
14
(b) Annual Minimum Royalties. Notwithstanding the foregoing,
commencing for the first License Year, ABG shall pay minimum annual royalties
(each an "Annual Minimum Royalty") as follows:
LICENSE YEAR ANNUAL MINIMUM ROYALTY
------------ ----------------------
1 $[*]
2 $[*]
3 $[*]
4 $[*]
5 $[*]
If total royalties paid by ABG under Section 5.04(a) above for the
applicable License Year are less than the Annual Minimum Royalty,
then ABG shall pay to Epoch the difference between actual royalties
paid and the Annual Minimum Royalty within forty-five (45) days
after the end of each applicable License Year during which such
royalties accrue, along with the payment and statement under
Section 5.06 for the last quarter of such License Year.
5.05 Acknowledgment for Payment for Know-How. ABG paid Epoch after the
Effective Date of this Agreement, as additional consideration for the transfer
of and license under Licensed Know-How and for Epoch having made available,
after the Effective Date of the First Amendment of this Agreement, source code
embodying algorithms for determining the melting temperature of MGB
Oligonucleotide as described in 6.05 and Exhibit B, the following payments: (i)
a one time payment of [*] Dollars ($[*]), and (ii) three (3) payments totaling
$[*], which represented monthly payments of [*] Dollar ($[*]) (adjusted on a pro
rata basis), paid between June 15, 1999 and August 23, 1999 (the date of the
first New Product Release of a Licensed Product); as used herein, the term "New
Product Release" means that point in a ABG product development program at which
a product is released for unrestricted manufacture and sale to customers under
PE Biosystems ISO 9001 Product Development Procedures. As yet additional
consideration for the transfer of and license under Licensed Know-How, ABG gave
to Epoch an ABI PRISM (tm) Model 7700 Sequence Detection System instrument (p/n
▇▇▇▇-▇▇-▇▇▇/208) [*]. The instrument provided hereunder will include all
installation services and warranties typically provided to customers in
connection with the purchase of such instrument. However, ABG will not provide
an optional service contract covering the instrument. All reagents will be
purchased by Epoch using conventional retail distribution channels.
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
15
5.06 Payment Dates and Statements. Within forty-five (45) days of the end
of each calendar quarter in which Net Sales occur, ABG will calculate the
royalty amount owed to Epoch under this Section 5 and will remit such amount to
Epoch. Such payment will be accompanied by a statement showing the calculation
of the amount owed for Licensed Products, the Net Sales of Licensed Products for
that quarter (including the gross invoiced sales and permissible deductions
therefrom), and the exchange rate (as determined pursuant to Section 4.06) used
to directly convert any royalty amounts into U.S. Dollars. The payment for the
last quarter of each year shall also include any additional amounts necessary to
meet the Annual Minimum Royalty requirements under Section 5.04(b). Each
quarterly statement shall also report the average selling price of Bare Probes
for Large Scale Orders for purposes of Section 6.02 below.
5.07 Late Payments. Any payment owed to Epoch under this Agreement that is
not paid on or before the date such payment is due will bear interest, to the
extent permitted by applicable law, at twelve percent (12%) per annum,
calculated on the number of days such payment is delinquent.
5.08 Currency of Payments. All payments under this Agreement will be made
U.S. Dollars by wire transfer to such bank account as Epoch may designate from
time to time. Any payments due hereunder on Net Sales outside of the United
States will be payable in U.S. Dollars at the rate of exchange of the currency
of the country in which the Net Sales are made as reported in the New York
edition of The Wall Street Journal, for the last business day of the quarter for
which the royalties are payable, as determined using a Party's customary
practices and procedures in accordance with United States generally accepted
accounting principles.
5.09 Other Taxes. ABG will pay all sales, use, transfer or similar taxes,
whether foreign, federal (United States), state or local, however designated,
that are levied or imposed by reason of the sale or transfer of Licensed
Products contemplated hereby, and any penalties, interest and collection or
withholding costs associated with any of the foregoing items.
5.10 Records, Review. ABG will keep accurate records of all operations
affecting payments hereunder, and will permit Epoch or its duly authorized agent
to inspect all such records and to make copies of or extracts from such records
during regular business hours throughout the term of this Agreement and for a
reasonable period of not less than three (3) years thereafter, provided that the
frequency of such inspections is no more than once per License Year. If the
review results in a determination of an underpayment of royalties or other
payments to Epoch, such underpayment will be promptly remitted to Epoch with
interest as provided in Section 5.07. If such inspection determines that such
underpayment was more than five percent below the proper amount for the period
under review, ABG will pay all of the reasonable costs of such review.
16
ARTICLE VI.
SUPPLY
6.01 Purchases MGB Intermediates. Subject to the terms and conditions of
this Agreement, Epoch will sell MGB Intermediates to ABG, and ABG will purchase
such MGB Intermediates from Epoch. ABG will not purchase any Licensed Product
from any third-party.
6.02 Purchases of Bare Probes for Large Scale Orders. Subject to the terms
and conditions of this Agreement, Epoch will sell Bare Probes to ABG, and ABG
will purchase Bare Probes from Epoch. In each calendar quarter after December
31, 2000, ABG's obligation to buy Bare Probes from Epoch will be limited to the
greater of [*] ([*]) Bare Probes or [*] percent ([*]%) of ABG's Large Scale
Orders of Bare Probes during the previous calendar quarter. In the event that
ABG does not purchase the minimum quantity of probes called for under this
Section 6.02, ABG will pay Epoch an amount equal to $(Z-X)*P, where Z is the
greater of [*] or [*] percent ([*]%) of ABG's Large Scale Orders of Bare Probes
during the previous calendar quarter, X is the actual number of Bare Probes
purchased from Epoch during the previous calendar quarter, and P is the average
selling price of Large Scale Orders of Bare Probes sold by ABG during the
previous calendar quarter.
6.03 Specifications. MGB Intermediates and Bare Probes will meet the
product specifications set forth in Exhibits A and C. Epoch will not make
changes to the specifications without the prior written consent of ABG. The
Parties will reasonably agree on any changes to such specifications, and any
such changes will be in writing.
6.04 Prices. For MGB Intermediates purchased by ABG from Epoch, Epoch will
charge ABG and ABG will pay Epoch an amount equal to [*] times Epoch's
Manufacturing Cost for MGB Intermediate. For Bare Probes purchased by ABG from
Epoch, ABG will pay Epoch, during the period from the Second Amendment Date to
December 31, 2001, an amount equal to [*] percent ([*]%) of ABG's average
selling price for Bare Probes in Large Scale Orders. Thereafter, until the
expiration or termination of this Agreement, ABG's purchase price for Bare
Probes will be [*] percent ([*]%) of the average selling price for Bare Probes
in Large Scale Orders. For purposes of this paragraph, ABG's average selling
price for Bare Probes in Large Scale Orders will equal the total of Net Sales of
Bare Probes in Large Scale Orders in the calendar quarter, divided by the total
number of Bare Probes included in such Large Scale Orders.
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
17
6.05 Transfer of Know-How. Epoch will transfer Licensed Know-How to ABG to
the extent necessary for ABG to make full use of MGB Intermediates, MGB
Oligonucleotides, and algorithms and related software for determining the
melting temperature of MGB Oligonucleotides. Such Licensed Know-How will
include, but not be limited to, that information specified in Exhibit B. All
Licensed Know-How is considered Confidential Information and will only be used
by ABG in connection with the exploitation of the license rights granted in
Article IV All Licensed Know-How will remain owned by Epoch. Similarly, ABG will
transfer certain know-how to Epoch to the extent necessary for Epoch to make
Bare Probes for ABG. Such know-how will include, but not be limited to,
information relating to the synthesis, purification, and characterization of
oligonucleotide compounds, and automated systems for configuring orders of
custom-sequence oligonucleotides. All such know-how is considered to be ABG's
Confidential Information and will only be used by Epoch in connection with
Epoch's obligations under this Agreement, and not for any other purpose. All
such know-how will remain owned by ABG.
6.06 Contingent Manufacturing Rights for MGB Intermediates. Subject to
this Section 6.06, ABG has no rights hereunder to manufacture or purchase MGB
Intermediates from third parties. However, in the event Epoch is unable to
supply at least ninety-five percent (95%) of ABG's forecast requirements of MGB
Intermediates for more than two (2) month after receipt of written notice from
ABG of a material failure to so supply, ABG shall have the right to manufacture
or purchase from third parties its requirements of MGB Intermediates until Epoch
demonstrates to ABG's reasonable satisfaction that it can again supply ABG's
requirements of MGB Intermediates. Epoch shall cooperate in obtaining such
alternate supply source, including, without limitation, transferring such
technology and know-how, and license rights as are reasonably necessary for ABG
or a third party to manufacture MGB Intermediates. To facilitate such transfer,
Epoch has deposited with ▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇ as escrow agent,
pursuant to an Escrow Agreement between the Parties dated November 1, 1999,
sufficient documentation of the know-how necessary to enable a person skilled in
oligonucleotide chemistry to manufacture MGB Intermediates. Under the Escrow
Agreement, the Escrow Agent (as defined therein), or a neutral third party
mutually agreeable to ABG and Epoch has the right to verify, audit and inspect
the documentation to be held or held in deposit to confirm that it is sufficient
to provide a person skilled in oligonucleotide chemistry the know-how necessary
to manufacture MGB Intermediates.
6.07 Purchase Orders; Forecasts. ABG will purchase MGB Intermediates and
Bare Probes from Epoch by issuing a written purchase order identifying MGB
Intermediates or Bare Probes to be purchased, the quantity, price, shipping
instructions, delivery dates, and any other special information. To the extent
the terms of any such purchase order differ from or conflict with the terms of
this Agreement, the terms of this Agreement will govern. Within thirty (30) days
of the date hereof and prior to the end of each calendar month thereafter, ABG
will submit a six-month rolling forecast of estimated MGB Intermediate and Bare
Probe requirements. The forecast for the first 13 (13) weeks of the forecast
will constitute a binding purchase order and the balance of such ABG's forecast
will be non-binding.
18
6.08 Modifications. ABG may modify, defer or cancel a purchase order not
later than thirteen (13) weeks prior to the scheduled shipment of MGB
Intermediates.
6.09 Shipment. Shipment will be made freight prepaid, F.O.B. Epoch's
facility, to the address set forth on ABG's purchase order, using a carrier
specified by ABG. Epoch will invoice ABG on a separate line for all shipping
charges ("pre-pay and add"). Title and risk of loss will pass from Epoch to ABG
upon delivery to carrier at the F.O.B. point.
6.10 Invoicing; Payment. Epoch will submit an invoice to ABG with each
shipment of MGB Intermediates and Bare Probes. Each invoice will be due and
payable net forty five (45) days from the date of shipment.
6.11 Inspection, Rejection. ABG will inspect all MGB Intermediates and
Bare Probes received for defects and for conformance with the purchase order.
ABG may reject any MGB Intermediates or Bare Probes that are defective or that
fail to conform to the purchase order. Any such rejection must be made within
thirty days (30) of receipt of the MGB Intermediates or Bare Probes by ABG. To
reject any MGB Intermediates or Bare Probes, ABG will notify Epoch of such
rejection and will promptly return the rejected MGB Intermediates or Bare Probes
to Epoch. Epoch will immediately replace the MGB Intermediates or Bare Probes
with conforming goods.
6.12 Pre-Payment. In addition to the License Fees paid under Section 4.01,
ABG has paid Epoch [*] Dollars ($[*]) as a pre-payment towards future purchases
of MGB Oligonucleotides and MGB Intermediates. Epoch credited One Million
Dollars ($1,000,000) of this pre-payment to purchase 400,000 shares of Common
Stock of Epoch, at a purchase price of Two Dollars And Fifty Cents ($2.50) per
share, pursuant to a Stock Purchase Agreement dated November 1, 1999. ABG will
credit purchases of MGB Intermediates or Bare Probes against the remaining [*]
Dollars ($[*]) of this pre-payment at a rate not to exceed [*] Dollars ($[*])
per License Year.
6.13 Security Interest. In order to secure any unused portion of the
pre-payments made under Section 6.12 (up to [*] Dollars ($[*])), Epoch has
granted to ABG a security interest in the Licensed Patent pursuant to a Security
Agreement dated December, 1998, which is in the form attached to the Original
Agreement as Exhibit A, which the Parties agree shall remain in force and in
effect. Epoch may, at any time, return all or a portion of the unused
prepayments. In the event the unused balance of the prepayments is Fifty
Thousand Dollars ($50,000) or less, the security interest will terminate.
6.14 Finished Goods Inventory. Epoch will carry a finished goods inventory
of MGB Intermediate in an amount equal to four (4) weeks of ABG's forecast
requirements.
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
19
6.15 Supply of Certain Dyes to Epoch. ABG will provide to Epoch sufficient
quantities of ▇▇▇ ▇▇▇ (or such other dye as ABG may specify) for preparation of
Bare Probes for ABG. Epoch acknowledges that these dyes are highly sensitive
materials, and that, if they were made available to third parties, such
availability could have a substantial adverse effect on ABG's current
businesses. Accordingly, Epoch agrees to use any dyes transferred to Epoch by
ABG hereunder only to satisfy Epoch's obligations under this Agreement, and,
upon the expiration or termination of this Agreement, to return any unused dyes
to ABG. ABG will supply the dyes to Epoch at a transfer price at an amount equal
to [*] times ABG's Manufacturing Cost
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
7.01 Product Warranty. Epoch warrants to ABG that, upon delivery of any
MGB Intermediates or Bare Probes to ABG, such MGB Intermediates or Bare Probes
will be free from defects in material, workmanship, design and title, and will
substantially meet the specifications attached hereto as Exhibits A and C (or
any mutually agreed upon replacements).
7.02 Documentation Warranty. Epoch further warrants that the MGB
Intermediates or Bare Probes, and all literature, packaging, inserts,
accompanying materials, and any other documentation supplied by Epoch in
connection with the MGB Intermediates or Bare Probes will not contain any
misrepresentation as to the nature or performance of the MGB Intermediates or
Bare Probes.
7.03 Remedies. If any MGB Intermediates or Bare Probes fails to meet the
foregoing warranties, in addition to satisfying any other remedies ABG may have,
Epoch will replace such deficient MGB Intermediates or Bare Probes in the most
timely manner possible at its own expense or Epoch will refund to ABG all costs
associated with the purchase and shipping of those MGB Intermediates or Bare
Probes.
7.04 Disclaimer. EXCEPT FOR THE EXPRESS WARRANTY AGAINST DEFECTS IN
DESIGN, MATERIALS, TITLE AND WORKMANSHIP CONTAINED HEREIN, EPOCH MAKES NO
WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, AND ALL WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED BY
EPOCH. Without limitation of the foregoing, Epoch expressly disclaims any
liability whatsoever for any damages incurred, directly or indirectly, in
connection with the Licensed Products and/or the MGB Intermediates and/or Bare
Probes, including without limitation, loss of profits and special, incidental or
consequential damages.
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
20
7.05 Representations and Warranties. Each Party represents, warrants and
covenants to the other Party that:
(a) it has the corporate power and authority and legal right to
enter into this Agreement and to perform its obligations hereunder;
(b) the execution and delivery of this Agreement and the performance
of the transactions contemplated thereby have been duly authorized by all
necessary corporate action of such Party;
(c) the execution and delivery of this Agreement and the performance
by such Party of any of its obligations under this Agreement do not and will not
(a) conflict with, or constitute a breach or violation of, any other contractual
obligation to which it is a Party, any judgment of any court or governmental
body applicable to such Party or its properties or, to such Party's knowledge,
any statute, decree, order, rule or regulation of any court or governmental
agency or body applicable to such Party or its properties, and (b) with respect
to the execution and delivery of the Agreement, require any consent or approval
of any governmental authority or other person;
(d) each Party will to the best of its knowledge without undertaking
a special investigation, disclose to the other Party any material adverse
proceedings, claims or actions that arise, which would materially interfere with
that Party's performance of its obligations under this Agreement; and
(e) each Party's employees have executed or will execute agreements
whereby all right, title and interest in any technology and invention(s) will be
assigned to their respective employers.
ARTICLE VIII.
INDEMNITY
8.01 Indemnification of Epoch. ABG will defend, indemnify and hold Epoch
harmless against any judgment, damage, liability, loss, cost or other expense,
including legal fees ("Liability"), resulting from any third party claims made
or proceedings brought against Epoch to the extent that such Liability arises
from ABG's use, marketing , distribution or sale of Licensed Product and/or MGB
Intermediates, except to the extent such claims or proceedings result (1) from
Epoch's negligence or willful act or omission in the manufacture, storage, or
delivery of Licensed Product, Bare Probes, and/or MGB Intermediates, (2) from
Epoch's breach of any warranty set forth in Article VII, or (3) infringement of
a patent owned or controlled by a third party, only to the extent such
infringement arises from the inclusion in the Licensed Product of inventions
claimed in a Licensed Patent or the use of the Licensed Know-How.
8.02 Indemnification of ABG. Epoch will defend, indemnify and hold ABG
harmless against any Liability resulting from any third party claims made or
proceedings brought against ABG to the extent that such Liability arises (1)
from Epoch's negligence or willful act or
21
omission in the manufacture, storage, or delivery of Licensed Product, Bare
Probes, and/or MGB Intermediates or (2) from Epoch's breach of any warranty set
forth in Article VII.
8.03 Indemnification Procedures. This agreement of indemnity is
conditioned upon the indemnified Party's obligation to: (1) advise the
indemnifying Party of any claim or lawsuit, in writing, within ten (10) days
after the indemnified Party has received notice of said claim or lawsuit, or,
within such a time frame as not to materially prejudice the rights of the
indemnifying Party, and (2) assist the indemnifying Party and its
representatives in the investigation and defense of any lawsuit and/or claim for
which indemnification is provided. This agreement of indemnity will not be valid
as to any settlement of a claim or lawsuit or offer of settlement or compromise
without the prior written approval of the indemnifying Party.
ARTICLE IX.
TERM AND TERMINATION
9.01 Term. Unless terminated earlier as provided herein, this Agreement
will commence on the Second Amendment Date and will remain in full force until
the expiration of the last to expire Licensed Patent.
9.02 Termination. This Agreement may be terminated as follows:
(a) by mutual written agreement of the Parties, effective as of the
time specified in such written agreement; or
(b) by either Party, (a) in the event the other Party will file in
any court or agency pursuant to any statute or regulation of any state or
country, a petition in bankruptcy or insolvency or for reorganization or for an
arrangement or for the appointment of a receiver or trustee of the Party or of
its assets, or if the other Party proposes a written agreement of composition or
extension of its debts, or if the other Party will be served with an involuntary
petition against it, filed in any insolvency proceeding, and such petition will
not be dismissed within sixty days after the filing thereof, or if the other
Party will propose or be a Party to any dissolution or liquidation, or if the
other Party will make an assignment for the benefit of creditors, or (b) upon
any material breach of this Agreement by the other Party, provided that the
Party alleging such breach must first give the other Party written notice
thereof, which notice must state the nature of the breach in reasonable detail
and the Party receiving such notice must have failed to cure such alleged breach
within sixty (60) days after receipt of such notice; or
(c) by ABG at any time upon one hundred and eighty (180) days
advance written notice to Epoch. In the event that ABG terminates the Agreement
pursuant to this Section 9.02(c), ABG (1) will release its security interest in
the Licensed Patent granted in the Original Agreement and Exhibit A thereto, (2)
will forfeit any unused portion of the pre-payments paid to Epoch as described
in Section 6.12, (3) will pay for any orders placed under Article VI prior to
termination, and (4) return all tangible embodiments of the Licensed Know-How to
Epoch.
9.03 Survival. Upon any termination of this Agreement, neither Party will
be relieved of any obligations incurred prior to such termination.
Notwithstanding any termination of this Agreement, the obligations of the
Parties under Articles VII, VIII, IX, X and XI, as well as under
22
any licenses which are maintained in effect and any other provisions which by
their nature are intended to survive any such termination, will survive and
continue to be enforceable.
ARTICLE X.
INFRINGEMENT LITIGATION
10.01 Notification. Each Party will notify the other Party in writing of
any suspected infringement(s) of Licensed Patents in the Exclusive Licensed
Field or the Non-Exclusive Licensed Field and will inform the other Party of any
evidence of such infringement(s).
10.02 Infringement in Exclusive Licensed Field. ABG will have the first
right to institute suit for infringement(s) in the Exclusive Licensed Field.
Epoch agrees to join as a Party plaintiff in any such lawsuit initiated by ABG,
if requested by ABG, with all costs, attorneys' fees, and expenses to be paid by
ABG. However, if ABG does not institute suit for infringement(s) within ninety
(90) days of receipt of written notice from Epoch of Epoch's desire to bring
suit for infringement in its own name and on its own behalf, then Epoch may, at
its own expense, bring suit or take any other appropriate action.
10.03 Infringement Outside Exclusive Licensed Field. Epoch will have the
sole right, but not the obligation, to institute suit for infringement and to
recover damages outside of the Exclusive Licensed Field.
10.04 Recovery. ABG will be entitled to any recovery of damages resulting
from a lawsuit brought by it pursuant to Section 10.02. Epoch will be entitled
to recovery of damages resulting from any lawsuit brought by Epoch pursuant to
Sections 10.02 or 10.03.
10.05 Settlement. Neither Party may settle with an infringer without the
prior written approval of the other Party if such settlement would affect the
rights of the other Party under the Licensed Patents.
ARTICLE XI.
CONFIDENTIALITY
11.01 Non-Disclosure. Because Epoch and ABG will be cooperating with each
other under this Agreement, each may reveal Confidential Information to the
other. The Parties agree, by using the same degree of care as each uses for its
own information of like importance, but not less than a reasonable degree of
care, to hold in confidence any Confidential Information disclosed by the other
Party hereunder, and not to disclose any Confidential Information to any third
party, and not to use any Confidential Information disclosed by the other Party
hereunder for purpose other than carrying out its obligations under this
Agreement, without the express prior written consent of the other Party. Each
Party will disclose Confidential Information only to its employees or agents who
have a need to know. With respect to any Confidential Information that is
revealed by a Party to the other Party, this confidentiality requirement will
23
remain in force for a period of 5 years following the date the Confidential
Information is revealed.
11.02 Responsibility over Employees and Agents. Each Party will assume
individual responsibility for the actions and omissions of its respective
employees, agents and assigns, and to inform same of the responsibilities for
confidentiality under this Agreement, and to obtain their agreement to be bound
in the same manner that the Party is bound.
11.03 Affiliates. Nothing herein will be construed as preventing either
Party from disclosing any information to an Affiliate of ABG or Epoch, provided
such Affiliate has undertaken a similar obligation of confidentiality with
respect to the Confidential Information.
11.04 Bankruptcy. All Confidential Information disclosed by one Party to
the other will remain the intellectual property of the disclosing Party. The
bankrupt or insolvent Party will, to the extent permitted by law, take all steps
necessary or desirable to maintain the confidentiality of the other Party's
Confidential Information and to ensure that the court or other tribunal maintain
such information in confidence in accordance with the terms of this Agreement.
In the event that a court or other legal or administrative tribunal, directly or
through an appointed master, trustee or receiver, assumes partial or complete
control over the assets of a Party to this Agreement based on the insolvency or
bankruptcy of such Party, the bankrupt or insolvent Party will promptly notify
the court or other tribunal.
(a) that Confidential Information received from the other Party
under this Agreement remains the property of the other Party; and
(b) of the confidentiality obligations under this Agreement.
11.05 Publication. Neither ABG nor Epoch will submit for written or oral
publication any manuscript, abstract or the like that includes data or other
information generated and provided by the other Party without first obtaining
the prior written consent of the other Party, which consent will not be
unreasonably withheld or delayed. If written consent or written denial is not
provided by the other Party within 90 days, the first Party will have the right
to publish. But, the foregoing will not apply to customary literature that is
prepared for marketing and sales purposes and that does not contain Confidential
Inform.
11.06 Publicity. Neither Party nor any of its Affiliates will originate
any news relating to this Agreement without the prior written approval of the
other Party, which approval will not be unreasonably withheld or delayed.
However, within 30 days after the execution of this Agreement the Parties will
mutually agree on a joint press release announcing the existence of this
Agreement.
24
ARTICLE XII.
GENERAL PROVISIONS
12.01 Force Majeure. If the performance of any part of this Agreement by
either Party, or of any obligation under this Agreement, is prevented,
restricted, interfered with or delayed by reason of any cause beyond the
reasonable control of the Party liable to perform, unless conclusive evidence to
the contrary is provided, the Party so affected will, upon giving written notice
to the other Party, be excused from such performance to the extent of such
prevention, restriction, interference or delay, provided that the affected Party
will use its reasonable best efforts to avoid or remove such causes of
non-performance and will continue performance with the utmost dispatch whenever
such causes are removed. When such circumstances arise, the Parties will discuss
what, if any, modification of the terms of this Agreement may be required in
order to arrive at an equitable solution.
12.02 Governing Law. This Agreement will be deemed to have been made in
the State of California and its form, execution, validity, construction and
effect will be determined in accordance with the laws of the State of
California, without reference to conflicts of law principles.
12.03 Informal Dispute Resolution. In an effort to resolve informally and
amicably any claim, controversy, or dispute arising out of or related to the
interpretation, performance, or breach of this Agreement (a "Dispute") without
resorting to litigation or arbitration, each Party will notify the other Party
to the Dispute in writing of any Dispute hereunder that requires resolution.
Such notice will set forth the nature of the Dispute, the amount involved, if
any, and the remedy sought. Each Party will promptly designate an
executive-level employee to investigate, discuss and seek to settle the matter
between them. If the two designated representatives are unable to settle the
matter within thirty (30) days after such notification, the matter will be
submitted to Epoch's Chief Executive Officer and ABG's President of the Applied
Biosystems Group for consideration. If settlement cannot be reached through
their efforts within an additional thirty (30) days (or such longer time period
as they will agree upon in writing), each Party will have the right to take such
action as it deems appropriate. The statute of limitations of the State of
California applicable to the commencement of a lawsuit will be tolled as of
initial written notification of a dispute to the other Party as set forth above
for sixty (60) days (or such longer time as the Parties agree in writing) if all
interim deadlines have been complied with by the notifying Party.
12.04 Arbitration. Subject to Section 12.03 above, any disputes arising
between the Parties relating to, arising out of or in any way connected with
this Agreement or any term or condition hereof, or the performance by either
Party of its obligations hereunder, whether before or after termination of this
Agreement, shall be promptly presented to the Chief Executive Officers of Epoch
and ABG for resolution and if the Chief Executive Officers cannot promptly
resolve such disputes, then such dispute shall be finally resolved by binding
arbitration according to the procedures set forth at Schedule 12.04 attached
hereto.
25
12.05 Attorneys' Fees. Except as otherwise provided herein, each Party
will bear its own legal fees incurred in connection with the transactions
contemplated hereby, provided, however, that if any Party to this Agreement
seeks to enforce its rights under this Agreement by legal proceedings or
otherwise, subject to Section 12.03, the non-prevailing Party will pay all costs
and expenses incurred by the prevailing Party, including, without limitation,
all reasonable attorneys' fees.
12.06 Severability. In the event any portion of this Agreement will be
held illegal, void or ineffective, the remaining portions hereof will be
interpreted to maintain the intent of the Parties. If any of the terms or
provisions of this Agreement are in conflict with any applicable statute or rule
of law, then such terms or provisions will be deemed inoperative to the extent
that they may conflict therewith and will be deemed to be modified to conform
with such statute or rule of law.
12.07 Entire Agreement. This Agreement, including all exhibits,
appendices, and schedules referred to herein, constitutes the sole agreement
between the Parties relating to the subject matter hereof and supersedes all
previous writings and understandings. Confidential disclosures made pursuant to
previously executed Confidentiality Agreements between Epoch and ABG will remain
subject to the terms of those Confidentiality Agreements. No terms or provisions
of this Agreement will be varied or modified by any prior or subsequent
statement, conduct or act of either of the Parties, except that the Parties may
amend this Agreement by written instruments specifically referring to and
executed in the same manner as this Agreement.
12.08 Assignment. This Agreement and the licenses herein granted will be
binding upon and inure to the benefit of the successors in interest of the
respective Parties. Neither Party will have the power to assign this Agreement
nor any interest hereunder without the written consent of the other, such
consent not to be unreasonably withheld, provided, however, that ABG or Epoch
may assign this Agreement or any of its rights or obligations hereunder to any
Affiliate or to any third party with which it may merge or consolidate, or to
which it may transfer all or substantially all of its assets or business to
which this Agreement relates, without obtaining the consent of the other Party,
subject to the other Party assuming all liabilities and obligations under the
Agreement.
12.09 Bankruptcy. All rights and licenses granted under this Agreement
will be considered for purposes of Section 365(n) of the Bankruptcy Code,
licenses of rights to "intellectual property" as defined under Section 101(56)
of the Bankruptcy Code. The Parties agree that the licensee of such rights under
this Agreement, will retain and may fully exercise all of its rights and
elections under the Bankruptcy Code. In the event that the licensor of such
rights seeks or is involuntarily placed under the protection of the Bankruptcy
Code, and the trustee in bankruptcy rejects this Agreement, the licensee thereof
hereby elects, pursuant to Section 365(n), to retain all rights granted to it
under this Agreement to the extent permitted by the law.
12.10 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart will be deemed an original instrument,
but all such counterparts together will constitute but one agreement.
26
12.11 Notices. Any notice required or permitted under this Agreement will
be sent by air mail, postage pre-paid, to the following addresses of the
Parties:
If to Epoch: If to ABG:
Epoch Biosciences, Inc. PE Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ Applied Biosystems Group
Suite 100 ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: President Attn.: Legal Department
27
IN WITNESS WHEREOF, the Parties, through their authorized officers, have
executed this Agreement as of the date first written above.
EPOCH PHARMACEUTICALS, PE CORPORATION, THROUGH ITS
INC., doing business as Epoch APPLIED BIOSYSTEMS GROUP
Biosciences, Inc.
By: By:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------- ---------------------------------------
Name: Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Title:
Chief Executive Officer Senior Vice President, PE Corporation;
President Applied Biosystems Group
Date: August 17, 2000 Date: August 17, 2000
28
EXHIBIT A
CHARACTERIZATION AND SPECIFICATIONS FOR MGB OLIGONUCLEOTIDE AND OLIGONUCLEOTIDE
I. HPLC ASSAY OF MGB OLIGONUCLEOTIDE
The HPLC assay used to characterize MGB Oligonucleotide will be as set
forth in Applied Biosystems document number [*].
II. PURITY OF MGB OLIGONUCLEOTIDE
The purity of a MGB Oligonucleotide will be determined based on an area
percent of a product peak based on the above-described HPLC Method ([*]).
A Purified MGB Oligonucleotide will have a purity of at least [*]% in
oligonucleotide probe lengths of up to [*]. However, the value of the
required purity of a MGB Oligonucleotide may be amended pursuant to
Section 10.06 of the Agreement. A [*] impurity should be less than [*]%.
III. YIELD OF MGB OLIGONUCLEOTIDE
The yield of a purified MGB Oligonucleotide product measured at [*] on a
[*] must be greater or equal to [*].
IV. PURITY OF OLIGONUCLEOTIDE
The purity of a Oligonucleotide will be determined based on an area
percent of a product peak based on the above-described [*], where, as used
in this exhibit, the term "Oligonucleotide" means a synthetic
oligonucleotide without an [*] attached. A Purified Oligonucleotide will
have a purity of at least [*]%. However, the value of the required purity
of a Oligonucleotide may be amended pursuant to Section 10.06 of the
Agreement.
V. YIELD OF OLIGONUCLEOTIDE
The yield of a purified Oligonucleotide product measured at [*] on a [*]
must be greater or equal to [*].
VI. MGB OLIGONUCLEOTIDE AND OLIGONUCLEOTIDE FORMULATION
The MGB oligonuleotide, [*] to be formulated in [*].
The oligonucleotide to be supplied dry.
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
1
EXHIBIT B
LICENSED KNOW-HOW
The Licensed Know-How transferred from Epoch to ABG will include at least the
following information.
1. Chemical structures of all reagents and probes provided to ABG by Epoch to
the extent necessary for ABG to make full use of such reagents and probes
for the synthesis and/or use of MGB Intermediates and MGB
Oligonucleotides.
2. Details of Epoch's manufacturing and QC methods to the extent necessary
for ABG to manufacture MGB Oligonucleotides in conformance with the
specifications set forth in Exhibit A, including at least the following:
a) detailed description of all DNA synthesis, purification, formulation
and analytical instrumentation, including vendors;
b) detailed DNA synthesis cycles;
c) cleavage conditions;
d) deprotection conditions;
e) purification methods, including HPLC, OPC and other protocols;
f) analytical methods, including HPLC and other protocols;
g) formulation and quantitation methods;
h) [*];
i) [*];
j) stability data of MGB reagents in DNA synthesis reagents and under
cleavage/deprotection conditions;
k) long term stability data of MGB probes;
l) data correlating analytical specs (HPLC, etc.) to performance of
probes in relevant applications;
m) method used for validating probe manufacturing process;
n) method used for monitoring probe manufacturing process; and
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
1
o) extinction coefficients (at [*]) for MGB reagents.
3. Algorithms, object code, source code and any other embodiments of methods
or processes useful for predicting the melting temperature of MGB
Oligonucleotides, whether patented, copyrighted, or not.
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
2
EXHIBIT C
SPECIFICATIONS FOR MGB INTERMEDIATE
IDENTITY OF MGB INTERMEDIATE
The parties will define a mutually acceptable assay for confirming the
identity of MGB Intermediate supplied to ABG by Epoch.
MGB-DQ POLYSTYRENE
1) Material is supplied with a C. of A. from Epoch which includes
loading data, and [*].
a) Loading specification: [*]
b) HPLC purity of fragment: No impurity greater than [*]%. Overall area
% purity is greater than [*]%
(HPLC method to be provided by EPOCH)
2) In-house raw material specifications will include the following:
a) Loading specification: [*]
b) HPLC purity of [*]: No unresolvable group of impurity peaks greater
than [*]. Overall area % purity of product is greater than [*]%
c) HPLC purity of purified GAPDH TaqMan probe synthesized on [*], using
[*].
d) Yield of purified GAPDH TaqMan probe synthesized on [*]: greater
than [*].
(Analytical HPLC method: See document number [*] See document number [*].
MGB-DQ CPG
1) Material is supplied with a C. of A. from Epoch which includes
loading data, and [*].
c) Loading specification: [*]
d) HPLC purity of fragment: No impurity greater than [*]. Overall area
% purity is greater than [*]% area
(HPLC method to be provided by EPOCH)
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
2) In-house raw material specifications will include the following:
a) Loading specification: [*]
b) HPLC purity of [*]:
c) No single peak impurity greater than [*]. No unresolvable group of
impurity peaks greater than [*].
d) Overall area % purity of product is greater than [*].
e) HPLC purity of [*].
f) Yield of [*].
Analyatical HPLC method: See document number [*]; purification HPLC See document
number [*].
*CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
2
SCHEDULE 12.04
ALTERNATIVE DISPUTE RESOLUTION
In the event of any dispute, difference or question arising between the
Parties in connection with this Agreement, the construction thereof, or the
rights, duties or liabilities of either Party excluding any dispute or
controversy for which arbitration is prohibited by any applicable law or treaty,
and which dispute is not amicably resolved by the good faith efforts of the
Parties under Section 12.04, then such dispute will be resolved by binding
Alternative Dispute Resolution ("ADR") in the manner described below:
1. If any Party intends to begin an ADR to resolve a dispute, such Party will
provide written notice to counsel for the other Party informing the other
Party of such intention and the issues to be resolved. Within 10 business
days after the receipt of such notice, the other Party may by written
notice to the counsel for the Party initiating ADR, add additional issues
to be resolved. From the date of receipt of the ADR notice and until such
time as any matter has been finally settled by ADR, the running of the
time periods in which a Party must cure a breach of this Agreement will be
suspended as to the subject matter of the dispute.
2. Within 5 business days following the receipt of the original ADR notice
("Notice Date") a neutral will be selected by the then President of the
Center for Public Resources ("CPR"), 14th Floor, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The neutral will be an individual who will preside
in resolution of any disputes between the Parties. The neutral selected
will be a member of the Judicial Panel of the CPR and will not be an
employee, director or shareholder of either a Party or of an Affiliate of
either Party.
3. Each Party will have 10 business days from the date the neutral is
selected to object in good faith to the selection of that person. If
either Party makes such an objection, the then president of the CPR will
as soon as possible thereafter, select another neutral under the same
conditions set forth above. This second selection will be final.
4. No later than 90 business days after selection, the neutral will hold a
hearing to resolve each of the issues identified by the Parties. The
hearing will be held in San Francisco, California, or any other mutually
acceptable location.
4.1. Each Party will have the right to be represented by counsel at the
hearing.
4.2. The hearing will be held at such place as agreed upon by the Parties
or if they are unable to agree at a place designated by the neutral.
5. The ADR proceeding will be confidential and the neutral will issue
appropriate protective orders to safeguard each Parties' Confidential
Information. Except as required by law, no Party will make (or instruct
the neutral to make) any public announcement with respect to
3
the proceedings or decision of the neutral without the prior written
consent of each other Party. The existence of any dispute submitted to
ADR, and the award of the neutral, will be kept in confidence by the
Parties and the neutral, except as required in connection with the
enforcement of such award or as otherwise required by applicable law.
6. It is the intention of the Parties that discovery, although permitted as
described herein, will be limited except in exceptional circumstances. The
neutral will permit such limited discovery necessary for an understanding
of any legitimate issue raised in the ADR, including the production of
documents. Each Party will be permitted but not required to take the
deposition of not more than 5 persons, each such deposition not to exceed
6 hours in length. If the neutral believes that exceptional circumstances
exist, and additional discovery is necessary for a full and fair
resolution of the issue, the neutral may order such additional discovery
as the neutral deems necessary. At the hearing the Parties may present
testimony (either by live witness or deposition) and documentary evidence.
The neutral will have sole discretion with regard to the admissibility of
any evidence and all other materials relating to the conduct of the
hearing.
7. Each Party will be entitled to no more than 4 hours of hearing to present
testimony or documentary evidence. The testimony of both Parties will be
presented during the same calendar day. Such time limitation will include
any direct, cross or rebuttal testimony, but such time limitation will
only be charged against the Party conducting such direct, cross or
rebuttal testimony. It will be the responsibility of the neutral to
determine whether the Parties have had the 4 hours to which they are
entitled. If the neutral believes that exceptional circumstances exist,
and additional hearing time is necessary for a full and fair resolution of
the issue, the neutral may order such additional hearing time as the
neutral deems necessary.
8. At least 15 business days prior to the date set for the hearing, each
Party will submit to each other Party and the neutral a list of all
documents on which such Party intends to rely in any oral or written
presentation to the neutral and a list of all witnesses, if any, such
Party intends to call at such hearing and a brief summary of each
witnesses testimony.
9. At least 5 business days prior to the hearing, each Party must submit to
the neutral and serve on each other Party a proposed ruling on each issue
to be resolved. Such writing will be limited to presenting the proposed
ruling, will contain no argument or analysis of the facts or issues, and
will be limited to not more than 10 pages.
10. Not more than 5 business days following the close of hearings, the Parties
may each submit post hearing briefs to the neutral addressing the evidence
and issues to be resolved. Such post hearing briefs will not be more than
50 pages.
11. The neutral will rule on each disputed issue after the hearing as
expeditiously as possible, but in no event more than 30 days after the
close of the hearing. The neutral will, in rendering his decision, apply
the substantive law of the state of California, U.S.A., and without giving
effect to its principles of conflicts of law, and without giving effect to
any
4
rules or laws relating to arbitration. The neutral is not empowered with
the remedy of termination of the Agreement.
12. Any judgment upon the award rendered by the neutral may be entered in any
court having jurisdiction thereof. The decision rendered in any such ADR
will be final and not appealable, except in cases of fraud or bad faith on
the part of the neutral or any Party to the ADR proceeding in connection
with the conduct of such proceedings, and will be enforceable in any court
of competent jurisdiction.
13. The neutral will have the option to assess costs and expenses to the
non-prevailing Party, otherwise the Parties will pay their own costs
(including, without limitation, attorneys fees) and expenses in connection
with such ADR.
5